Proxy Statement/Prospectus
This proxy statement/prospectus is being furnished to Warnaco stockholders in connection with the solicitation of proxies by the Warnaco board of directors in connection with the special meeting.
This proxy statement/prospectus and the enclosed proxy card(s) are first being sent to Warnaco stockholders on or about
January 15, 2013.
Date, Time and Place
The Warnaco special meeting is scheduled to be held at 9:30 a.m., local time, on February 13, 2013, at Warnacos offices, 501 Seventh
Avenue, New York, New York 10018.
Purpose of the Warnaco Special Meeting
The Warnaco special meeting is being held:
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Proposal 1.
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to adopt the merger agreement, pursuant to which Wand Acquisition Corp. will be merged with and into Warnaco, and Warnaco will become a wholly owned subsidiary of
PVH;
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Proposal 2.
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to approve, on a (non-binding) advisory basis, the compensation to be paid to Warnacos named executive officers that is based on or otherwise relates to the merger, as
discussed under the section entitled The MergerInterests of Warnacos Directors and Executive Officers in the MergerGolden Parachutes beginning on page 59; and
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Proposal 3.
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to vote upon an adjournment of the special meeting if necessary or appropriate in the view of the Warnaco board of directors to solicit additional proxies in favor of the
proposal to adopt the merger agreement if there are not sufficient votes at the time of such adjournment to adopt the merger agreement.
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If the merger is completed, each outstanding share of Warnaco common stock (other than excluded shares)
will be converted into the right to receive (1) 0.1822 of a share of PVH common stock, and (2) $51.75 in cash, with cash paid in lieu of fractional shares of PVH common stock.
Recommendations of the Warnaco Board of Directors
The Warnaco board of directors has determined that entering into the merger agreement was in the best interests of Warnaco and its
stockholders and declared the merger agreement advisable.
The Warnaco board of directors unanimously recommends that
you vote FOR the proposal to adopt the merger agreement, FOR the proposal to approve the merger-related compensation for named executive officers, and FOR the adjournment proposal.
Record Date; Stock Entitled to Vote
Only holders of record of shares of Warnaco common stock at the close of business on January 14, 2013 are entitled to notice of, and to vote at, the Warnaco special meeting and at any adjournment of the
meeting. We refer to this date as the record date for the Warnaco special meeting. A complete list of stockholders of record of Warnaco entitled to vote at the Warnaco special meeting will be available for the 10 days before the Warnaco special
meeting at Warnacos executive offices and principal place of business at 501 Seventh Avenue, New York, New York 10018 for inspection by stockholders of Warnaco during ordinary business hours for any purpose germane to the Warnaco special
meeting. The list will also be available at the Warnaco special meeting for examination by any stockholder of Warnaco of record present at the special meeting.
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As of the record date, the directors and executive officers of Warnaco as a group owned and
were entitled to vote 963,926 shares of the common stock of Warnaco, or approximately 2% of the shares of Warnaco common stock of Warnaco on that date. Warnaco currently expects that its directors and executive officers will vote their shares in
favor of adoption of the merger agreement, but none of Warnacos directors or executive officers have entered into any agreement obligating them to do so.
Quorum
A quorum is necessary to hold a valid
special meeting of Warnaco stockholders. A quorum will be present at the Warnaco special meeting if the holders of a majority of the outstanding shares of the common stock of Warnaco entitled to vote on the record date are present, in person or by
proxy. If a quorum is not present at the Warnaco special meeting, Warnaco expects the presiding officer to adjourn the special meeting in order to solicit additional proxies. Abstentions and broker non-votes (as described below), if any, will be
counted as present for purposes of determining whether a quorum is present.
Required Vote
The adoption of the merger agreement requires the affirmative vote of holders of a majority of the shares of common stock of Warnaco
issued and outstanding as of the close of business on the record date. The proposal to approve the merger-related compensation for named executive officers and the adjournment proposal each require the affirmative vote of holders of a majority of
the shares of Warnaco common stock present in person or by proxy at the special meeting.
Your failure to vote, in the case
you are the record holder of shares, or instruct your broker to vote, in the case you hold shares in street name, will have the same effect as a vote against the proposal to adopt the merger agreement, but, except in the case of any broker
non-votes, will have no effect on the proposal to approve the merger-related compensation for named executive officers or the adjournment proposal.
Abstentions and Broker Non-Votes
In accordance
with the rules of the NYSE, brokers who hold shares of Warnaco common stock in street name for their customers have authority to vote on routine proposals when they have not received instructions from beneficial owners. However,
brokers are precluded from exercising their voting discretion with respect to non-routine matters, such as the proposal to adopt the merger agreement, the proposal to approve the merger-related compensation for named executive officers and the
adjournment proposal. As a result, absent specific instructions from the beneficial owner of such shares, brokers are not empowered to vote such shares.
Your failure to instruct your broker to vote is considered a broker non-vote with respect to a particular proposal only when a broker has discretionary authority to vote on at least one other proposal.
Because brokers do not have authority to exercise voting discretion with respect to the proposal to adopt the merger agreement, the proposal to approve the merger-related compensation for named executive officers and the adjournment proposal, there
will not be any broker non-votes at the Warnaco special meeting in the absence of any additional matter coming before such meeting as to which brokers have discretionary authority. See Other Matters on page 122.
Your abstention from voting and broker non-votes, if any, will have the same effect as a vote against the proposal to adopt the merger
agreement, the proposal to approve the merger-related compensation for named executive officers and the adjournment proposal.
Voting at the Special Meeting
Whether or not you plan to attend the Warnaco special meeting, please promptly vote your
shares of Warnaco common stock by proxy to ensure your shares are represented at the meeting. You may also vote in person at the Warnaco special meeting.
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Voting in Person
If you plan to attend the Warnaco special meeting and wish to vote in person, you will be given a ballot at the special meeting. Please
note, however, that if your shares of Warnaco common stock are held in street name, which means your shares of Warnaco common stock are held of record by a broker, bank or other nominee, and you wish to vote at the Warnaco special meeting, you must
bring to the Warnaco special meeting a proxy from the record holder (your broker, bank or nominee) of the shares of Warnaco common stock authorizing you to vote at the Warnaco special meeting.
Voting by Proxy; Voting Instructions
Stockholders of Record
: You should vote your proxy even if you plan to attend the Warnaco special meeting. You can always change
your vote at the Warnaco special meeting.
Your enclosed proxy card includes specific instructions for voting your shares of
Warnaco common stock. Warnacos electronic voting procedures are designed to authenticate your identity and to ensure that your votes are accurately recorded. When the accompanying proxy is returned properly executed, the shares of Warnaco
common stock represented by it will be voted at the Warnaco special meeting or any adjournment thereof in accordance with the instructions contained in the proxy.
If you return your signed proxy card without indicating how you want your shares of Warnaco common stock to be voted with regard to a particular proposal, your shares of Warnaco common stock will be voted
in favor of each such proposal. Proxy cards that are returned without a signature will not be counted as present at the Warnaco special meeting and cannot be voted.
Shares Held in Street Name
: If your shares of Warnaco common stock are held in street name through a broker, bank or other nominee, you have received a separate voting instruction card in lieu of a
proxy card and you must follow those instructions in order to vote.
Shares Held in Employee Savings Plan
: If you hold
Warnaco shares indirectly in the Warnaco savings plan, you have the right to direct the Warnaco trustee how to vote your shares as described in the voting materials sent to you by the Warnaco trustee.
Revocation of Proxies or Voting Instructions
You have the power to revoke your proxy at any time before your proxy is voted at the Warnaco special meeting. You can revoke your proxy or voting instructions in one of four ways:
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you can grant a new, valid proxy bearing a later date;
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you can send a signed notice of revocation;
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if you are a holder of record of Warnaco common stock on the record date for the Warnaco special meeting, you can attend the Warnaco special meeting
and vote in person, which will automatically cancel any proxy previously given, or you can revoke your proxy in person, but your attendance alone will not revoke any proxy that you have previously given; or
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if your shares of Warnaco common stock are held in an account with a broker, bank or other nominee, you must follow the instructions on the voting
instruction card you received in order to change or revoke your instructions.
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If you choose either of the
first two methods, your notice of revocation or your new proxy must be received by Warnacos Corporate Secretary at 501 Seventh Avenue, New York, New York 10018 no later than the beginning of the Warnaco special meeting.
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Solicitation of Proxies
In accordance with the merger agreement, the cost of proxy solicitation for the Warnaco special meeting will be borne by Warnaco. In
addition to the use of the mail, proxies may be solicited by officers and directors and regular employees of Warnaco, without additional remuneration, by personal interview, telephone, facsimile or otherwise. Warnaco will also request brokers, banks
and nominees to forward proxy materials to the beneficial owners of shares of Warnaco common stock held of record on the record date, the cost of which will be borne by Warnaco. Warnaco has retained Innisfree M&A Incorporated to assist in its
solicitation of proxies and has agreed to pay them a fee of approximately $25,000, plus reasonable expenses, for these services.
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THE MERGER
Effects of the Merger
Upon completion of the merger, Wand Acquisition Corp. will merge with and into Warnaco. Warnaco will be the surviving corporation in the merger and will thereby become a wholly owned subsidiary of PVH.
In the merger, each outstanding share of Warnaco common stock (other than excluded shares) will be converted on the effective
date of the merger into the right to receive (1) 0.1822 of a share of PVH common stock, and (2) $51.75 in cash. Cash will be paid in lieu of any fractional shares of PVH common stock.
See Comparison of Rights of Stockholders of PVH and Warnaco beginning on page 104 for a summary of the material differences
between the rights of holders of PVH common stock and the rights of holders of Warnaco common stock.
Background
of the Merger
Warnaco and PVH have from time to time considered the possibility of a business combination transaction
involving the two companies, based on Warnacos and PVHs substantial business relationship and shared interest as co-beneficial owners of the
Calvin Klein
trademarks. Warnaco is party to numerous license agreements with a
subsidiary of PVH to develop, manufacture and market jeanswear and related products under the
Calvin Klein Jeans
trademark, which is beneficially owned by PVH. In addition, Warnaco is the beneficial owner of the
Calvin Klein
trademark
for mens, womens and childrens underwear, intimate apparel, loungewear and sleepwear, and pays PVH an administration fee based on Warnacos worldwide sales of such products under an administration agreement.
Warnaco and PVH periodically had discussions concerning a possible transaction between the two companies over the period from October
2005 to January 2010. None of these discussions resulted in the parties engaging in any substantive negotiations regarding a business combination or similar transaction.
On June 18, 2012, during a business lunch between Helen McCluskey, President and Chief Executive Officer of Warnaco, and Emanuel Chirico, Chairman and Chief Executive Officer of PVH, Mr. Chirico
expressed PVHs strong interest in acquiring Warnaco at a price of $62.00 per share of Warnaco common stock. Later that same day, Ms. McCluskey received a letter from Mr. Chirico confirming their earlier discussion and setting forth
PVHs proposal to acquire 100% of Warnacos outstanding common stock at a price of $62.00 per share, payable in a combination of $46.50 in cash and a fraction of a share of PVH common stock worth $15.50 (representing a 43% premium to the
closing stock price of Warnaco common stock on June 15, 2012 (the last trading day prior to the lunch)) and a 41% premium to the average closing stock price of Warnaco common stock over the trailing 30-calendar day period). In the letter,
Mr. Chirico indicated that the PVH board of directors believed that a combination of Warnaco and PVH had tremendous strategic and financial merit and represented a unique opportunity to reunite the
Calvin Klein
brand. He further
indicated that PVH was confident that there would be no significant impediments to consummating a transaction expeditiously. PVHs proposal was conditioned on the completion of due diligence and the negotiation and execution of a definitive
merger agreement. Mr. Chiricos letter indicated that PVH had engaged Peter J. Solomon Company L.P., which we refer to as PJSC, as its financial advisor and Wachtell, Lipton, Rosen & Katz, which we refer to as Wachtell, as its
legal counsel.
On June 25, 2012, the Warnaco board of directors met with members of Warnacos management and
representatives of Skadden, Arps, Slate, Meagher & Flom LLP, which we refer to as Skadden, its outside legal counsel, and J.P. Morgan, its financial advisor, to discuss PVHs June 18, 2012 proposal. At the meeting, Skadden made a
presentation to the Warnaco board of directors regarding the boards fiduciary duties and role in considering and responding to PVHs proposal. J.P. Morgan then presented a brief summary of past discussions between Warnaco and PVH, as well
as an overview and preliminary analysis of PVHs June 18, 2012 proposal.
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Following the presentations, the Warnaco board of directors determined that its evaluation of PVHs proposal would benefit from a review of Warnacos updated long-term strategic plan
(which was not yet available). The Warnaco board of directors instructed Ms. McCluskey to respond to Mr. Chirico accordingly.
On June 28, 2012, Ms. McCluskey called Mr. Chirico (and, following the call, confirmed the substance of the call in a letter delivered to Mr. Chirico) to indicate that, in light of the
fact that Warnaco was in the middle of its annual strategic planning and had scheduled an offsite meeting in mid-July to discuss Warnacos long-term strategic plan, the Warnaco board of directors would not be in a position to respond to
PVHs proposal at that time, but anticipated that it would be able to do so by the end of July 2012.
On July 6,
2012, Mr. Chirico sent a letter to Ms. McCluskey responding to her June 28, 2012 letter in which he expressed a desire to meet in person the following week to discuss further the timing of Warnacos anticipated response to
PVHs proposal. Accordingly, Ms. McCluskey and Mr. Chirico met on July 11, 2012.
On July 19, 2012,
in response to a follow-up email from Mr. Chirico, Ms. McCluskey sent Mr. Chirico an email indicating that Warnaco management was participating in offsite meetings and was updating Warnacos strategic plan with a view to reaching
a decision as to PVHs proposal. Additionally, Ms. McCluskey confirmed that Warnacos board meeting to consider PVHs proposal was scheduled for July 31, 2012 and that she expected to respond to PVHs proposal shortly
thereafter.
Warnaco executed an engagement letter with J.P. Morgan, dated as of July 30, 2012, memorializing the terms
of J.P. Morgans engagement as Warnacos exclusive financial advisor in connection with a potential transaction with PVH.
On July 31, 2012, the Warnaco board of directors held a meeting at Skaddens offices with members of Warnacos management and representatives of J.P. Morgan and Skadden to further discuss
PVHs June 18, 2012 proposal and the subsequent communications between Ms. McCluskey and Mr. Chirico, as well as certain other strategic alternatives that may be available to Warnaco. At the meeting, members of Warnacos
management presented the updated strategic plan to the Warnaco board of directors. Skadden then provided an update to the Warnaco board of directors regarding the boards fiduciary duties. J.P. Morgan then made a presentation to the Warnaco
board of directors, which included, among other things, a review of recent developments in the market and the relative valuation and performance of Warnaco and PVH, a discussion and analysis of Warnacos standalone plan, including the potential
impact of certain alternative strategic acquisitions, and a preliminary valuation analysis of Warnaco under various scenarios and based on different methodologies, including discounted cash flow, precedent transaction and trading multiple analyses.
J.P. Morgan also reviewed certain preliminary valuation analyses regarding PVH and discussed the potential for Warnacos stockholders to participate in the continued appreciation of PVHs common stock following consummation of the merger,
including due to potential positive market reaction to a transaction. J.P. Morgan also reviewed, on a preliminary basis, the potential transaction implications to PVH of an acquisition, including the positive impact on projected earnings per share.
Following the presentations by Skadden and J.P. Morgan, and after careful review and deliberation, the Warnaco board of directors unanimously determined that PVHs June 18, 2012 proposal was inadequate and directed Ms. McCluskey to
reject the proposal, but also to indicate to PVH that Warnacos board would be prepared to engage in merger discussions if PVH were to raise significantly the price it had proposed.
Accordingly, on August 1, 2012, Ms. McCluskey called Mr. Chirico (and, following the call, confirmed the substance of the
call in a letter delivered to Mr. Chirico) to indicate that the Warnaco board of directors had concluded unanimously, after consultation with its financial advisor and legal counsel, to reject PVHs June 18, 2012 proposal. However,
Ms. McCluskeys letter indicated that the Warnaco board of directors would consider engaging in discussions with PVH subject to a significant price increase and certain other conditions, and that the Warnaco board of directors had
instructed J.P. Morgan to contact PJSC to outline the parameters under which Warnaco would be prepared to discuss a possible transaction.
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On August 2, 2012, Mr. Chirico called Ms. McCluskey in response to her
August 1, 2012 letter. Mr. Chirico indicated, among other things, that, in connection with PVHs consideration of an increased proposal, PVH wished to arrange a series of meetings with Warnaco to discuss the general state of the
Warnaco business and potential transaction synergies. During that conversation, Mr. Chirico also indicated that the PVH board of directors needed guidance from the Warnaco board of directors as to the price at which the Warnaco board of
directors would be willing to consider a transaction with PVH.
On August 7, 2012, representatives of PVH, Warnaco, PJSC
and J.P. Morgan met in-person to provide PVH with an update on Warnacos earnings for the second quarter of fiscal 2012, which had been announced the previous day.
On August 8, 2012, representatives of J.P. Morgan met with representatives of PJSC at the offices of PJSC to discuss certain trends and other preliminary financial information for Warnaco.
On August 9, 2012, representatives of PVH and Warnaco held a conference call to review Warnacos earnings for the
second quarter of fiscal 2012 and, on August 10, 2012, representatives of PVH, PJSC, Warnaco and J.P. Morgan held a meeting at Wachtells offices, to discuss, among other things, certain limited information regarding Warnacos
business as well as potential transaction synergies. Following the August 10, 2012 meeting, representatives of PJSC contacted representatives of J.P. Morgan to indicate that PVH would follow-up with a revised proposal after the next meeting of
the PVH board of directors in the last week of August.
On August 29, 2012, following the meeting of the PVH board of
directors, representatives of PJSC had a call with representatives of J.P. Morgan during which PJSC conveyed a revised proposal by PVH to acquire Warnaco at an increased price of $66.00 per share of Warnaco common stock, consisting of $49.50 in cash
and 0.1767 of a share of PVH common stock.
On August 31, 2012, Mr. Chirico delivered a letter to Ms. McCluskey
confirming PVHs revised proposal to acquire 100% of Warnacos outstanding shares of common stock for a per share consideration of $49.50 in cash and 0.1767 of a share of PVH common stock (representing approximately $66.00 per Warnaco
share, and representing a 51% premium to the closing stock price of Warnaco common stock on June 15, 2012 and a 31% premium to the closing stock price of Warnaco common stock on August 28, 2012). The other material terms of the proposal
remained substantially as outlined in Mr. Chiricos June 18, 2012 letter.
On September 5, 2012, the
Warnaco board of directors met with management and representatives of J.P. Morgan and Skadden to review the revised proposal from PVH. At the meeting, the Warnaco board of directors determined that PVHs revised proposal was inadequate.
On September 6, 2012, representatives of J.P. Morgan and PJSC had a call to discuss PVHs most recent proposal.
During the call, representatives of J.P. Morgan relayed the Warnaco board of directors view as to PVHs revised proposal, and PJSC asked J.P. Morgan to relay a request to the Warnaco board of directors for a specific per share transaction
price at which Warnaco would be prepared to engage in negotiations with PVH. J.P. Morgan and PJSC also discussed commencement of a staged due diligence process, in which Warnaco would grant PVH access to limited confidential information to support
Warnacos view that a higher transaction price was appropriate in advance of more extensive due diligence access.
On
September 7, 2012, Mr. Chirico called Ms. McCluskey and expressed concern regarding the progress of the parties discussions regarding a potential transaction. Mr. Chirico also reiterated the request from PJSC that the
Warnaco board of directors propose to PVH a per share transaction price at which Warnaco would be prepared to engage with PVH. Mr. Chirico noted that he hoped to receive Warnacos response in advance of a scheduled September 10, 2012
PVH board meeting.
On September 9, 2012, the Warnaco board of directors held a telephonic meeting with management and
representatives of J.P. Morgan and Skadden to discuss the communications between the parties financial
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advisors and the September 7, 2012 phone conversation between Ms. McCluskey and Mr. Chirico. Following discussions with its advisors and after careful deliberations, the Warnaco
board of directors determined that it would be willing to support a transaction with PVH at a price of $70.00 per Warnaco share and authorized Ms. McCluskey to communicate that view to Mr. Chirico.
Accordingly, on September 10, 2012, Ms. McCluskey sent a letter to Mr. Chirico rejecting PVHs August 31, 2012
proposal, but indicating that the Warnaco board of directors would be willing to support a transaction with PVH at a price of $70.00 per share of Warnaco common stock. The letter also indicated that, at such price, Warnaco would allow PVH to proceed
with confirmatory due diligence and would begin negotiation of a customary merger agreement. The letter further indicated that Warnaco expected to conduct due diligence on PVH, in light of the stock portion of the consideration.
Following the receipt of the September 10, 2012 letter, Mr. Chirico called Ms. McCluskey to indicate that PVH was not
prepared to propose a $70.00 per share price and, moreover, that PVH would not revise its previous $66.00 per share proposal without conducting additional due diligence. Representatives of PJSC also contacted representatives of J.P. Morgan to relay
the same message. Warnaco thereafter agreed that, upon execution of a confidentiality agreement, it would provide PVH with a limited set of diligence information for the purpose of PVH determining whether the price of its proposal could be
increased. It was further agreed that management of Warnaco and PVH would meet in person on September 11 and 12, 2012 at Wachtells offices to discuss certain matters concerning the proposed transaction.
On September 10, 2012, representatives of Skadden sent a confidentiality agreement to Wachtell. On September 11, 2012,
following negotiations between representatives of Wachtell and Skadden regarding certain provisions of the confidentiality agreement, Warnaco and PVH executed the confidentiality agreement. On September 11 and 12, 2012, certain members of
Warnacos and PVHs management, as well as their respective advisors, met in person to discuss, among other things, potential transaction synergies and expected one-time costs in connection with a transaction, as well as certain
information regarding Warnacos financial performance. At these meetings, management of Warnaco and PVH reviewed certain limited projections for Warnaco.
On September 14, 2012, representatives of PJSC conveyed to representatives of J.P. Morgan a revised proposal by PVH of $67.50 per share of Warnaco common stock, with 75% of the purchase price in the
form of cash and 25% of the purchase price in the form of PVH common stock.
On September 16, 2012, the Warnaco board of
directors held a telephonic meeting with management and representatives of J.P. Morgan and Skadden to review PVHs revised September 14, 2012 proposal. At the meeting, the Warnaco board of directors determined that PVHs increased
purchase price of $67.50 per share remained inadequate and instructed Ms. McCluskey to indicate to PVH that Warnaco would be willing to proceed on the basis of a proposal valued at $69.00 per share of Warnaco common stock with up to 25% of the
purchase price payable in the form of PVH common stock.
On September 19, 2012, during a phone conversation,
Ms. McCluskey conveyed to Mr. Chirico that the Warnaco board of directors was willing to support a transaction with PVH at price of $69.00 per share of Warnaco common stock with up to 25% of the purchase price payable in the form of PVH
common stock, subject to the parties completion of reciprocal due diligence and the negotiation of a mutually acceptable merger agreement.
On September 21, 2012, Mr. Chirico called Ms. McCluskey and conveyed a proposal to acquire Warnaco for $69.00 per share of Warnaco common stock, with at least 75% of the purchase price to
be paid in cash and the stock component of the merger consideration to be valued using the 20-day average price for the period immediately preceding the execution of the merger agreement. Mr. Chirico further indicated that, in connection with
this revised proposal, PVH reserved the right, prior to execution of a definitive merger agreement, to adjust the cash / stock mix to include a higher percentage of cash. Thereafter, the parties tentatively agreed to proceed
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with due diligence and negotiation of a mutually acceptable definitive merger agreement on the basis outlined by Mr. Chirico.
On September 21, 2012, PJSC distributed business and legal due diligence request lists to J.P. Morgan. Over the next several weeks,
management of PVH, together with its advisors, conducted a due diligence investigation of Warnaco, including by accessing an online data room that was established by representatives of Warnaco and through numerous meetings and conference calls with
representatives of Warnaco management and its advisors.
On September 28, 2012, Wachtell delivered to Skadden an initial
draft merger agreement. During the next several weeks, representatives of Skadden and Wachtell, together with members of senior management of Warnaco and PVH, negotiated the terms of the merger agreement, exchanging numerous drafts of the merger
agreement and participating in telephone conference calls and in-person meetings to resolve open issues. During this time, representatives of Warnaco, PVH and their respective advisors also continued their due diligence investigations.
On October 12, 2012, representatives of PVHs financing sources began to conduct due diligence on Warnaco and PVH.
On October 18, 2012, PVH confirmed that based on its due diligence investigation, its board of directors continued to support a
transaction on the terms previously outlined by Mr. Chirico on September 21, 2012.
On October 29, 2012, the
Warnaco board of directors met in person and by telephone with management and representatives of Skadden and J.P. Morgan. At the meeting, representatives of Skadden reviewed with the Warnaco board of directors the boards fiduciary duties. J.P.
Morgan then reviewed and discussed with the Warnaco board of directors its analysis of the transaction, and delivered its oral opinion to Warnacos board of directors, which was subsequently confirmed by delivery of a written opinion, dated
October 29, 2012 (which opinion is attached to this proxy statement / prospectus as
Annex B
), to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered and
qualifications and limitations on the review undertaken by J.P. Morgan in preparing its opinion, the merger consideration to be received by holders of Warnaco common stock was fair to such holders from a financial point of view. In addition,
representatives of Skadden presented a summary of certain material terms of the merger agreement. Following additional discussion and deliberation, the Warnaco board of directors unanimously (1) approved the execution, delivery and performance
of the merger agreement, (2) determined that entering into the merger agreement was in the best interests of Warnaco and its stockholders, (3) declared the merger agreement advisable and (4) recommended that stockholders adopt the
merger agreement.
Later that evening, the PVH board of directors also met telephonically, in the culmination of a series of
meetings concerning the transaction, with members of PVH management and representatives of PJSC and Wachtell participating. The board also received a presentation from one of the banks leading its proposed financing for the transaction. At that
meeting, the PVH board of directors was advised of its fiduciary duties and considered numerous facets of the transaction. At the conclusion of that meeting, the PVH board of directors voted unanimously to approve all matters presented to it,
including (1) a determination that entering into the merger agreement was advisable to, and in the best interests of, PVH and its stockholders, and (2) the approval of the execution, delivery and performance of the merger agreement and the
financing commitment letter.
Later that night, Warnaco and PVH executed the merger agreement. U.S. financial markets were
closed on October 29 and 30, 2012 due to Hurricane Sandy. On October 31, 2012, Warnaco and PVH issued a joint press release announcing the transaction.
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Warnacos Reasons for the Merger and Recommendation of the Warnaco Board
of Directors
In reaching its conclusion that the merger agreement is advisable and in the best interests of Warnaco and
its stockholders, the Warnaco board of directors consulted with management of Warnaco, as well as Warnacos legal and financial advisors, and considered the following factors, each of which the Warnaco board of directors viewed as being
generally positive or favorable and supporting its conclusion:
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Merger Consideration
. The Warnaco board of directors considered a number of factors related to the merger consideration. In particular, the
Warnaco board of directors considered the following:
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Implied Value; Historical Trading Prices
. The Warnaco board of directors concluded that the implied value of the merger consideration of $69.00
per share (with the stock portion of the merger consideration valued based on the average closing price of PVH common stock for the 20-trading day period ending October 26, 2012), represented an attractive valuation for Warnaco. This implied
value of the merger consideration represented a premium of approximately 36% to the closing price per share of Warnaco common stock of $50.88 on October 26, 2012, the last trading day prior to the Warnaco board of directors approval of
the merger, and a premium of approximately 33% to the average closing price of Warnaco common stock of $51.83 for the one-month period ending October 26, 2012.
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Significant Portion of Merger Consideration in Cash
. The Warnaco board of directors considered that most of the merger consideration would be
paid in cash, giving Warnaco stockholders an opportunity to realize certain value for a significant portion of their investment immediately upon the completion of the merger. Moreover, those Warnaco stockholders (other than any such stockholder
deemed an affiliate of PVH following consummation of the merger) who desire to receive all cash for their shares of Warnaco common stock will be permitted to sell any shares of PVH common stock received as merger consideration without restriction,
at the then-current market price of PVH common stock.
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Participation in Potential Upside Through Stock Portion of Merger Consideration
. The Warnaco board of directors considered that a portion of the
merger consideration will be paid in shares of PVH common stock and, as a result, Warnaco stockholders would have the opportunity to participate in any future earnings or growth of the combined company and future appreciation in the value of PVH
common stock following the merger should they decide to retain the PVH common stock payable in the merger. On that basis, the Warnaco board of directors considered information relating to PVH, PVHs strategic rationale for the merger and the
prospects of the combined company following the merger. In particular, the Warnaco board of directors noted that the merger would allow the combined company to have direct global control of the
Calvin Klein
brand and present an opportunity
for accelerated growth. In addition, the Warnaco board of directors also noted that the combined company would have an enhanced competitive position, increased diversity and depth in its product lines, the potential to realize significant cost
savings and revenue synergies, and an enhanced geographic footprint. The Warnaco board of directors also considered the scope of the due diligence investigation of PVH conducted by Warnacos senior management and outside advisors and evaluated
the results thereof and information available to it related to PVH.
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Extensive Negotiations with PVH
. The Warnaco board of directors considered the benefits that Warnaco was able to obtain as a result of extensive
negotiations with, and provision of due diligence materials and information to, PVH, including a significant increase in PVHs proposal from the time of its initial proposal on June 18, 2012.
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Financial Condition and Stand-Alone Prospects of Warnaco
. The Warnaco board of directors considered Warnacos business, financial condition
and the results of operations, as well as Warnacos long-range strategic plan and its prospects as a stand-alone company. In particular, the Warnaco board of directors considered the following:
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Market and Execution Risks
. The Warnaco board of directors considered the risks associated with continuing as an independent company. In
particular, the Warnaco board of directors considered
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potential market and execution risks associated with Warnacos long-range strategic plan and the fact that Warnacos operating performance could be adversely affected by macroeconomic
factors beyond its control, especially in Europe and Asia.
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Uncertainty of Forecasts
. The Warnaco board of directors was aware of the inherent uncertainty of attaining managements internal financial
projections, including those set forth in the section entitled Warnaco Unaudited Prospective Financial Information beginning on page 52, and that as a result Warnacos actual financial results in future periods could differ
materially from managements forecasted results, including those set forth in the long-range strategic plan.
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Consideration of Acquisition Opportunities
. From time to time prior to the Warnaco board of directors consideration of PVHs merger
proposal, Warnaco management had analyzed potential strategic acquisition opportunities. However, in each such instance, Warnaco managements analysis was in its early stages, without the benefit of having conducted a customary due diligence
review, and, to the extent there had been discussions with a proposed counterparty, they were preliminary and had not progressed to the point where there was an agreement as to price or any other material term. Accordingly, the Warnaco board of
directors did not view any such potential acquisition opportunities as viable alternatives to the merger. Moreover, the Warnaco board of directors believed that those acquisition opportunities previously identified, as well as any that might be
identified in the future, would not necessarily create the immediate enhancement in value for Warnaco stockholders presented by the merger, and that, in all events, such acquisitions involved substantial risks, including execution risk and risks
relating to integration of any acquired businesses.
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Opinion of Financial Advisor
. The Warnaco board of directors considered the oral opinion of J.P. Morgan (which was subsequently confirmed
by delivery of J.P. Morgans written opinion) that, as of that date, and based on and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken by J.P. Morgan as set
forth therein, the merger consideration was fair, from a financial point of view, to the holders of the shares of Warnaco common stock, as more fully described below under the heading The MergerOpinion of J.P. Morgan beginning on
page 39. The full text of the J.P. Morgan opinion, which describes the assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken by J.P. Morgan, is attached as
Annex B
to this proxy
statement/prospectus.
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Terms of the Merger Agreement
. The Warnaco board of directors reviewed and considered the terms of the merger agreement, including the
parties respective representations, warranties and covenants, the conditions to their respective obligations to complete the merger and their ability to terminate the merger agreement. See The Merger Agreement beginning on page 82
for a detailed discussion of the terms and conditions of the merger agreement. In particular, the Warnaco board of directors considered the following:
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Conditions to Completion of the Merger; Likelihood of Closing
. The Warnaco board of directors considered the reasonable likelihood of the
completion of the merger, including the obligations of the parties to use reasonable best efforts to obtain required approvals.
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Absence of Financing Condition
. The Warnaco board of directors considered that PVHs obligations pursuant to the merger agreement are not
subject to any financing condition or similar contingency based on PVHs ability to obtain financing, that, if PVH were unable to obtain financing, Warnacos remedies against PVH would not be limited, that Warnaco would be entitled to
specifically enforce the merger agreement, including the obligation of PVH to consummate the merger, regardless of the availability or terms of PVHs financing, and that PVH made representations and warranties in the merger agreement regarding
its ability to have funds available to it to complete the transactions contemplated by the merger agreement. The Warnaco board of directors also considered the terms of the financing commitments obtained by PVH in connection with the execution of
the merger agreement. For additional information on PVHs financing, see Description of the Debt Financing beginning on page 46.
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Unsolicited Acquisition Proposals and Ability to Change Recommendation
. The Warnaco board of directors considered the provisions in the merger
agreement that provide for the ability of the Warnaco board of directors, subject to the terms and conditions of the merger agreement, to enter into negotiations with or provide information to a person that has made an unsolicited acquisition
proposal, to terminate the merger agreement to accept certain unsolicited acquisition proposals that are deemed superior to the PVH merger and/or to withdraw or modify, in certain circumstances, the Warnaco board of directors recommendation to
Warnaco stockholders that they adopt the merger agreement. See The Merger AgreementNo Solicitation of Alternative Proposals beginning on page 84 and The Merger AgreementChange in Board Recommendation beginning on
page 87.
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Termination Fee
. The Warnaco board of directors considered that, in its view, the $100 million termination fee that could become payable
pursuant to the merger agreement was comparable to termination fees in transactions of a similar size, was reasonable, and would not likely deter alternative acquisition proposals. See The Merger AgreementEffects of Termination; Expenses
and Termination Fees on page 89.
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Appraisal Rights
. The Warnaco board of directors considered the availability of appraisal rights in connection with the merger for holders of
Warnaco common stock who properly exercise their rights under the DGCL. See Appraisal Rights beginning on page 117.
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The Warnaco board of directors also identified and considered a number of countervailing factors and potential risks to Warnaco and its stockholders relating to the merger and the merger agreement, each
of which the Warnaco board of directors viewed as being generally negative, including the following:
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Lack of Direct Ongoing Participation in Warnacos Potential Upside
. The Warnaco board of directors considered that Warnaco stockholders
would not have the opportunity to continue participating in Warnacos potentially significant upside as a stand-alone company, and would only participate in Warnacos upside indirectly as a part of the combined company if they retained the
stock portion of the merger consideration following the effective time of the merger.
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Fixed Stock Portion of Merger Consideration; Possibility of Adverse Effects on PVHs Business
. The Warnaco board of directors considered
that, because the stock portion of the merger consideration provides for a fixed exchange ratio of shares of PVH common stock to Warnaco common stock, the implied value of the merger consideration would be adversely affected by a decrease in the
trading price of PVH common stock during the pendency of the merger. The Warnaco board of directors considered the fact that the merger agreement does not provide Warnaco stockholders with price protection (such as a collar) with respect
to the trading price of PVH common stock during the pendency of the merger. The Warnaco board of directors determined that this structure was appropriate and that this risk was acceptable given that a substantial portion of the merger consideration
will be paid in a fixed cash amount, reducing the impact of any decline in the trading price of PVH common stock on the value of the merger consideration, and that the lack of a collar provision would also permit Warnaco stockholders to
benefit fully from any increase in the trading price of PVH common stock during the pendency of the merger.
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Potential Risk of Failure to Complete the Merger
. The Warnaco board of directors considered the possibility that the merger may not be completed
and the potential adverse consequences to Warnaco if the merger is not completed, including the potential impact on Warnacos stock price, the potential loss of customers and employees and potential erosion of third-party confidence in Warnaco.
The Warnaco board of directors considered that such risks were mitigated by certain terms in the merger agreement, including: the absence of significant required third-party approvals (other than antitrust approvals and approval of the Warnaco
stockholders); subject to certain limited exceptions, PVHs obligations to take actions to obtain all required antitrust approvals; the absence of any financing condition to PVHs obligations to complete the merger; and Warnacos
ability to specifically enforce the merger agreement.
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37
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PVH Business Risks
. The Warnaco board of directors considered that Warnaco stockholders would be subject to the execution risks associated with
the combined companys business operations if they retained the stock portion of the merger consideration following the effective time of the merger. These execution risks were different in part from the execution risks related to Warnaco as a
stand-alone business. In this regard, the Warnaco board of directors considered that there were risks associated with execution risks were different in part from the execution risks related to Warnaco as a stand-alone business. In this regard, the
Warnaco board of directors considered that there were risks associated with successful implementation of the combined companys long term business plan and strategy, the combined company realizing the anticipated benefits of the merger on the
timeline expected or at all and integration of Warnacos businesses with PVHs business operations in an efficient manner. The Warnaco board of directors considered that the failure of any of these activities to be completed successfully
may decrease the actual benefits of the merger and that, accordingly, Warnaco stockholders who retain the shares of PVH common stock received as a portion of the merger consideration would not fully realize these benefits.
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Lack of Alternative Transactions
. The Warnaco board of directors considered that it was not aware of any potential alternative transactions that
would be reasonably likely to deliver value to Warnaco stockholders in excess of the merger consideration. The Warnaco board of directors noted that PVH, in its capacity as Warnacos largest licensor under license agreements with Warnaco, would
have certain rights to consent to an acquisition of Warnaco by a third party, thereby making it less likely that a third party would make an acquisition proposal for Warnaco. The Warnaco board of directors concluded that the merger consideration was
the highest value that was reasonably available to Warnaco at the present time and that a more favorable opportunity to sell Warnaco was unlikely to arise in the future.
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Termination Fee; Alternative Acquisition Proposals
. The Warnaco board of directors considered the risk that, although Warnaco has the right
under certain limited circumstances to enter into discussions or negotiations with a person that has made an unsolicited acquisition proposal, or to withdraw or modify the recommendation of the Warnaco board of directors to Warnaco stockholders that
they adopt the merger agreement or to terminate the merger agreement, in each case, subject to certain restrictions imposed by the merger agreement, provisions of the merger agreement may have the effect of discouraging the making of acquisition
proposals and making it less likely that the transactions related to such proposals would be negotiated or pursued, even if potentially more favorable to Warnaco stockholders than the merger. Among other things, the Warnaco board of directors
considered the provisions of the merger agreement that, under specified circumstances, including those involving an alternative acquisition proposal or a change of the Warnaco board of directors recommendation, could require Warnaco to pay PVH
a termination fee of $100 million (although, as noted above, the Warnaco board of directors believed that the size of such fee was reasonable and would not likely deter alternative acquisition proposals). See The Merger AgreementEffects
of Termination; Expenses and Termination Fees beginning on page 89 for further information regarding these provisions of the merger agreement and the termination fee.
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Interim Operating Covenants
. The Warnaco board of directors considered the limitations imposed by the merger agreement on the conduct of
Warnacos business during the pendency of the merger and the fact that these covenants may limit Warnacos ability to pursue business opportunities that may arise or take other actions it would otherwise take with respect to the operations
of Warnaco during the pendency of the merger. See The Merger AgreementConduct of Business beginning on page 90.
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Merger Consideration Taxable
. The merger is expected to be a taxable transaction for U.S. federal income tax purposes, and the receipt of PVH
common stock and cash in exchange for Warnaco common stock in the merger will therefore generally be taxable to Warnaco common stockholders for U.S. federal income tax purposes. See The MergerMaterial U.S. Federal Income Tax Consequences
of the Merger beginning on page 49.
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Diversion of Management
. The Warnaco board of directors considered the possible diversion of managements time and attention from
Warnacos ongoing business due to the substantial time and effort necessary to complete the merger and plan for the integration of the operations of Warnaco and PVH.
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Other Risks
. The Warnaco board of directors considered the types and nature of the risks described under the section entitled Risk
Factors beginning on page 17.
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The Warnaco board of directors concluded that the potentially negative
factors associated with the merger were outweighed by the potential benefits that it expected Warnaco stockholders would receive as a result of the merger, including the belief of the Warnaco board of directors that the merger would maximize the
immediate value of the Warnaco common stock and eliminate the risks and uncertainties affecting the future prospects of Warnaco as a stand-alone company. The Warnaco board of directors was also aware of, and considered, the potential additional or
different interests of Warnacos directors and executive officers in the merger, as described in the section entitled The MergerInterests of Warnacos Directors and Executive Officers in the Merger beginning on page 54.
The preceding discussion of the information and factors considered by the Warnaco board of directors is not intended to be
exhaustive but includes the material factors considered by the Warnaco board of directors. In view of the complexity and wide variety of factors considered by the Warnaco board of directors in connection with its evaluation of the merger, the
Warnaco board of directors did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the different factors that it considered in reaching its decision. In addition, in considering the factors
described above, individual members of the Warnaco board of directors may have given different weight to different factors. The Warnaco board of directors considered this information as a whole and overall considered the information and factors to
be favorable to, and in support of, its determinations and recommendations.
This explanation of Warnacos reasons for
the merger and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the section entitled Cautionary Statement Regarding Forward-Looking Statements beginning on page 22.
The Warnaco board of directors has determined that the terms of the merger are advisable and in the best
interest of Warnaco and its stockholders, has approved the terms of the merger agreement and the merger, and unanimously recommends that the stockholders of Warnaco vote FOR the proposal to adopt the merger agreement
.
Opinion of J.P. Morgan
Pursuant to an engagement letter dated as of July 30, 2012, Warnaco retained J.P. Morgan as its financial advisor in connection with the merger.
At the meeting of the Warnaco board of directors on October 29, 2012, J.P. Morgan rendered its oral opinion, subsequently confirmed
in writing on the same day, to the Warnaco board of directors that, as of such date and based upon and subject to the factors, procedures, qualifications, limitations and assumptions set forth in its opinion, the consideration to be paid by PVH to
holders of shares of Warnaco common stock pursuant to the merger agreement was fair, from a financial point of view, to such stockholders. No limitations were imposed by the Warnaco board of directors upon J.P. Morgan with respect to the
investigations made or procedures followed by it in rendering its opinion.
The full text of the written opinion of J.P.
Morgan, dated October 29, 2012, which sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken in rendering its opinion, is attached as
Annex
B
to this proxy
39
statement/prospectus and is incorporated herein by reference. Warnacos stockholders are urged to read the opinion in its entirety. J.P. Morgan provided its opinion to the Warnaco board of
directors (in its capacity as such) in connection with, and for the purposes of, its evaluation of the transactions contemplated by the merger agreement. J.P. Morgans written opinion is addressed to the Warnaco board of directors, is directed
only to the fairness of the consideration to be paid to the holders of shares of Warnaco common stock pursuant to the merger agreement, and does not address any other matter. The issuance of J.P. Morgans opinion was approved by a fairness
opinion committee of J.P. Morgan. J.P. Morgans opinion does not constitute a recommendation to any holder of shares of Warnaco common stock as to how such stockholder should vote with respect to the transactions contemplated by the merger
agreement or any other matter at the special meeting. The merger consideration to be paid to the holders of shares of Warnaco common stock was determined in negotiations between PVH and Warnaco, and the decision to approve and recommend the
transactions contemplated by the merger agreement was made independently by the Warnaco board of directors. J.P. Morgans opinion and financial analyses were among the many factors considered by the Warnaco board of directors in its evaluation
of the transactions contemplated by the merger agreement and should not be viewed as determinative of the views of the Warnaco board of directors or management with respect to the merger consideration or the transactions contemplated by the merger
agreement. The summary of J.P. Morgans opinion set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion.
In arriving at its opinion, J.P. Morgan, among other things:
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reviewed the merger agreement;
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reviewed certain publicly available business and financial information concerning Warnaco and PVH and the industries in which they operate;
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compared the proposed financial terms of the merger with the publicly available financial terms of certain transactions involving companies J.P. Morgan
deemed relevant and the consideration paid for such companies;
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compared the financial and operating performance of Warnaco and PVH with publicly available information concerning certain other companies J.P. Morgan
deemed relevant and reviewed the current and historical market prices of Warnaco common stock, PVH common stock and certain publicly traded securities of such other companies;
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reviewed certain internal financial analyses and forecasts prepared by or at the direction of the management of Warnaco and PVH relating to their
respective businesses, as well as the estimated amount and timing of cost savings and related expenses and transaction synergies expected to result from the merger; and
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performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of
its opinion.
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J.P. Morgan also held discussions with certain members of the management of Warnaco and PVH
with respect to certain aspects of the merger, the past and current business operations of Warnaco and PVH, the financial condition and future prospects and operations of Warnaco and PVH, the effects of the merger on the financial condition and
future prospects of Warnaco and PVH, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.
J.P. Morgan relied upon and assumed, without assuming responsibility or liability for independent verification, the accuracy and
completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by Warnaco or PVH or otherwise reviewed by or for J.P. Morgan. J.P. Morgan did not conduct and was not provided with any valuation or
appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of Warnaco or PVH under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to it
or derived therefrom (including the transaction synergies referred to above), J.P. Morgan assumed that they were reasonably prepared based on
40
assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of Warnaco and PVH to which such
analyses or forecasts relate. J.P. Morgan expressed no view as to such analyses or forecasts (including the transaction synergies referred to above) or the assumptions on which they were based. J.P. Morgan also assumed that the representations and
warranties made by Warnaco, PVH and Wand Acquisition Corp. in the merger agreement and the related agreements are true and correct in all respects material to its analysis. J.P. Morgan is not a legal, regulatory or tax expert and relied on the
assessments made by Warnaco and its advisors with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without
any adverse effect on Warnaco or PVH or on the contemplated benefits of the merger.
J.P. Morgans opinion is based on
economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion. Subsequent developments may affect J.P. Morgans opinion, and J.P. Morgan does not have any obligation to
update, revise, or reaffirm such opinion. J.P. Morgans opinion is limited to the fairness, from a financial point of view, of the consideration to be paid to the holders of shares of Warnaco common stock pursuant to the merger agreement, and
J.P. Morgan has expressed no opinion as to the fairness of the merger to, or any consideration paid in connection therewith to, the holders of any other class of securities, creditors or other constituencies of Warnaco or as to the underlying
decision by Warnaco to engage in the merger. J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the merger, or any class of such persons relative to the
merger consideration to be paid to the holders of shares of Warnaco common stock pursuant to the merger agreement or with respect to the fairness of any such compensation. J.P. Morgan expressed no opinion as to the price at which Warnaco common
stock or PVH common stock will trade at any future time.
J.P. Morgan was not authorized to and did not solicit any
expressions of interest from any other parties with respect to the sale of all or any part of Warnaco or any other alternative transaction.
In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methods in reaching its opinion. The following is a summary of the material financial analyses
utilized by J.P. Morgan in connection with providing its opinion to the Warnaco board of directors at its meeting on October 29, 2012. The financial analyses summarized below include information presented in tabular format. In order to fully
understand J.P. Morgans financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data described below without
considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of J.P. Morgans financial analyses.
Public Trading Analysis
. Using publicly available information, including published equity research analysts estimates
of earnings per share, or EPS, and earnings before interest, taxes, depreciation and amortization, or EBITDA, for calendar year 2012 (which we refer to in this section as CY12) and calendar year 2013 (which we refer to in this section as CY13), J.P.
Morgan compared selected financial and operating data of Warnaco with similar data for fourteen publicly traded companies involving businesses that may be considered similar to Warnacos business. Due to the operating and financial variability
across this group, a smaller select group of companies was chosen for purposes of J.P. Morgans public trading analysis. These selected companies were Guess?, Inc.*, The Jones Group Inc.*, Oxford Industries Inc. and Perry Ellis International
Inc.*. Although none of these selected companies are identical or directly comparable to Warnaco, they were selected for the purposes of the public trading analyses because of the similarities that each selected company shares with Warnaco,
including that each selected company (i) has a market capitalization comparable to Warnaco (
i.e
., market capitalization of less than $3 billion), (ii) has a similar operating profile to Warnaco (
i.e
., an expected EBITDA margin of less
than 15%), (iii) has a similar customer concentration to Warnaco and/or (iv) holds licensing rights to brands owned by third parties. Additionally, J.P. Morgan identified the companies indicated with an asterisk (*) as primary selected
companies for the purposes of the analyses.
41
J.P. Morgan calculated the multiple of (1) closing stock price for each of the selected
companies common equity divided by EPS, which is referred to as the Price/Earnings or P/E multiple, and (2) firm value (determined as market value, plus total debt, preferred stock, and minority interest, less cash and cash equivalents),
which we refer to in this section as FV, for each of the selected companies divided by EBITDA, which is referred to as the FV/EBITDA multiple. J.P. Morgan also calculated the same multiples for Warnaco.
The low and high P/E multiples of the selected companies for CY12 estimated EPS ranged from 10.7x to 18.8x (with multiples of primary
selected companies ranging from 10.7x to 11.2x) and CY13 estimated EPS ranged from 9.6x to 15.5x (with multiples of primary selected companies ranging from 9.6x to 9.8x). The low and high FV/EBITDA multiples of the selected companies for CY12
estimated EBITDA ranged from 5.0x to 9.0x (with multiples of primary selected companies ranging from 5.0x to 6.4x) and CY13 estimated EBITDA ranged from 4.6x to 8.1x (with multiples of primary selected companies ranging from 4.6x to 5.7x).
Based on the results of this analysis, J.P. Morgan selected (1) a P/E multiple reference range of (a) 11.0x to
15.0x for CY12 and (b) 10.0x to 13.0x for CY13 and applied such multiple reference ranges to EPS estimates of Warnaco for CY12 and CY13 provided by Warnacos management and (2) a FV/EBITDA multiple reference range of (a) 5.5x to
6.5x for CY12 and (b) 5.0x to 6.0x for CY13 and applied such multiple reference ranges to EBITDA estimates of Warnaco for CY12 and CY13 provided by Warnacos management and, in each case, obtained the following ranges of implied per share
equity values for Warnaco, rounded to the nearest $0.25:
Public Trading Analysis Implied Per
Share Equity Values for Warnaco
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Low
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High
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CY12E P/E
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$
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44.00
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$
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60.25
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CY13E P/E
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$
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45.00
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$
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58.50
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CY12E FV/EBITDA
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$
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45.00
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$
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52.75
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CY13E FV/EBITDA
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$
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45.25
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$
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54.00
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The ranges of implied per share equity values for Warnaco were compared to (1) the closing price of
Warnaco common stock of $50.88 on October 26, 2012, the last trading day prior to the announcement of the merger, and (2) the merger consideration of $69.00 per share (valuing the stock portion of the merger consideration based on the
20-day average closing price of PVH common stock for the period immediately preceding the execution of the merger agreement).
Selected Transactions Analysis
. Using publicly available information, J.P. Morgan reviewed selected transactions
involving acquired businesses that, for purposes of J.P. Morgans analyses, may be considered similar to Warnacos business. For the selected transactions, J.P. Morgan calculated FV as a multiple of the target companys EBITDA for the
twelve months prior to the announcement date of the transaction, or LTM EBITDA, which is referred to as the FV/LTM EBITDA multiple. J.P. Morgan selected the following transactions for its analysis:
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Selected Transactions
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Announcement Date
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Ascena / Charming Shoppes
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May 2, 2012
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Wolverine World Wide / Collective Brands
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May 1, 2012
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VF Corp. / Timberland*
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June 13, 2011
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Jones Apparel Group / Kurt Geiger
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June 2, 2011
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PPR / Volcom
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May 2, 2011
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TPG & LGP / J. Crew*
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November 23, 2010
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Bain Capital / Gymboree
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October 11, 2010
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PVH / Tommy Hilfiger*
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March 15, 2010
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Sun Capital Partners / Kellwood Co.
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January 15, 2008
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Apax / Tommy Hilfiger
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December 23, 2005
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42
Although none of the selected transactions are identical or directly comparable to the
merger, J.P. Morgan identified the transactions indicated with an * as primary selected transactions for the purposes of the analyses as these transactions more closely resembled the merger given a target company with a higher branded
lifestyle component and similar transaction size. J.P. Morgans analysis resulted in a median FV/LTM EBITDA multiple for the selected transactions of 8.5x and a range of 8.3x to 12.9x for the primary selected transactions.
Based on the results of this analysis, J.P. Morgan selected a FV/LTM EBITDA multiple reference range of 8.0x to 13.0x, and applied such
multiple reference range to Warnacos LTM EBITDA as of September 29, 2012, as provided to J.P. Morgan by Warnacos management. This analysis resulted in the following range of implied per share equity value for Warnaco, rounded to the
nearest $0.25:
Selected Transactions Analysis Implied Per Share Equity Values for Warnaco
J.P. Morgan also applied the median FV/LTM EBITDA multiple of the selected transactions and the FV/LTM
EBITDA multiple for each of the primary selected transactions to Warnacos LTM EBITDA as of September 29, 2012, as provided to J.P. Morgan by Warnacos management. This analysis resulted in the following implied per share equity
values for Warnaco, rounded to the nearest $0.25:
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Primary Selected
Transactions
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Implied Per Share Equity
Values for Warnaco
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VF Corp. / Timberland
|
|
$
|
93.25
|
|
PVH / Tommy Hilfiger
|
|
$
|
60.25
|
|
TPG & LGP / J. Crew
|
|
$
|
62.50
|
|
Overall median
|
|
$
|
61.75
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|
The ranges of implied equity values for Warnaco were compared to (1) the closing price of Warnaco
common stock of $50.88 on October 26, 2012, the last trading day prior to the announcement of the merger, and (2) the merger consideration of $69.00 per share (valuing the stock portion of the merger consideration based on the 20-day
average closing price of PVH common stock for the period immediately preceding the execution of the merger agreement).
Discounted Cash Flow Analysis
. J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining
the fully diluted implied equity value per share for Warnaco. A discounted cash flow analysis is a method of evaluating an asset using estimates of the future unlevered after-tax free cash flows generated by this asset and taking into consideration
the time value of money with respect to those future cash flows by calculating their present value. The unlevered after-tax free cash flows refers to a calculation of the future cash flows of an asset without including in
such calculation any debt servicing costs. Present value refers to the current value of one or more future cash payments from the asset, which is referred to as that assets cash flows, and is obtained by discounting those cash
flows back to the present. Terminal value refers to the capitalized value of all cash flows from an asset for periods beyond the final forecast period.
In performing this analysis, J.P. Morgan calculated the present value of the unlevered after-tax free cash flows that Warnaco is expected to generate during fiscal years 2013 through 2022 based upon
(1) the Warnaco forecasts (see The MergerWarnaco Unaudited Prospective Financial Information beginning on page 52), and (2) extended forecasts (prepared by or at the direction of Warnacos management solely for
purposes of J.P. Morgans valuation analysis) for fiscal years 2018 through 2022, applying (A) gradually declining revenue growth rates from the 2017 revenue growth rate and (B) an EBITDA margin for each such fiscal year equal to the
2017 EBITDA margin. J.P. Morgan also calculated a range of terminal values for Warnaco at the end of the ten-year period ending 2022 by applying a perpetual growth rate ranging from 2.0% to 3.0% to the unlevered
43
after-tax free cash flows of Warnaco during the final year of the ten-year period. The unlevered after-tax free cash flows and the range of terminal values were then discounted to present values
using a range of discount rates from 11.5% to 12.5%, which were chosen by J.P. Morgan based upon an analysis of the estimated weighted average cost of capital of Warnaco, which included, among other things, an analysis of the selected companies
under the Public Trading Analysis described above as well as certain other publicly traded companies involving businesses that may be considered to have similar risk profiles to Warnacos business. The discounted cash flow analysis
resulted in the following range of implied per share equity values for Warnaco on a standalone basis (
i.e.
, without transaction synergies), rounded to the nearest $0.25:
DCF Implied Per Share Equity Values for Warnaco
The range of implied per share equity value for Warnaco was compared to (1) the closing price of
Warnaco common stock of $50.88 on October 26, 2012, the last trading day prior to the announcement of the merger, and (2) the merger consideration of $69.00 per share (valuing the stock portion of the merger consideration based on the
20-day average closing price of PVH common stock for the period immediately preceding the execution of the merger agreement).
In addition, for reference purposes only and not as a component of its fairness analysis, J.P. Morgan also reviewed with the Warnaco
board of directors a discounted cash flow analysis of Warnaco based on projected cash flows of 12 public analysts for Warnaco, and noted that such discounted cash flow analysis (when applying the terminal value perpetual growth rate range of 2.0% to
3.0% and the discount rate range of 11.5% to 12.5% utilized in the discounted cash flow analysis based upon financial projections prepared by Warnacos management described above) resulted in the following range of implied per share equity
values for Warnaco on a standalone basis (
i.e.
, without transaction synergies), rounded to the nearest $0.25:
Street
Case DCF Implied Per Share Equity Values for Warnaco
The range of implied per share equity value for Warnaco was compared to (1) the closing price of
Warnaco common stock of $50.88 on October 26, 2012, the last trading day prior to the announcement of the merger and (2) the merger consideration of $69.00 per share (valuing the stock portion of the merger consideration based on the
20-day average closing price of PVH common stock for the period immediately preceding the execution of the merger agreement).
Historical Trading Range
. For reference purposes only and not as a component of its fairness analysis, J.P. Morgan
presented to the Warnaco board of directors the 52-week trading range of Warnaco common stock, which was $39.62 per share to $60.02 per share, and compared that to (1) the closing price of Warnaco common stock of $50.88 per share on
October 26, 2012, the last trading day prior to the announcement of the merger, and (2) the merger consideration of $69.00 per share (valuing the stock portion of the merger consideration based on the 20-day average closing price of PVH
common stock for the period immediately preceding the execution of the merger agreement).
Analyst Price
Targets
. For reference purposes only and not as a component of its fairness analysis, J.P. Morgan also reviewed with the Warnaco board of directors certain 12-month price targets of 10 public analysts for Warnaco and noted that the
range of such price targets was $44.00 to $60.00 with a median of
44
$52.50, and compared that to (1) the closing price of Warnaco common stock of $50.88 on October 26, 2012, the last trading day prior to the announcement of the merger, and (2) the
merger consideration of $69.00 per share (valuing the stock portion of the merger consideration based on the 20-day average closing price of PVH common stock for the period immediately preceding the execution of the merger agreement).
The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data
presented by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered
as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. In arriving at its
opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed
to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion. Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors
or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested
by those analyses. Moreover, J.P. Morgans analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be bought or sold. None of the selected companies reviewed as described in
the above summary is identical to Warnaco, and none of the selected transactions reviewed was identical to the merger. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for
purposes of J.P. Morgans analysis, may be considered similar to those of Warnaco. The transactions selected were similarly chosen because their participants, size and other factors, for purposes of J.P. Morgans analysis, may be
considered similar to the merger. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies
compared to Warnaco and the transactions compared to the merger.
As a part of its investment banking business, J.P. Morgan
and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate and other purposes. J.P. Morgan was selected on the basis of such experience and its familiarity with Warnaco to advise Warnaco in connection with the transactions
contemplated by the merger agreement and to deliver a fairness opinion to the holders of shares of Warnaco common stock, pursuant to the merger agreement, as of the date of such opinion.
For services rendered in connection with the transactions contemplated by the merger agreement (including the delivery of its opinion),
Warnaco has agreed to pay J.P. Morgan a fee for its services based on a percentage formula of the total transaction value which will be determined upon consummation of the transactions contemplated by the merger agreement, but which is expected to
be approximately $38,900,000, based on an applicable percentage of the sum of the expected consideration payable to Warnaco and its stockholders plus the indebtedness of Warnaco expected to be outstanding immediately prior to the consummation of the
transactions contemplated by the merger agreement, $2,000,000 of which was payable upon the delivery by J.P. Morgan of its opinion. In addition, Warnaco has agreed to reimburse J.P. Morgan for its reasonable expenses incurred in connection with its
services, including the reasonable fees and disbursements of counsel, and will indemnify J.P. Morgan against certain liabilities, including liabilities arising under the Federal securities laws.
During the two years preceding the date of the delivery of its opinion, J.P. Morgan and its affiliates have had commercial or investment
banking relationships with Warnaco and PVH for which J.P. Morgan and such affiliates have received customary compensation, which services include acting as a lender and providing treasury and securities services to each of Warnaco and PVH,
respectively, and acting as lead arranger and bookrunner for a credit facility of Warnaco in June 2011. In addition, J.P. Morgan and its affiliates maintain
45
banking and other business relationships with Warnaco and its affiliates, for which J.P. Morgan and such affiliates have received customary compensation. According to J.P. Morgan, during the two
years preceding the date of the delivery of its opinion, J.P. Morgan and its affiliates received from (i) Warnaco aggregate revenues of approximately $1,600,000 related to treasury & securities services and corporate finance and (ii) PVH
aggregate revenues of approximately $2,100,000 related to treasury & securities services and asset & wealth management. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and equity
securities of Warnaco and PVH for their own accounts or for the accounts of customers and, accordingly, they may at any time hold long or short positions in such securities.
Directors and Management After the Merger
Upon
completion of the merger, the board of directors and executive officers of PVH are expected to remain unchanged, except that Helen McCluskey, currently the President and Chief Executive Officer of Warnaco, is expected to become a member of the PVH
board. For information on PVHs current directors and executive officers, please see PVHs proxy statement dated May 10, 2012. See Where You Can Find More Information beginning on page 122.
Description of the Debt Financing
Overview
In connection with the execution of the merger agreement,
PVH executed a commitment letter (as amended and restated on November 20, 2012 to add, among other things, certain additional parties as joint lead bookrunners and documentation agents and as amended on December 5, 2012) with the lenders that
provides for up to $4.325 billion of financing to, among other things, fund a portion of the cash consideration to be paid to Warnaco stockholders in the merger and refinance certain of PVHs, Warnacos and their respective
subsidiaries existing debt.
In addition, on December 20, 2012, PVH issued $700 million of senior unsecured notes. The
proceeds of the notes will be used to fund a portion of the cash consideration to be paid to Warnaco stockholders in the merger and reduced the commitments of the lenders under the commitment letter in respect of the new Tranche B Term Loan Facility
(as described below) by $500 million, such that the resulting commitments now total $3.825 billion.
The following is a
summary of the material terms of the commitment letter, the financing contemplated thereby and the notes. The actual terms and conditions of any definitive financing documents to be entered into between PVH and the lenders may include terms and
conditions that are different than those described herein.
Under the terms of the commitment letter, Barclays Bank PLC,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and RBC Capital Markets will be joint bookrunners and Barclays Bank PLC, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Citigroup Global Markets Inc. will be joint lead arrangers with respect to the new senior secured credit facilities. Barclays Bank PLC will act as the sole and exclusive administrative agent and collateral agent for the new senior
secured credit facilities. Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc. will act as syndication agents with respect to the new senior secured credit facilities. Credit Suisse Securities (USA) and
Royal Bank of Canada will act as documentation agents with respect to the new senior secured credit facilities. The joint lead arrangers, joint bookrunners and syndication agents are currently in the process of syndicating the financing to a number
of other financial institutions and prospective lenders.
As discussed further below, the commitments of the lenders to
provide the financing contemplated by the commitment letter are subject to a number of conditions, and such financing should not be considered assured. In the event that the financing is not available to PVH or if PVH anticipates that the financing
may not be available due to the failure to satisfy a condition thereto or for any other reason, PVH would seek alternative financing arrangements in connection with the merger. Such alternative financing may not be available on acceptable
46
terms, in a timely manner or at all. The potential alternative financing arrangements may include one or more bank financings or credit facilities or issuances of debt securities by PVH. As of
the date of this proxy statement/prospectus, no alternative financing arrangements or alternative financing plans have been made in the event the financing is not available as anticipated and as contemplated by the commitment letter. The
consummation of the merger is not conditioned on receipt of the financing or any alternative financing.
Senior Secured
Credit Facilities
PVH will be the borrower under the U.S. Dollar denominated term facilities and the
U.S. Dollar denominated revolving credit facilities described below. Tommy Hilfiger B.V., a subsidiary of PVH organized in the Netherlands, will be the borrower under the foreign currency denominated revolving credit facility described below
(which borrower we refer to as the Foreign Borrower and together with PVH, the Borrowers).
PVH expects the obligations under
the new senior secured credit facilities will be guaranteed by substantially all of PVHs existing and future direct and indirect U.S. subsidiaries, with certain customary or agreed upon exceptions, and the obligations of the Foreign Borrower
will also be guaranteed by PVH and Tommy Hilfiger Europe B.V.; it being understood that the guarantee obligations of (and security provided by) PVHs wholly owned subsidiaries Calvin Klein, Inc. and CK Service Corp. and each of their respective
subsidiaries will be limited to the amount permitted to be guaranteed (and secured) thereby pursuant to the Amended and Restated Pledge and Security Agreement, dated as of May 6, 2010, between PVH, Calvin Klein, Inc., The Bank of New York
Mellon Trust Company, N.A. and the other parties thereto. PVH and the U.S. subsidiary guarantors will pledge and grant a security interest in certain of their assets as collateral for their obligations.
The lenders have committed to provide (1) a $1.200 billion U.S. Dollar denominated Senior Secured Tranche A Term Loan Facility,
(2) a $1.875 billion U.S. Dollar denominated Senior Secured Tranche B Term Loan Facility, and (3) Senior Secured Revolving Credit Facilities in an aggregate principal amount of $750 million, consisting of (a) a U.S. Dollar
denominated revolving credit facility available to PVH in an amount to be agreed (which will in no event be less than $450 million), (b) a U.S. Dollar denominated revolving credit facility available to PVH in U.S. Dollars or Canadian
Dollars in an amount to be agreed and (c) a Euro denominated revolving credit facility available to the Foreign Borrower in Euro (or at the Foreign Borrowers option, its equivalent in Sterling, Yen or other currencies to be agreed) in an
amount to be agreed. PVH expects that in connection with the syndication and funding of the new senior secured credit facilities, the allocation of term loans between the two term loan tranches may be adjusted so that the Senior Secured Tranche A
Term Loan Facility consists of loans in an aggregate principal amount of $1.700 billion and the Senior Secured Tranche B Term Loan Facility consists of loans in an aggregate principal amount of $1.375 billion.
The commitments of the lenders to provide the new senior secured credit facilities are subject to certain
conditions, including among others, the absence of a material adverse effect (as such term is defined in the commitment letter) with respect to Warnaco, the accuracy of certain representations made by or with respect to Warnaco in the merger
agreement, the accuracy of certain specified representations of the Borrowers and the guarantors to be included in the definitive financing documents relating to qualification, incorporation or organization; power and authority to enter into the
definitive financing documents; due authorization and execution of the definitive financing documents; no conflict of the definitive financing documents with the Borrowers and the guarantors organizational documents, material applicable
law, PVHs 7.375% Senior Notes due 2020 (which we refer to as the Existing Notes) and PVHs 7
3
/
4
% Debentures due 2023; delivery and enforceability of the definitive financing documents; solvency on a consolidated basis
after giving effect to the transactions (as such term is defined in the commitment letter); not being subject to regulation under the Investment Company Act of 1940; not using proceeds of the financing to purchase margin stock; the Patriot Act; and
the creation, validity and perfection of the security interest granted in the intended collateral to be perfected (subject to certain exceptions set forth in the commitment letter).
47
Subject to the satisfaction of certain conditions, PVH expects that the new senior secured
credit facility will permit PVH to increase the aggregate amount of the revolving credit facilities and/or the term loan facilities by an aggregate amount not to exceed the greater of (1) $750 million and (2) $1.250 billion as long as the
ratio of senior secured net debt to consolidated adjusted EBITDA would not exceed 3.00:1.00 after giving pro forma effect to the incurrence of such increase, plus, in either case, an amount equal to the aggregate revolving commitments of any
defaulting lender (to the extent the commitments with respect thereto have been terminated). The lenders under the new senior secured credit facility would not be required to provide commitments with respect to such increased amounts.
PVH expects that the new Tranche A Term Loan Facility and the new revolving credit facilities will mature five years after the closing
date and that the new Tranche B Term Loan Facility will mature seven years after the closing date.
PVH expects that the terms
of the new Tranche A Term Loan Facility will require PVH to repay amounts outstanding under such facility, commencing with the last day of the first full calendar quarter following the closing date, in amounts equal to 5.00% per annum of the
aggregate principal amount thereof for the next eight quarters, 7.50% per annum of the aggregate principal amount thereof for the following four quarters and 10.00% per annum of the aggregate principal amount thereof for the remaining
quarters, in each case paid in equal quarterly installments and in each case subject to certain customary adjustments, with the balance due on the maturity date of the new Tranche A Term Loan Facility.
PVH expects that the terms of the new Tranche B Term Loan Facility will require PVH to repay amounts outstanding under such facility in
equal quarterly installments in an amount equal to 1.00% per annum of the aggregate principal amount, with the balance due on the maturity date of the new Tranche B Term Loan Facility.
PVH expects that the outstanding borrowings under the new senior secured credit facility will be prepayable without premium or penalty
(other than customary breakage costs). PVH expects that the terms of the new senior secured credit facility will require PVH to repay certain amounts outstanding thereunder with (1) net cash proceeds of the incurrence of certain indebtedness,
(2) net cash proceeds of certain asset sales or other dispositions (including as a result of casualty or condemnation) that exceed certain thresholds, to the extent such proceeds are not reinvested or committed to be reinvested in the business
in accordance with customary reinvestment provisions and (3) a percentage of excess cash flow, which percentage will be based upon PVHs net leverage ratio during the relevant fiscal period.
PVH expects that the United States Dollar-denominated borrowings under the new senior secured credit facility will bear interest at a
rate equal to an applicable margin plus, as determined at PVHs option, either (1) a base rate determined by reference to the higher of (a) the prime rate, (b) the United States federal funds rate plus 1/2 of 1.00% and (c) a
one-month adjusted eurocurrency rate plus 1.00% (provided that with respect to the new Tranche B Term Loan Facility PVH expects that in no event will the base rate be deemed to be less than 1.75% per annum) or (2) an adjusted eurocurrency rate,
calculated in a manner to be agreed and more fully set forth in the new senior secured credit facility (provided that with respect to the new Tranche B Term Loan Facility PVH expects that in no event will the adjusted eurocurrency rate be deemed to
be less than 0.75% per annum). PVH expects that the applicable margin for United States Dollar-denominated borrowings under the new senior secured credit facility (other than borrowings under the new Tranche B Term Loan Facility) will range from
0.50% to 1.25% for base rate-based borrowings and from 1.50% to 2.25% for adjusted eurocurrency rate-based borrowings, depending on PVHs net leverage ratio. PVH expects that the applicable margin for borrowings under the new Tranche B Term
Loan Facility will be fixed at 1.50% for base rate-based borrowing and 2.50% for adjusted eurocurrency rate-based borrowings.
PVH expects that the Canadian Dollar-denominated borrowings under the new senior secured credit facility will bear interest at a rate
equal to an applicable margin plus, as determined at PVHs option, either (1) the greater of (a) a prime rate determined in a manner to be agreed and more fully set forth in the new senior secured credit facility and (b) the sum
of (x) the average of the rates per annum for Canadian Dollar bankers acceptances
48
having a term of one month that appears on the Reuters Screen CDOR Page as of 10:00 a.m. (Toronto time) on the date of determination, as reported by the administrative agent (and if such screen
is not available, any successor or similar service as may be selected by the administrative agent), and (y) 0.75%, or (2) an adjusted eurocurrency rate, calculated in a manner to be agreed and more fully set forth in the new senior secured
credit facility. PVH expects that the applicable margin for Canadian Dollar-denominated borrowings under the new senior secured credit facility will range from 0.50% to 1.25% for base rate-based borrowings and from 1.50% to 2.25% for adjusted
eurocurrency rate-based borrowings, depending on PVHs net leverage ratio.
PVH expects that the borrowings under the new
Euro denominated revolving credit facility will bear interest at a rate equal to an applicable margin plus an adjusted eurocurrency rate, calculated in a manner to be agreed and more fully set forth in the new senior secured credit facility. PVH
expects that the applicable margin for Euro-denominated borrowings under the new senior secured credit facility will range from 1.50% to 2.25%, depending on PVHs net leverage ratio.
PVH expects that the new senior secured credit facility will require PVH to comply with customary affirmative and negative covenants. PVH
expects that the new senior secured credit facility will require that PVH maintain a minimum interest coverage ratio and a maximum net leverage ratio. The method of calculating all of the components used in the covenants will be set forth in the new
senior secured credit facility.
PVH expects the new senior secured credit facility to contain events of default consistent
with PVHs existing amended and restated credit agreement, dated as of March 2, 2011, except as otherwise agreed.
Senior Unsecured Notes
On December 20, 2012, PVH issued $700 million of senior unsecured notes. The proceeds of the notes will be used to fund a portion of the cash consideration to be paid to Warnaco stockholders in the merger
and reduced the commitments of the lenders under the commitment letter in respect of the new Tranche B Term Loan Facility by $500 million.
The notes are unsecured and not guaranteed by any person. The notes bear interest at a rate equal to 4.500% per annum and mature on the ten year anniversary of the issuance date.
The notes contain certain redemption provisions, repurchase requirements, affirmative covenants, negative covenants and events of default
typical for high yield debt securities.
Material U.S. Federal Income Tax Consequences of the Merger
The following is a summary of the material United States federal income tax consequences of the merger to United States
holders (as defined below) of Warnaco common stock who receive the merger consideration in exchange for their shares pursuant to the merger. This summary is based on the Internal Revenue Code of 1986, as amended, which we refer to as the Internal
Revenue Code, applicable Treasury regulations, and administrative and judicial interpretations thereof, all as in effect as of the date of this proxy statement/prospectus, and all of which may change, possibly with retroactive effect. This summary
assumes that shares of Warnaco common stock are held as capital assets (generally, property held for investment). It does not address all of the United States federal income tax consequences that may be relevant to United States holders in light of
their particular circumstances, or to other types of holders, including, without limitation:
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banks, insurance companies or other financial institutions;
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tax-exempt organizations;
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persons who are not United States holders;
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49
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pass-through entities and persons who are investors in a pass-through entity;
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persons who are subject to alternative minimum tax;
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persons who hold their shares of common stock as a position in a straddle or as part of a hedging or conversion
transaction;
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persons deemed to sell their shares of Warnaco common stock under the constructive sale provisions of the Internal Revenue Code;
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persons that have a functional currency other than the United States dollar;
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holders who exercise appraisal rights; or
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persons who acquired their shares of Warnaco common stock upon the exercise of stock options or otherwise as compensation.
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In addition, this discussion does not address any United States state or local or non-United States tax
consequences of the merger nor does it address any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act 2010.
PVH and Warnaco urge each Warnaco stockholder to consult its own tax advisor regarding the United States federal income or other tax
consequences of the merger to the stockholder.
For purposes of this discussion, a United States holder means a holder of
Warnaco common stock who is, for United States federal income tax purposes:
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a citizen or resident of the United States;
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a corporation or an entity treated as a corporation created or organized in, or under the laws of, the United States, any state thereof or the District
of Columbia;
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an estate the income of which is subject to United States federal income taxation regardless of its source; or
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a trust (1) (a) the administration over which a United States court can exercise primary supervision and (b) all of the substantial
decisions of which one or more United States persons have the authority to control or (2) that has a valid election in effect to be treated as a United States person.
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If a partnership (or other entity treated as a partnership for United States federal income tax purposes) holds Warnaco common stock, the
tax treatment of a partner in the partnership (or other entity) will generally depend upon the status of the partner and the activities of the partnership (or other entity). If you are a partner of a partnership (or other entity) holding Warnaco
common stock, you should consult your tax advisor regarding the tax consequences of the merger.
Consequences of the
Merger
The receipt of the merger consideration in exchange for shares of Warnaco common stock pursuant to the merger
will be a taxable transaction for United States federal income tax purposes. In general, a United States holder who receives the merger consideration in exchange for shares of Warnaco common stock pursuant to the merger will recognize capital gain
or loss for United States federal income tax purposes equal to the difference, if any, between (1) the sum of the fair market value of the PVH common stock as of the effective time of the merger and the amount of cash received and (2) the
holders aggregate adjusted tax basis in the shares of Warnaco common stock exchanged for the merger consideration pursuant to the merger. Any gain or loss would be long-term capital gain or loss if the holding period for the shares of Warnaco
common stock exceeds one year at the effective time of the merger. Long-term capital gains of noncorporate United States holders (including individuals) generally are eligible for preferential rates of United States federal income tax. There are
limitations on the deductibility of capital losses under the Internal Revenue Code.
50
A United States holders aggregate tax basis in PVH common stock received in the merger
will equal the fair market value of the stock as of the effective time of the merger. The holding period of the PVH common stock received in the merger will begin on the day after the merger.
Backup Withholding
Backup withholding (currently at a rate of 31%) may apply to payments made in connection with the merger. Backup withholding will not apply, however, to a holder who (1) furnishes a correct taxpayer
identification number and certifies that it is not subject to backup withholding on the substitute Internal Revenue Service Form W-9 included in the letter of transmittal to be delivered to holders of Warnaco common stock prior to completion of the
merger, (2) provides a certification of non-United States status on the applicable Internal Revenue Service Form W-8 (typically Internal Revenue Service Form W-8BEN) or appropriate successor form or (3) is otherwise exempt from backup
withholding. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the holders United States federal income tax liability provided the required information is timely furnished to the Internal
Revenue Service. Please consult your tax advisor to see if you qualify for exemption from backup withholding and, if so, to understand the procedure for obtaining that exemption.
THE FOREGOING DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OF THE POTENTIAL TAX CONSIDERATIONS RELATING TO THE MERGER, AND IS NOT TAX
ADVICE. THEREFORE, HOLDERS OF WARNACO COMMON STOCK ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY OF UNITED STATES FEDERAL, STATE OR LOCAL, NON-UNITED STATES AND OTHER
TAX LAWS.
Accounting Treatment
PVH prepares its financial statements in accordance with GAAP. The merger will be accounted for by applying the acquisition method of accounting in accordance with FASB ASC Topic 805, Business
Combinations, which requires the determination of the acquirer, the acquisition date, the fair value of assets and liabilities of the acquiree and the measurement of goodwill. Based on the guidance of ASC Topic 805, PVH will be the acquirer of
Warnaco for accounting purposes. This means that PVH will allocate the purchase price to the fair value of Warnacos assets and liabilities at the acquisition date, with any excess purchase price being recorded as goodwill. Assuming the PVH
stock price is $117.47 (the closing price on January 11, 2013, the latest practicable trading day before the date of this proxy statement/prospectus), PVH anticipates that the aggregate value of the merger consideration to be paid at closing will be
approximately $3.0 billion, based on the number of Warnaco shares outstanding as of the record date.
Regulatory
Approvals Required for the Merger
HSR Act and Antitrust
. The merger is subject to the requirements of the HSR Act,
which prevents PVH and Warnaco from completing the merger until required information and materials are furnished to the DOJ and the FTC, and the HSR Acts waiting period is terminated or expires. On November 13, 2012, PVH and Warnaco filed
the requisite notification and report forms under the HSR Act with the DOJ and the FTC, and on November 23, 2012, the FTC granted early termination of the HSR Acts waiting period. The DOJ, the FTC and U.S. state attorneys general may
challenge the merger on antitrust grounds either before or after termination of the waiting period. Private parties may also bring legal actions under the antitrust laws under certain circumstances. Accordingly, at any time before or after the
completion of the merger, any of the DOJ, the FTC or others could take action under the antitrust laws, including without limitation seeking to enjoin the completion of the merger or permitting completion subject to regulatory concessions or
conditions. Although neither PVH nor Warnaco believes that the merger will violate federal antitrust laws, PVH and Warnaco cannot guarantee that the antitrust agencies in the United States will not take a different position.
51
Other Regulatory Matters
. The merger is also subject to review by the antitrust
agencies in Canada, the E.U., Mexico and Turkey, and receipt of all required clearances or approvals applicable to the consummation of the merger under the antitrust laws of Canada, the E.U., Mexico and Turkey is a condition to closing the merger.
PVH and Warnaco submitted notifications to the Canadian Competition Bureau on December 3, 2012, to the European
Commission in the E.U. on January 3, 2013, and to the relevant competition agencies in Turkey and Mexico on November 19, 2012 and November 29, 2012, respectively. The Canadian Competition Bureau issued a no-action letter with respect
to the merger on December 17, 2012, and the relevant competition agencies in Turkey and Mexico approved the merger on December 6, 2012 and December 12, 2012, respectively. Approval in the E.U. is expected to be obtained by
February 7, 2013. Although neither PVH nor Warnaco believes that the merger will violate the competition laws in the E.U., PVH and Warnaco cannot guarantee that the European Commission will not take a different position.
Litigation Relating to the Merger
A putative class action lawsuit challenging the merger on behalf of Warnaco stockholders was filed in the Supreme Court of the State of New York, New York County, on November 14, 2012. The lawsuit,
captioned
Coyne v. The Warnaco
Group, Inc.
et
al.
, names as defendants Warnaco, PVH, Wand Acquisition Corp., and the directors of Warnaco. The lawsuit alleges that the directors of Warnaco breached
their fiduciary duties to Warnaco stockholders in approving the merger agreement because the merger price is too low, the merger agreement contains improper deal protection terms, and the merger is designed to benefit Warnaco insiders. It also
alleges that PVH and Wand Acquisition Corp. aided and abetted the Warnaco directors breach of fiduciary duties. On December 18, 2012, plaintiff amended the complaint to include allegations that the directors of Warnaco engaged a conflicted
financial advisor in connection with the merger and failed to disclose and/or misrepresented material information about the merger in the preliminary proxy statement that PVH filed with the SEC on December 4, 2012. The lawsuit seeks as relief an
injunction barring completion of the merger, damages, and attorneys fees. The defendants believe the lawsuit is without merit and intend to defend vigorously against it.
Exchange of Shares in the Merger
Prior to the
effective time of the merger, PVH will appoint an exchange agent to handle the exchange of shares of Warnaco common stock for the merger consideration the holder is entitled to receive under the merger agreement. Promptly after the effective time of
the merger (and in no event later than four business days after such time), the exchange agent will send to each holder of record of Warnaco common stock at the effective time of the merger who holds shares of Warnaco common stock in certificated
form a letter of transmittal and instructions for effecting the exchange of Warnaco common stock certificates for the merger consideration. Upon surrender of stock certificates for cancellation along with the executed letter of transmittal and other
documents described in the instructions, a Warnaco stockholder will receive the per share cash consideration and one or both of the following: (1) one or more shares of PVH common stock; and (2) cash in lieu of fractional shares of PVH
common stock. After the effective time of the merger, Warnaco will not register any transfers of the shares of Warnaco common stock. Unless you specifically request to receive PVH stock certificates, the shares of PVH common stock you receive in the
merger will be issued in book-entry form.
Upon completion of the merger, each share of Warnaco common stock held in
book-entry form will be automatically converted into the merger consideration, with any whole shares of PVH common stock issued as stock consideration being issued in book-entry form. An account statement will be mailed to you confirming this
automatic conversion, along with the cash consideration to which you are entitled and any cash in lieu of fractional shares of PVH common stock.
OTHER MATTERS
As of the date of this proxy statement/prospectus, the Warnaco board of directors knows of no matters that will be presented for
consideration at the Warnaco special meeting other than as described in this proxy statement/prospectus. If any other matters properly come before the Warnaco special meeting or any adjournments or postponements of the meeting and are voted upon,
the enclosed proxy will confer discretionary authority on the individuals named as proxy to vote the shares represented by the proxy as to any other matters. The individuals named as proxies intend to vote in accordance with their best judgment as
to any other matters.
WHERE YOU CAN FIND MORE INFORMATION
PVH and Warnaco file annual, quarterly and special reports, proxy statements and other information with the SEC under the Exchange Act.
You may read and copy any of this information at the SECs Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. The SEC also
maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers, including PVH and Warnaco, who file electronically with the SEC. The address of that site is
www.sec.gov
.
Investors may also consult Warnacos and PVHs websites for more information concerning the merger described in
this proxy statement/prospectus. Warnacos website is
www.warnaco.com
and PVHs website is
www.pvh.com
. Information included on these websites is not incorporated by reference into this proxy statement/prospectus.
PVH has filed with the SEC a registration statement of which this proxy statement/prospectus forms a part. The registration statement
registers the shares of PVH common stock to be issued to Warnaco stockholders in connection with the merger. The registration statement, including the attached exhibits and schedules, contains additional relevant information about PVH common stock.
The rules and regulations of the SEC allow PVH and Warnaco to omit certain information included in the registration statement from this proxy statement/prospectus.
In addition, the SEC allows PVH and Warnaco to disclose important information to you by referring you to other documents filed separately with the SEC. This information is considered to be a part of this
proxy statement/prospectus, except for any information that is superseded by information included directly in this proxy statement/prospectus.
This proxy statement/prospectus incorporates by reference the documents listed below that PVH has previously filed with the SEC;
provided, however,
that we are not incorporating by reference, in
each case, any documents, portions of documents or information deemed to have been furnished and not filed in accordance with SEC rules. They contain important information about PVH, its financial condition and other matters.
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PVH Filings (File No. 001-07572)
|
|
Period
|
Annual Report on Form 10-K
|
|
Filed on March 28, 2012 for the fiscal year ended January 29, 2012.
|
|
|
Proxy Statement on Schedule 14A
|
|
Filed on May 10, 2012, in connection with the solicitation of proxies for the PVH 2012 annual meeting of stockholders.
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Quarterly Reports on Form 10-Q
|
|
Filed on June 7, 2012 for the quarterly period ended April 29, 2012, on September 6, 2012 for the quarterly period ended July 29, 2012 and on November 28, 2012 for the quarterly
period ended October 28, 2012.
|
122
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|
|
PVH Filings (File No. 001-07572)
|
|
Period
|
Current Reports on Form 8-K
|
|
Filed on April 13, 2010 (related to the financial statements of the Tommy Hilfiger business), February 3, 2012, February 14, 2012, June 25, 2012, November 2, 2012, November 13,
2012, December 6, 2012 (related to the launch of PVHs senior unsecured notes offering), December 6, 2012 (related to the resignation of a director from the PVH board of directors), December 7, 2012 and December 20, 2012 (other than
documents or portions of those documents stated to be furnished and not filed).
|
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Prospectus, dated April 22, 2010, filed pursuant to Rule 424 under the Securities Act
|
|
Filed on April 26, 2010.
|
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Prospectus, dated April 23, 2010, filed pursuant to Rule 424 under the Securities Act
|
|
Filed on April 26, 2010.
|
In addition, PVH incorporates by reference herein any future filings it makes with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this proxy statement/prospectus and prior to the date of the Warnaco special meeting. Such documents are considered to be a part of this proxy statement/prospectus,
effective as of the date such documents are filed. In the event of conflicting information in these documents, the information in the latest filed document should be considered correct.
You can obtain any of the documents listed above from the SEC, through the SECs website at the address described above or from PVH
by requesting them in writing or by telephone at the following address:
PVH Corp.
200 Madison Avenue
New York, New York 10016
Attention: Secretary
(212) 381-3500
These documents are available from PVH without charge, excluding any exhibits to them unless the exhibit is specifically listed as an
exhibit to the registration statement of which this proxy statement/prospectus forms a part.
This proxy statement/prospectus
incorporates by reference the documents listed below that Warnaco has previously filed with the SEC; provided, however, that we are not incorporating by reference, in each case, any documents, portions of documents or information deemed to have been
furnished and not filed in accordance with SEC rules. They contain important information about Warnaco, its financial condition and other matters.
|
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Warnaco Filings (File No. 001-10857)
|
|
Period
|
Annual Report on Form 10-K
|
|
Filed on February 29, 2012 for the fiscal year ended December 31, 2011.
|
|
|
Proxy Statement on Schedule 14A
|
|
Filed on April 11, 2012, in connection with the solicitation of proxies for the Warnaco 2012 annual meeting of stockholders.
|
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Quarterly Reports on Form 10-Q
|
|
Filed on May 4, 2012 for the quarterly period ended March 31, 2012, on August 7, 2012 for the quarterly period ended June 30, 2012, and on November 6, 2012 for the quarterly
period ended September 29, 2012.
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123
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Warnaco Filings (File No. 001-10857)
|
|
Period
|
|
|
Current Reports on Form 8-K
|
|
Filed on May 1, 2012, May 15, 2012, October 31, 2012, and November 2, 2012 (other than documents or portions of those documents stated to be furnished and not
filed).
|
In addition, Warnaco incorporates by reference herein any future filings it makes with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this proxy statement/prospectus and prior to the date of the Warnaco special meeting. Such documents are considered to be a part of this document, effective as of the date
such documents are filed. In the event of conflicting information in these documents, the information in the latest filed document should be considered correct.
You can obtain any of the documents listed above from the SEC, through the SECs website at the address described above or from Warnaco by requesting them in writing or by telephone at the following
address:
The Warnaco Group, Inc.
501 Seventh Avenue
New York, New York 10018
Attention: Secretary
(212) 287-8000
These documents are available from Warnaco without charge,
excluding any exhibits to them unless the exhibit is specifically listed as an exhibit to the registration statement of which this proxy statement/prospectus forms a part.
If you would like to request documents, please do so by February 6, 2013 to receive them before the Warnaco special meeting. If you request any documents from PVH or Warnaco, PVH or Warnaco will mail them
to you by first class mail, or another equally prompt means, within one business day after PVH or Warnaco receives your request.
This document is a prospectus of PVH and is a proxy statement of Warnaco for the Warnaco special meeting. Neither PVH nor Warnaco has authorized anyone to give any information or make any representation
about the merger or PVH or Warnaco that is different from, or in addition to, that contained in this proxy statement/prospectus or in any of the materials that PVH or Warnaco has incorporated by reference into this proxy statement/prospectus.
Therefore, if anyone does give you information of this sort, you should not rely on it. The information contained in this proxy statement/prospectus speaks only as of the date of this proxy statement/prospectus unless the information specifically
indicates that another date applies.
124
Annex A
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
Dated as of October 29, 2012,
among
THE
WARNACO GROUP, INC.
PVH CORP.
and
WAND ACQUISITION CORP.
TABLE OF CONTENTS
A-ii
A-iii
AGREEMENT AND PLAN OF MERGER (this
Agreement
), dated as of
October 29, 2012, among The Warnaco Group, Inc., a Delaware corporation (the
Company
), PVH Corp., a Delaware corporation (
Parent
), and Wand Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent (
Merger Sub
).
WHEREAS, the Company Board, the Parent Board and the Board of Directors
of Merger Sub have approved this Agreement, determined that the terms of this Agreement are in the best interests of the Company, Parent or Merger Sub, as applicable, and their respective stockholders, and declared the advisability of this
Agreement;
WHEREAS, the Company Board and the Board of Directors of Merger Sub have recommended adoption and approval of this
Agreement by their respective stockholders; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the representations, warranties and covenants herein and intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
The Merger
SECTION 1.01
The Merger
. On the terms and subject to the conditions set forth in this Agreement, and in accordance with the General Corporation Law of the State
of Delaware (the
DGCL
), on the Closing Date, Merger Sub shall be merged with and into the Company (the
Merger
). At the Effective Time, the separate corporate existence of Merger Sub shall cease and the Company
shall continue as the surviving company in the Merger (the
Surviving Company
).
SECTION 1.02
Closing
. The closing (the
Closing
) of the Merger shall take
place at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York 10019 at 10:00 a.m., New York City time, on a date to be specified by the Company and Parent, which shall be no later than the fifth
Business Day following the satisfaction or (to the extent permitted by Law) waiver by the party or parties entitled to the benefits thereof of the conditions set forth in Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or (to the extent permitted by Law) waiver of those conditions), or at such other place, time and date as shall be agreed in writing between the Company and Parent;
provided
,
however
, that, if the Marketing Period has not ended at such time, the Closing shall occur instead on (a) the earlier to occur of (i) any Business Day during the Marketing Period to be specified by Parent to the Company on no less
than three Business Days written notice and (ii) the last day of the Marketing Period (or, if such date is not a Business Day, the first Business Day occurring thereafter); or (b) such other date and time as agreed to in writing by
Parent and the Company. The date on which the Closing occurs is referred to in this Agreement as the
Closing Date
.
SECTION 1.03
Effective Time
. Subject to the provisions of this Agreement, as soon as practicable on the Closing Date, the parties shall file with the Secretary of
State of the State of Delaware the certificate of merger relating to the Merger (the
Certificate of Merger
), executed and acknowledged in accordance with the relevant provisions of the DGCL, and, as soon as practicable on or after
the Closing Date, shall make all other filings required under the DGCL or by the Secretary of State of the State of Delaware in connection with the Merger. The Merger shall become effective at the time that the Certificate of Merger has been duly
filed with the Secretary of State of the State of Delaware, or at such later time as the Company and Parent shall agree and specify in the Certificate of Merger (the time the Merger becomes effective being the
Effective Time
).
SECTION 1.04
Effects
. The Merger shall have the effects set forth in this Agreement
and Section 259 of the DGCL.
A-1
SECTION 1.05
Certificate of Incorporation and
By-Laws
. The certificate of incorporation of Merger Sub, as in effect immediately prior to the Effective Time, shall be the certificate of incorporation of the Surviving Company until thereafter changed or amended as provided therein or by
applicable Law. The by-laws of Merger Sub, as in effect immediately prior to the Effective Time, shall be the by-laws of the Surviving Company until thereafter changed or amended as provided therein or by applicable Law, except that references to
the name of Merger Sub shall be replaced by references to the name of the Surviving Company.
SECTION 1.06
Directors and Officers of Surviving Company
. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the Surviving Company until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be. The officers of Merger
Sub immediately prior to the Effective Time shall be the officers of the Surviving Company until the earlier of their resignation or removal or until their respective successors are duly elected or appointed and qualified, as the case may be.
ARTICLE II
Effect on the Capital Stock of the Constituent Entities; Exchange of Certificates
SECTION 2.01
Effect on Capital Stock
. At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Parent, Merger Sub or the
holder of any shares of common stock, par value $0.01 per share, of the Company (the
Company Common Stock
) or any shares of common stock, par value $0.01 per share, of Merger Sub (the
Merger Sub Common Stock
):
(i)
Conversion of Merger Sub Common Stock
. Each share of Merger Sub Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into one (1) fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Company with the same rights, powers and privileges as the shares so
converted and shall constitute the only outstanding shares of capital stock of the Surviving Company. From and after the Effective Time, all certificates representing shares of Merger Sub Common Stock shall be deemed for all purposes to represent
the number of shares of common stock of the Surviving Company into which they were converted in accordance with the immediately preceding sentence.
(ii)
Cancellation of Treasury Stock and Parent-Owned Stock; Conversion of Subsidiary-Owned Stock
.
(A) Each share of Company Common Stock that is owned by the Company as treasury stock and each share of Company Common Stock that is owned directly by Parent or Merger Sub immediately prior to the
Effective Time shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and no consideration shall be delivered in exchange therefor.
(B) Each share of Company Common Stock that is owned by any direct or indirect wholly owned Subsidiary of the Company or
any direct or indirect wholly owned Subsidiary of Parent (other than Merger Sub) or of Merger Sub shall be converted into such number of shares of common stock of the Surviving Company such that the ownership percentage of any such Subsidiary in the
Surviving Company immediately following the Effective Time shall equal the ownership percentage of such Subsidiary in the Company immediately prior to the Effective Time.
(iii)
Conversion of Company Common Stock
. Subject to Sections 2.02 and 2.03, each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (other than shares to be canceled or converted into shares of the Surviving Company in accordance with Section 2.01(ii) and Dissenting Shares) shall be converted into the right to
receive (x) .1822 shares of common stock, par value $1 per share, of Parent (the
Parent Common Stock
) (the
Stock Consideration
) and (y) $51.75 in cash (the
Cash Consideration
and,
together with the Stock Consideration, the
Merger Consideration
). All such shares of Company Common Stock, when so converted, shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each
holder of a certificate (or evidence of shares in book-entry form) that immediately prior to the Effective Time represented any such shares of Company
A-2
Common Stock (each, a
Certificate
) shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration and any cash in lieu of fractional
shares of Parent Common Stock to be issued or paid in consideration therefor and any dividends or other distributions to which holders become entitled upon the surrender of such Certificate in accordance with Section 2.02, without interest.
Notwithstanding the foregoing, if between the date of this Agreement and the Effective Time the outstanding shares of Parent Common Stock or Company Common Stock shall have been changed into a different number of shares or a different class, by
reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, or any similar event shall have occurred, then any number or amount contained herein which is based upon the number of shares of
Parent Common Stock or Company Common Stock, as the case may be, will be appropriately adjusted to provide to Parent and the holders of Company Common Stock the same economic effect as contemplated by this Agreement prior to such event. As provided
in Section 2.02(j), the right of any holder of a Certificate to receive the Merger Consideration shall be subject to and reduced by the amount of any required withholding under applicable Tax Law.
SECTION 2.02
Exchange of Certificates
. (a) Exchange Agent. Prior to the Effective Time,
Parent shall appoint a bank or trust company reasonably acceptable to the Company to act as exchange agent (the
Exchange Agen
t) for the payment and delivery of the Merger Consideration. At or prior to the Effective Time, Parent
shall deposit with the Exchange Agent, for the benefit of the holders of Certificates, for exchange in accordance with this Article II through the Exchange Agent, (i) certificates representing the shares of Parent Common Stock to be issued
as Stock Consideration (or appropriate alternative arrangements shall be made by Parent if uncertificated shares of Parent Common Stock will be issued) and (ii) cash sufficient to (x) pay the Cash Consideration and (y) make payments
in lieu of fractional shares pursuant to Section 2.02(f). All such Parent Common Stock and cash deposited with the Exchange Agent is hereinafter referred to as the
Exchange Fund
.
(b)
Letter of Transmittal
. As promptly as reasonably practicable after the Effective Time (and in any event within four Business
Days after the Effective Time), Parent shall cause the Exchange Agent to mail to each holder of record of Company Common Stock a form of letter of transmittal (the
Letter of Transmittal
) (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent, shall be in such form and have such other provisions (including customary provisions with respect to delivery of an
agents message with respect to shares held in book-entry form) as Parent may specify subject to the Companys reasonable approval, and shall be prepared prior to the Closing), together with instructions thereto.
(c)
Merger Consideration Received in Connection with Exchange
. Upon (i) in the case of shares of Company Common Stock
represented by a Certificate, the surrender of such Certificate for cancellation to the Exchange Agent, or (ii) in the case of shares of Company Common Stock held in book-entry form, the receipt of an agents message by the
Exchange Agent, in each case together with the Letter of Transmittal, duly, completely and validly executed in accordance with the instructions thereto, and such other documents as may reasonably be required by the Exchange Agent, the holder of such
shares shall be entitled to receive in exchange therefor (x) the Merger Consideration into which such shares of Company Common Stock have been converted pursuant to Section 2.01 and (y) any cash in lieu of fractional shares that the
holder has the right to receive pursuant to Section 2.02(f) and in respect of any dividends or other distributions that the holder has the right to receive pursuant to Section 2.02(d). In the event of a transfer of ownership of Company
Common Stock that is not registered in the transfer records of the Company, the Merger Consideration (and cash in lieu of fractional shares that the holder has the right to receive pursuant to Section 2.02(f) and in respect of any dividends or
other distributions that the holder has the right to receive pursuant to Section 2.02(d)) may be issued to a transferee if the Certificate representing such Company Common Stock (or, if such Company Common Stock is held in book-entry form,
proper evidence of such transfer) is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and by evidence that any applicable stock transfer Taxes have been paid. Until surrendered as
contemplated by this Section 2.02(c), each share of Company Common Stock, and any Certificate with respect thereto, shall be deemed at any time from and after the Effective Time to represent only the right to receive upon such surrender the
Merger Consideration that the holders of shares of Company
A-3
Common Stock are entitled to receive in respect of such shares pursuant to Section 2.01(iii) (and cash in lieu of fractional shares pursuant to Section 2.02(f) and in respect of any
dividends or other distributions pursuant to Section 2.02(d)). No interest shall be paid or shall accrue on the cash payable upon surrender of any Certificate (or shares of Company Common Stock held in book-entry form).
(d)
Treatment of Unexchanged Shares
. No dividends or other distributions declared or made with respect to Parent Common Stock with
a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate (or shares of Company Common Stock held in book-entry form) with respect to the shares of Parent Common Stock issuable upon surrender thereof, and no
cash payment with respect to the Cash Consideration or in lieu of fractional shares shall be paid to any such holder, until the surrender of such Certificate (or shares of Company Common Stock held in book-entry form) in accordance with this
Article II. Subject to escheat, Tax or other applicable Law, following surrender of any such Certificate (or shares of Company Common Stock held in book-entry form), there shall be paid to the holder of the certificate representing whole shares
of Parent Common Stock issued in exchange therefor, without interest, (i) at the time of such surrender, (A) the amount of any cash payable in lieu of a fractional share of Parent Common Stock to which such holder is entitled pursuant to
Section 2.02(f) and (B) the amount of dividends or other distributions declared on the shares of Parent Common Stock with a record date after the Effective Time and a payment date prior to such surrender that is payable with respect to
such whole shares of Parent Common Stock and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time and a payment date subsequent to such surrender payable with respect
to such whole shares of Parent Common Stock.
(e)
No Further Ownership Rights in Company Common Stock
. The shares of
Parent Common Stock issued and cash paid in accordance with the terms of this Article II upon conversion of any shares of Company Common Stock (including any cash paid pursuant to Section 2.02(f)) shall be deemed to have been issued and
paid in full satisfaction of all rights pertaining to such shares of Company Common Stock. From and after the Effective Time, there shall be no further registration of transfers on the stock transfer books of the Surviving Company of shares of
Company Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, any Certificates formerly representing shares of Company Common Stock (or shares of Company Common Stock held in book-entry form) are
presented to Parent or the Exchange Agent for any reason, they shall be canceled and exchanged as provided in this Article II.
(f)
No Fractional Shares
. No certificates or scrip representing fractional shares of Parent Common Stock shall be issued upon the conversion of Company Common Stock pursuant to Section 2.01.
Notwithstanding any other provision of this Agreement, each holder of shares of Company Common Stock converted pursuant to the Merger who would otherwise have been entitled to receive a fraction of a share of Parent Common Stock (after taking into
account all shares of Company Common Stock exchanged by such holder) shall receive, in lieu thereof, cash (without interest) in an amount equal to such fractional amount multiplied by the last reported sale price of Parent Common Stock on the New
York Stock Exchange (the
NYSE
) (as reported in
The Wall Street Journal
or, if not reported therein, in another authoritative source mutually selected by Parent and the Company) on the last complete trading day prior to the
date of the Effective Time.
(g)
Termination of Exchange Fund
. Any portion of the Exchange Fund (including any interest
received with respect thereto) that remains undistributed to the holders of Company Common Stock for one year after the Effective Time shall be delivered to Parent, and any holder of Company Common Stock who has not theretofore complied with this
Article II shall thereafter look only to Parent for payment of its claim for Merger Consideration, any cash in lieu of fractional shares and any dividends and distributions to which such holder is entitled pursuant to this Article II, in each
case without any interest thereon.
(h)
No Liability
. None of the Company, Parent, Merger Sub or the Exchange Agent
shall be liable to any Person in respect of any portion of the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. Any portion of the Exchange Fund which remains
A-4
undistributed to the holders of Certificates for two years after the Effective Time (or immediately prior to such earlier date on which the Exchange Fund would otherwise escheat to, or become the
property of, any Governmental Entity), shall, to the extent permitted by applicable Law, become the property of Parent, free and clear of all claims or interest of any Person previously entitled thereto.
(i)
Investment of Exchange Fund
. The Exchange Agent shall invest any cash in the Exchange Fund if and as directed by Parent. Any
interest and other income resulting from such investments shall be paid to, and be the property of, Parent. No investment losses resulting from investment of the Exchange Fund shall diminish the rights of any stockholder of the Company to receive
the Merger Consideration or any other payment as provided herein. To the extent there are losses with respect to such investments or the Exchange Fund diminishes for any other reason below the level required to make prompt cash payment of the
aggregate funds required to be paid pursuant to the terms hereof, Parent shall reasonably promptly replace or restore the cash in the Exchange Fund so as to ensure that the Exchange Fund is at all times maintained at a level sufficient to make such
cash payments.
(j)
Withholding Rights
. Each of Parent and the Exchange Agent (without duplication) shall be entitled
to deduct and withhold from the consideration otherwise payable to any holder of Company Common Stock pursuant to this Agreement such amounts as are required to be deducted and withheld with respect to the making of such payment under applicable Tax
Law. Amounts so withheld and paid over to the appropriate taxing authority shall be treated for all purposes of this Agreement as having been paid to the holder of Company Common Stock in respect of which such deduction or withholding was made.
(k)
Lost Certificates
. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond, in such reasonable and customary amount as Parent may direct, as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent shall, in exchange for such lost, stolen or destroyed Certificate, issue the Stock Consideration and pay the Cash Consideration, any cash in lieu of fractional shares and
any dividends and distributions on such Certificate, in each case deliverable in respect thereof pursuant to this Agreement.
SECTION 2.03
Dissenters Rights
. Notwithstanding any other provision contained in this Agreement, no shares of Company Common Stock that are issued and outstanding as of the Effective Time and that are held by a stockholder who
has properly exercised such stockholders appraisal rights in respect of such shares (any such shares being referred to herein as
Dissenting Shares
) under Section 262 of the DGCL shall be converted into the right to
receive the Merger Consideration as provided in Section 2.01(iii) and instead shall be entitled to such rights as are granted by Section 262 of the DGCL (unless and until such stockholder shall have failed to timely perfect, or shall have
effectively withdrawn or lost, such stockholders right to dissent from the Merger under the DGCL, in which case such stockholder shall be entitled to receive the Merger Consideration (and any cash in lieu of fractional shares that the
stockholder has the right to receive pursuant to Section 2.02(f) and in respect of any dividends or other distributions that the holder has the right to receive pursuant to Section 2.02(d)) in exchange for such shares of Company Common
Stock, and such shares of Company Common Stock shall no longer be deemed to be Dissenting Shares) and to receive such consideration as may be determined to be due with respect to such Dissenting Shares pursuant to and subject to the requirements of
the DGCL. The Company (i) shall give Parent prompt notice of any notice or demand for appraisal or payment for shares of Company Common Stock or any withdrawals of such demands received by the Company, (ii) shall give Parent the
opportunity to participate in and direct all negotiations and proceedings with respect to any such demands and (iii) shall not, without the prior written consent of Parent, voluntarily make any payment with respect to, or settle, offer to
settle or otherwise negotiate, any such demands.
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ARTICLE III
Representations and Warranties of Parent and Merger Sub
Parent and Merger
Sub jointly and severally represent and warrant to the Company that the statements contained in this Article III are true and correct except as set forth in the Parent SEC Documents filed and publicly available after December 31, 2011 and
prior to the date of this Agreement (the
Filed Parent SEC Documents
) (excluding any disclosures in the Filed Parent SEC Documents that are set forth under the headings Risk Factors or disclosure of risks set forth in
any forward-looking statements disclaimer or any other statements that are similarly cautionary, nonspecific or predictive in nature; it being understood that any factual information contained within such headings, disclosure or
statements shall not be excluded) or in the disclosure letter delivered by Parent to the Company at or before the execution and delivery by Parent and Merger Sub of this Agreement (the Parent Disclosure Letter). The Parent Disclosure
Letter shall be arranged in numbered and lettered sections corresponding to the numbered and lettered sections contained in this Article III, and the disclosure in any section shall not be deemed to qualify any other section in this
Article III except to the extent (and only to the extent) that it is reasonably apparent from the face of such disclosure that such disclosure also qualifies or applies to such other section.
SECTION 3.01
Organization, Standing and Power
. Each of Parent and each of Parents
Subsidiaries (the
Parent Subsidiaries
) is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized (in the case of good standing, to the extent such jurisdiction recognizes
such concept), except, in the case of Parent Subsidiaries that are not Significant Subsidiaries (as such term is defined in Rule 12b-2 under the Exchange Act), where the failure to be so organized, exist or be in good standing, individually or in
the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect. Each of Parent and the Parent Subsidiaries has all requisite power and authority and possesses all governmental franchises, licenses, permits,
authorizations, variances, exemptions, orders and approvals (collectively,
Permits
) necessary to enable it to own, lease or otherwise hold its properties and assets and to conduct its businesses as presently conducted (the
Parent Permits
), except where the failure to have such power or authority or to possess Parent Permits, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect.
Each of Parent and the Parent Subsidiaries is duly qualified or licensed to do business in each jurisdiction where the nature of its business or the ownership or leasing of its properties make such qualification necessary, other than in such
jurisdictions where the failure to be so qualified or licensed, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect. Parent has delivered or made available to the Company, prior
to execution of this Agreement, true and complete copies of (a) the amended and restated articles of incorporation of Parent in effect as of the date of this Agreement (the
Parent Articles
) and the by-laws of Parent in effect
as of the date of this Agreement (the
Parent By-laws
) and (b) the constituent documents of Merger Sub.
SECTION 3.02
Parent Subsidiaries
. (a) All of the outstanding shares of capital stock or
voting securities of, or other equity interests in, each Parent Subsidiary have been validly issued and are fully paid and nonassessable and are owned by Parent, by a Parent Subsidiary or by Parent and a Parent Subsidiary, free and clear of
all material pledges, liens, charges, mortgages, deeds of trust, rights of first offer or first refusal, options, encumbrances and security
interests of any kind or nature whatsoever (collectively, with covenants, conditions, restrictions, easements, encroachments, title retention agreements or other third party rights or title defect of any kind or nature whatsoever,
Liens
), and free of any other restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock, voting securities or other equity interests), except for restrictions imposed by
applicable securities laws.
(b) Except for the capital stock and voting securities of, and other equity interests in, the
Parent Subsidiaries, neither Parent nor any Parent Subsidiary owns, directly or indirectly, any capital stock or voting securities of, or other equity interests in, or any interest convertible into or exchangeable or exercisable for, any capital
stock or voting securities of, or other equity interests in, any firm, corporation, partnership, company, limited liability company, trust, joint venture, association or other entity.
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SECTION 3.03
Capital Structure
. (a) The
authorized capital stock of Parent consists of 240,000,000 shares of Parent Common Stock and 150,000 shares of preferred stock, par value $100.00 per share (the
Parent Preferred Stock
and, together with the Parent Common
Stock, the Parent Capital Stock), of which 8,000 shares have been designated as Series A Convertible Preferred Stock (the
Parent Series A Shares
). At the close of business on October 26, 2012,
(i) 71,037,023 shares of Parent Common Stock were issued and outstanding, (ii) 4,000 shares of Parent Series A Shares were issued and outstanding, (iii) 413,301 shares of Parent Common Stock were held by Parent in its treasury,
(iv) 6,274,689 shares of Parent Common Stock were reserved and available for issuance pursuant to the Parent Stock Plans, of which (A) 2,145,379 shares were issuable upon exercise of outstanding Parent Stock Options, (B) 676,336
shares of Parent Common Stock were potentially issuable upon the vesting of Parent RSU Awards, and (C) 683,177 shares of Parent Common Stock were potentially issuable upon the vesting of outstanding Parent Performance Shares, and
(v) 2,094,680 shares of Parent Common Stock were reserved for issuance upon conversion of the Parent Series A Shares. Except as set forth in this Section 3.03(a), at the close of business on October 26, 2012, no shares of capital
stock or voting securities of, or other equity interests in, Parent were issued, reserved for issuance or outstanding. From the close of business on October 26, 2012 to the date of this Agreement, there have been no issuances by Parent of
shares of capital stock or voting securities of, or other equity interests in, Parent other than the issuance of Parent Common Stock upon the exercise of Parent Stock Options or upon the vesting of Parent RSU Awards or Parent Performance Shares, in
each case, outstanding at the close of business on October 26, 2012 and in accordance with their terms in effect at such time.
(b) Except as set forth in Section 3.03(a) or pursuant to the terms of this Agreement, there are not issued, reserved for issuance or outstanding, and there are not any outstanding obligations of
Parent or any Parent Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, (i) any capital stock of Parent or any Parent Subsidiary or any securities of Parent or any Parent Subsidiary convertible into or exchangeable
or exercisable for shares of capital stock or voting securities of, or other equity interests in, Parent or any Parent Subsidiary, (ii) any warrants, calls, options or other rights to acquire from Parent or any Parent Subsidiary, or any other
obligation of Parent or any Parent Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, any capital stock or voting securities of, or other equity interests in, Parent or any Parent Subsidiary, or (iii) any rights
issued by or other obligations of Parent or any Parent Subsidiary that are linked in any way to the price of any class of Parent Capital Stock or any shares of capital stock of any Parent Subsidiary, the value of Parent, any Parent Subsidiary or any
part of Parent or any Parent Subsidiary or any dividends or other distributions declared or paid on any shares of capital stock of Parent or any Parent Subsidiary. Except for acquisitions, or deemed acquisitions, of Parent Common Stock or other
equity securities of Parent in connection with (x) the payment of the exercise price of Parent Stock Options with Parent Common Stock (including but not limited to in connection with net exercises), (y) required tax withholding
in connection with the exercise of Parent Stock Options, the vesting of Parent Performance Shares or Parent RSU Awards and the vesting or delivery of other awards pursuant to the Parent Stock Plans and (z) forfeitures of Parent Stock Options,
Parent Performance Shares and Parent RSU Awards, there are not any outstanding obligations of Parent or any of the Parent Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock or voting securities or other equity
interests of Parent or any Parent Subsidiary or any securities, interests, warrants, calls, options or other rights referred to in clause (i), (ii) or (iii) of the immediately preceding sentence. There are no bonds, debentures, notes
or other Indebtedness of Parent having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of Parent may vote (
Parent Voting Debt
). Neither Parent
nor any of the Parent Subsidiaries is a party to any voting agreement with respect to the voting of any capital stock or voting securities of, or other equity interests in, Parent. Neither Parent nor any of the Parent Subsidiaries is a party to any
agreement pursuant to which any Person is entitled to elect, designate or nominate any director of Parent or any of Parent Subsidiaries.
(c) The shares of Parent Common Stock constituting the Stock Consideration will be, when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to, or issued in violation
of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, the Parent Articles, the Parent By-laws or any Contract to which Parent is a party or otherwise
bound.
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SECTION 3.04
Authority; Execution and Delivery;
Enforceability
. (a) Each of Parent and Merger Sub has all requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Merger and the other transactions
contemplated by this Agreement. The Board of Directors of Parent (the
Parent Board
) has adopted resolutions, by unanimous vote of the directors present at a meeting duly called at which a quorum of directors of Parent was present,
(i) approving the execution, delivery and performance of this Agreement and (ii) determining that entering into this Agreement is in the best interests of Parent and its stockholders. As of the date of this Agreement, such resolutions have
not been amended or withdrawn. The Board of Directors of Merger Sub has unanimously adopted resolutions (i) approving the execution, delivery and performance of this Agreement, (ii) determining that the terms of this Agreement are in the
best interests of Merger Sub and Parent, as its sole stockholder, (iii) declaring this Agreement advisable and (iv) recommending that Parent, as sole stockholder of Merger Sub, adopt this Agreement and directing that this Agreement be
submitted to Parent, as sole stockholder of Merger Sub, for adoption. As of the date of this Agreement, such resolutions have not been amended or withdrawn. Parent, as sole stockholder of Merger Sub, has adopted this Agreement. No other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize, adopt or approve, as applicable, this Agreement or to consummate the Merger and the other transactions contemplated by this Agreement (except for the filing of the
Certificate of Merger as required by the DGCL). Each of Parent and Merger Sub has duly executed and delivered this Agreement and, assuming the due authorization, execution and delivery by the Company, this Agreement constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms except, in each case, as enforcement may be limited by bankruptcy, insolvency, reorganization or similar Laws affecting creditors rights generally and by general
principles of equity.
(b) No fair price, moratorium, control share acquisition or other
similar antitakeover statute or similar statute or regulation applies with respect to this Agreement, the Merger or any of the other transactions contemplated by this Agreement.
SECTION 3.05
No Conflicts; Consents
. (a) The execution and delivery by each of Parent and
Merger Sub of this Agreement does not, and the performance by each of Parent and Merger Sub of its obligations hereunder and the consummation of the Merger and the other transactions contemplated by this Agreement will not, conflict with, or result
in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation, any obligation to make an offer to purchase or redeem any Indebtedness
or capital stock or any loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of Parent or any Parent Subsidiary under, any provision of (i) the Parent Articles, the Parent By-laws or the
comparable charter or organizational documents of any Parent Subsidiary, (ii) any contract, lease, license, indenture, note, bond, agreement, understanding, undertaking, concession, franchise or other instrument (in each case, to the extent
legally binding on the parties thereto) (a
Contract
) to which Parent or any Parent Subsidiary is a party or by which any of their respective properties or assets is bound or any Parent Permit or (iii) subject to the filings
and other matters referred to in Section 3.05(b), any judgment, order or decree (Judgment) or statute, law (including common law), ordinance, rule or regulation (
Law
), in each case, applicable to Parent or any
Parent Subsidiary or their respective properties or assets, other than, in the case of clauses (ii) and (iii) above, any matters that, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent
Material Adverse Effect.
(b) No consent, approval, clearance, waiver, Permit or order (
Consent
) of or
from, or registration, declaration, notice or filing made to or with any Federal, national, state, provincial or local, whether domestic or foreign, government or any court of competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, whether domestic, foreign or supranational (a
Governmental Entity
), is required to be obtained or made by or with respect to Parent or any Parent Subsidiary in connection with the
execution and delivery of this Agreement or its performance of its obligations hereunder or the consummation of the Merger and the other transactions contemplated by this Agreement, other than (i) (A) the filing with the U.S. Securities and
Exchange Commission (the
SEC
), and declaration of effectiveness under the Securities Act of 1933, as amended (the
Securities Act
), of the registration statement on Form S-4 in
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connection with the issuance by Parent of the Stock Consideration, in which the Proxy Statement will be included as a prospectus (the
Form S-4
), and (B) the filing
with the SEC of such reports under, and such other compliance with, the Securities Exchange Act of 1934, as amended (the
Exchange Act
), and the Securities Act, and the rules and regulations thereunder, as may be required in
connection with this Agreement, the Merger and the other transactions contemplated by this Agreement, (ii) (A) compliance with and filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
HSR
Act
), (B) compliance with and filings under Council Regulation (EC) 139/2004 on the control of concentrations between undertakings (published in the Official Journal of the European Union on January 29, 2004 at L24/1) (the
EC Merger Regulation
), (C) compliance with any applicable requirements under the Canadian federal Competition Act, and (D) such other Consents, registrations, declarations, notices or filings as are required to be made or
obtained under any foreign antitrust, competition, trade regulation or similar Laws, (iii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware and appropriate documents with the relevant authorities of
the other jurisdictions in which Parent and the Company are qualified to do business, (iv) such Consents, registrations, declarations, notices or filings as are required to be made or obtained under the securities or blue sky laws
of various states in connection with the issuance of the Stock Consideration, (v) such filings with and approvals of the NYSE as are required to permit the consummation of the Merger and the listing of the Stock Consideration and (vi) such
other matters that, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect.
SECTION 3.06
SEC Documents; Undisclosed Liabilities
. (a) Parent has furnished or filed all reports, schedules, forms, statements and other documents
(including exhibits and other information incorporated therein) required to be furnished or filed by Parent with the SEC since February 1, 2010 (such documents, together with any documents filed with the SEC during such period by Parent on a
voluntary basis on a Current Report on Form 8-K, but excluding the Form S-4, being collectively referred to as the
Parent SEC Documents
).
(b) Each Parent SEC Document (i) at the time filed, complied in all material respects with the requirements of the Sarbanes-Oxley Act of 2002 (
SOX
) and the Exchange Act or the
Securities Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such Parent SEC Document and (ii) did not at the time it was filed (or if amended or superseded by a filing or amendment prior to
the date of this Agreement, then at the time of such filing or amendment) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Each of the consolidated financial statements of Parent included in the Parent SEC Documents complied at the time it was filed as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with respect thereto, was prepared in accordance with United States generally accepted accounting principles (
GAAP
) (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly presented in all material respects the consolidated financial position of
Parent and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods shown (subject, in the case of unaudited statements, to normal year-end audit adjustments).
(c) Except (i) as reflected or reserved against in Parents consolidated audited balance sheet as of January 29, 2012 (or
the notes thereto) included in the Filed Parent SEC Documents, (ii) for liabilities and obligations incurred in connection with or contemplated by this Agreement, (iii) for liabilities and obligations that have been incurred in the
ordinary course of business since January 29, 2012 and (iv) for liabilities and obligations that have been discharged or paid in full in the ordinary course of business, neither Parent nor any Parent Subsidiary has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise) that, individually or in the aggregate, have had or would reasonably be expected to have a Parent Material Adverse Effect.
(d) Each of the principal executive officer of Parent and the principal financial officer of Parent (or each former principal executive
officer of Parent and each former principal financial officer of Parent, as
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applicable) has made all applicable certifications required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302 and 906 of SOX with respect to the Parent SEC Documents, and the
statements contained in such certifications are true and accurate as of the date of such certifications. For purposes of this Agreement,
principal executive officer
and
principal financial officer
shall have the
meanings given to such terms in SOX. None of Parent or any of the Parent Subsidiaries has outstanding, or has arranged any outstanding, extensions of credit to directors or executive officers within the meaning of Section 402 of
SOX.
(e) Parent maintains a system of internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) sufficient to provide reasonable assurance (i) that transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP applied on a consistent
basis during the periods involved, (ii) that transactions are executed only in accordance with the authorization of management and (iii) regarding prevention or timely detection of the unauthorized acquisition, use or disposition of
Parents properties or assets.
(f) The disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act) utilized by Parent are reasonably designed to ensure that all information (both financial and non-financial) required to be disclosed by Parent in the reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that all such information required to be disclosed is accumulated and communicated to the management of Parent,
as appropriate, to allow timely decisions regarding required disclosure and to enable the chief executive officer and chief financial officer of Parent to make the certifications required under the Exchange Act with respect to such reports.
(g) Neither Parent nor any of the Parent Subsidiaries is a party to, or has any commitment to become a party to, any joint
venture, off-balance sheet partnership or any similar Contract (including any Contract or arrangement relating to any transaction or relationship between or among Parent and any of the Parent Subsidiaries, on the one hand, and any unconsolidated
Affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand, or any off-balance-sheet arrangements (as defined in Item 303(a) of Regulation S-K under the Exchange Act)), where
the result, purpose or intended effect of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, Parent or any of the Parent Subsidiaries in Parents or such Parent Subsidiarys published
financial statements or other Parent SEC Documents.
(h) Since January 31, 2011, none of Parent, the Parent Board, the
audit committee of the Parent Board or, to the Knowledge of Parent, Parents independent accountants has received any oral or written notification of any (x) significant deficiency in the internal controls over financial
reporting of Parent, (y) material weakness in the internal controls over financial reporting of Parent or (z) fraud, whether or not material, that involves management or other employees of Parent who have a significant role in
the internal controls over financial reporting of Parent. For purposes of this Agreement, the terms significant deficiency and material weakness shall have the meanings assigned to them in Auditing Standard No. 5 of the
Public Company Accounting Oversight Board, as in effect on the date of this Agreement.
SECTION 3.07
Information Supplied
. None of the information supplied or to be supplied by
Parent or Merger Sub for inclusion or incorporation by reference in (i) the Form S-4 will, at the time the Form S-4 or any amendment or supplement thereto is declared effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) the Proxy Statement will, at the date it is first mailed to the Companys stockholders or
at the time of the Company Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Form S-4 will comply as to form in all material respects with the requirements of the Securities Act and the rules and regulations thereunder. No representation is made by Parent or Merger Sub with
respect to statements made or incorporated by reference therein based on information supplied by the Company for inclusion or incorporation by reference therein.
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SECTION 3.08
Absence of Certain Changes or
Events
. From January 30, 2012 to the date of this Agreement, there has not occurred any fact, circumstance, effect, change, event or development that, individually or in the aggregate, has had or would reasonably be expected to have a
Parent Material Adverse Effect. From January 30, 2012 to the date of this Agreement, each of Parent and the Parent Subsidiaries has conducted its respective business in the ordinary course in all material respects, and has not taken an action
that would be prohibited by Section 5.01(a) if it were taken after the date of this Agreement and prior to the Effective Time.
SECTION 3.09
Litigation
. There is no suit, action or other proceeding pending or, to the Knowledge of Parent, threatened against Parent or any Parent Subsidiary
or any of their respective properties or assets that, individually or in the aggregate, has had or would reasonably be expected to have a Parent Material Adverse Effect, nor is there any Judgment outstanding against or, to the Knowledge of Parent,
investigation by any Governmental Entity involving Parent or any Parent Subsidiary or any of their respective properties or assets that, individually or in the aggregate, has had or would reasonably be expected to have a Parent Material Adverse
Effect.
SECTION 3.10
Compliance with Applicable Laws
. Parent and the Parent
Subsidiaries are in compliance in all material respects with all applicable Laws and Parent Permits, including all applicable rules, regulations, directives or policies of any Governmental Entity, in each case that are material to the operations of
each of Parents business segments (as described in the Filed Parent SEC Documents). To Parents Knowledge, no material action, demand or investigation by or before any Governmental Entity is pending or threatened alleging that Parent or a
Parent Subsidiary is not in compliance with any applicable Law or Parent Permit or which challenges or questions the validity of any rights of the holder of any Parent Permit, in each case that are material to the operations of each of Parents
business segments (as described in the Filed Parent SEC Documents).
SECTION 3.11
Brokers Fees and Expenses
. No broker, investment banker, financial advisor or other Person, other than Peter J. Solomon Company L.P., the fees and expenses of which will be paid by Parent, is entitled to any brokers,
finders, financial advisors or other similar fee or commission in connection with the Merger or any of the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent.
SECTION 3.12
Financing
.
(a) Assuming the accuracy of the representations set forth in Article IV and compliance by the Company with its agreements hereunder, in
each case, in all material respects, as of the Effective Time, Parent and Merger Sub will have available to them all funds necessary to consummate the Merger and to pay the aggregate Cash Consideration, all other cash amounts required to be paid in
connection with the Merger and all fees and expenses required to be paid in connection with the Financing.
(b) Parent has
delivered to the Company true, correct and complete fully-executed copies of the commitment letter, dated as of October 29, 2012, by and among Barclays Bank PLC, Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Citigroup Global Markets Inc. (collectively, together with their Affiliates and their successors and permitted assignees, the
Lenders
) and Parent, including all exhibits, schedules, annexes and amendments to such letter, in
effect as of the date of this Agreement, together with a redacted copy of any fee letter relating thereto (together, the
Commitment Letter
). Pursuant to the Commitment Letter, and subject to the terms and conditions thereof, each
of the parties thereto (other than Parent) have severally agreed and committed to lend the amounts set forth therein (the provision of such funds as set forth therein, the
Financing
) for the purposes set forth in such Commitment
Letter (including the making of loans to Parent and/or Merger Sub to finance the Merger and the other transactions contemplated by this Agreement). As of the date of this Agreement, the Commitment Letter is in full force and effect, has not been
withdrawn, terminated, rescinded, amended, supplemented or otherwise modified in any respect and is a legal, valid and binding obligation of Parent and, to the Knowledge of Parent, the other parties thereto.
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(c) As of the date of this Agreement, other than the Commitment Letter, there are no other
Contracts pursuant to which a third party has agreed and committed funds in connection with the Financing or relating to any terms or conditions thereof. As of the date of this Agreement, no event has occurred which, with or without notice, lapse of
time or both, would (i) constitute a default or breach on the part of Parent, nor, to Parents Knowledge, any other party thereto, under any term or condition of the Commitment Letter, (ii) constitute or result in a failure to satisfy
a condition precedent or other contingency set forth in the Commitment Letter, or (iii) to Parents Knowledge, otherwise result in any portion of the Financing being unavailable on or before the Closing Date. As of the date hereof, there
are no conditions relating to the funding of the full amount of the Financing, other than as set forth in the Commitment Letter. As of the date hereof, and assuming the accuracy of the representations set forth in Article IV and compliance by the
Company with its agreements hereunder, in each case, in all material respects, Parent has no reason to believe any of the conditions relating to the funding of the full amount of the Financing will not be satisfied on or prior to the Closing Date.
Parent has fully paid any and all commitment fees or other fees required by the Commitment Letter to be paid on or prior to the date of this Agreement and shall in the future pay any such fees as they become due.
SECTION 3.13
Merger Sub
. Parent is the sole stockholder of Merger Sub. Since its date of
incorporation, Merger Sub has not carried on any business nor conducted any operations other than the execution of this Agreement, the performance of its obligations hereunder and matters ancillary thereto.
SECTION 3.14
Share Ownership
. Neither Parent nor Merger Sub has been, at any time during the
three years prior to the date hereof, an interested stockholder of the Company, as defined in Section 203 of the DGCL. As of the date of this Agreement, none of Parent, Merger Sub or their respective Affiliates owns any shares of
capital stock of the Company or has any rights to acquire any shares of capital stock of the Company (except pursuant to this Agreement).
SECTION 3.15
No Other Representations or Warranties
. Except for the representations and warranties contained in this Article III or in any certificate delivered
by the Company to Parent or Merger Sub in accordance with the terms hereof (and notwithstanding the delivery or disclosure to the Company or its Representatives of any documentation, projections, estimates, budgets or other information), the Company
acknowledges that none of Parent, the Parent Subsidiaries or any other Person on behalf of Parent makes any other express or implied representation or warranty in connection with the transactions contemplated by this Agreement.
ARTICLE IV
Representations and Warranties of the Company
The Company represents and warrants to Parent and Merger Sub that the statements contained in this Article IV are true and correct except as set forth in the Company SEC Documents filed and publicly
available after December 31, 2011 and prior to the date of this Agreement (the
Filed Company SEC Documents
) (excluding any disclosures in the Filed Company SEC Documents that are set forth under the headings Risk
Factors or disclosure of risks set forth in any forward-looking statements disclaimer or any other statements that are similarly cautionary, nonspecific or predictive in nature; it being understood that any factual information
contained within such headings, disclosure or statements shall not be excluded) or in the disclosure letter delivered by the Company to Parent at or before the execution and delivery by the Company of this Agreement (the
Company Disclosure
Letter
). The Company Disclosure Letter shall be arranged in numbered and lettered sections corresponding to the numbered and lettered sections contained in this Article IV, and the disclosure in any section shall not be deemed to
qualify any other section in this Article IV except to the extent (and only to the extent) that it is reasonably apparent from the face of such disclosure that such disclosure also qualifies or applies to such other section.
SECTION 4.01
Organization, Standing and Power
. Each of the Company and each of the
Companys Subsidiaries (the
Company Subsidiaries
) is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized (in the case of good standing, to the extent such
jurisdiction
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recognizes such concept), except, in the case of the Company Subsidiaries that are not Significant Subsidiaries (as such term is defined in Rule 12b-2 under the Exchange Act), where the failure
to be so organized, exist or be in good standing, has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Each of the Company and the Company Subsidiaries has all requisite power
and authority and possesses all Permits necessary to enable it to own, lease or otherwise hold its properties and assets and to conduct its businesses as presently conducted (the Company Permits), except where the failure to have such
power or authority or to possess Company Permits, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect. Each of the Company and the Company Subsidiaries is duly qualified or
licensed to do business in each jurisdiction where the nature of its business or the ownership or leasing of its properties make such qualification necessary, other than in such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect. The Company has delivered or made available to Parent, prior to execution of this Agreement, true and complete copies of
the amended and restated certificate of incorporation of the Company in effect as of the date of this Agreement (the
Company Charter
) and the by-laws of the Company in effect as of the date of this Agreement (the Company
By-laws).
SECTION 4.02
Company Subsidiaries
. (a) All of the outstanding
shares of capital stock or voting securities of, or other equity interests in, each Company Subsidiary have been validly issued and are fully paid and nonassessable and are owned by the Company, by a Company Subsidiary or by the Company and a
Company Subsidiary, free and clear of all material Liens, and free of any other restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock, voting securities or other equity interests), except for
restrictions imposed by applicable securities laws. Section 4.02(a) of the Company Disclosure Letter sets forth, as of the date of this Agreement, a true and complete list of the Company Subsidiaries, each such Company Subsidiarys
jurisdiction of incorporation and the class, number and percentage of its authorized, issued and outstanding shares of capital stock, if any, that are not owned by the Company or a Company Subsidiary.
(b) Except for the capital stock and voting securities of, and other equity interests in, the Company Subsidiaries, neither the Company
nor any Company Subsidiary owns, directly or indirectly, any capital stock or voting securities of, or other equity interests in, or any interest convertible into or exchangeable or exercisable for, any capital stock or voting securities of, or
other equity interests in, any firm, corporation, partnership, company, limited liability company, trust, joint venture, association or other entity.
SECTION 4.03
Capital Structure
. (a) The authorized capital stock of the Company consists of 112,500,000 shares of Company Common Stock and 20,000,000
shares of preferred stock, par value $0.01 per share (the
Company Preferred Stock
and, together with the Company Common Stock, the
Company Capital Stock
). At the close of business on October 25, 2012,
(i) 53,497,219 shares of Company Common Stock were issued and outstanding, including 439,845 outstanding shares that comprise Company Restricted Stock Awards (excluding Company Career Units and Company RSUs), (ii) no shares of Company
Preferred Stock were issued and outstanding, (iii) 3,563,986 shares of Company Common Stock were reserved and available for issuance pursuant to the Company Stock Plans, of which (A) 1,565,383 shares were issuable upon exercise of
outstanding Company Stock Options and (B) 688,223 shares were potentially issuable upon the vesting or settlement of outstanding Company Career Units, Company RSUs, Company Performance Shares and Company PSUs (in the case of Company Performance
Shares and Company PSUs, assuming maximum performance targets are achieved). Except as set forth in this Section 4.03(a), at the close of business on October 25, 2012, no shares of capital stock or voting securities of, or other
equity interests in, the Company were issued, reserved for issuance
or outstanding. From the close of business on October 25, 2012
to the date of this Agreement, there have been no issuances by the Company of shares of capital stock or voting securities of, or other equity interests in, the Company, other than the issuance of Company Common Stock upon the exercise of Company
Stock Options or the vesting or settlement of Company Career Units, Company RSUs, or Company PSUs outstanding at the close of business on October 25, 2012 and in accordance with their terms in effect at such time.
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(b) All outstanding shares of Company Common Stock (including shares that comprise Company
Restricted Stock Awards) are, and, at the time of issuance, all such shares that may be issued upon the exercise of Company Stock Options or otherwise issued upon the vesting or settlement of Company Restricted Stock Awards, Company Performance
Shares and Company PSUs pursuant to the Company Stock Plans will be, duly authorized, validly issued, fully paid and nonassessable and not subject to, or issued in violation of, any purchase option, call option, right of first refusal, preemptive
right, subscription right or any similar right under any provision of the DGCL, the Company Charter, the Company By-laws or any Contract to which the Company is a party or otherwise bound. All grants of equity awards or other rights with respect to
shares of Company Common Stock to current or former directors, officers, employees, agents or consultants of the Company or any Company Subsidiary have been made in accordance with the terms of the applicable Company Stock Plans and award agreements
thereunder and any policy of the Company or the Board of Directors of the Company (the
Company Board
) (including any committee thereof) relating to the grant of such awards or rights. Except as set forth above in this
Section 4.03, there are not issued, reserved for issuance or outstanding, and there are not any outstanding obligations of the Company or any Company Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, (x) any
capital stock of the Company or any Company Subsidiary or any securities of the Company or any Company Subsidiary convertible into or exchangeable or exercisable for shares of capital stock or voting securities of, or other equity interests in, the
Company or any Company Subsidiary, (y) any warrants, calls, options or other rights to acquire from the Company or any Company Subsidiary, or any other obligation of the Company or any Company Subsidiary to issue, deliver or sell, or cause to
be issued, delivered or sold, any capital stock or voting securities of, or other equity interests in, the Company or any Company Subsidiary or (z) any rights issued by or other obligations of the Company or any Company Subsidiary that are
linked in any way to the price of any class of Company Capital Stock or any shares of capital stock of any Company Subsidiary, the value of the Company, any Company Subsidiary or any part of the Company or any Company Subsidiary or any dividends or
other distributions declared or paid on any shares of capital stock of the Company or any Company Subsidiary. Except for acquisitions, or deemed acquisitions, of Company Common Stock or other equity securities of the Company in connection with
(i) the payment of the exercise price of Company Stock Options with Company Common Stock (including but not limited to in connection with net exercises), (ii) required tax withholding in connection with the exercise of Company
Stock Options or the vesting or settlement of Company Restricted Stock Awards, Company Performance Shares or Company PSUs, and (iii) forfeitures of Company Stock Options, Company Restricted Stock Awards, Company Performance Shares or Company
PSUs, there are not any outstanding obligations of the Company or any of the Company Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock or voting securities or other equity interests of the Company or any Company
Subsidiary or any securities, interests, warrants, calls, options or other rights referred to in clause (x), (y) or (z) of the immediately preceding sentence. With respect to Company Stock Options, (1) each grant of a Company Stock
Option was duly authorized on the date on which the grant of such Company Stock Option was by its terms to be effective (the
Grant Date
) for such option by all necessary corporate action, including, as applicable, approval by the
Company Board (or a duly constituted and authorized committee or subcommittee thereof), and (2) the per share exercise price of each Company Stock Option was at least equal to the fair market value of a share of Company Common Stock on the
applicable Grant Date. There are no debentures, bonds, notes or other Indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of the
Company may vote (
Company Voting Debt
). Neither the Company nor any of the Company Subsidiaries is a party to any voting agreement with respect to the voting of any capital stock or voting securities of, or other equity interests
in, the Company. Neither the Company nor any of the Company Subsidiaries is a party to any agreement pursuant to which any Person is entitled to elect, designate or nominate any director of the Company or any of the Company Subsidiaries.
SECTION 4.04
Authority; Execution and Delivery; Enforceability
. (a) The Company has all
requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Merger and the other transactions contemplated by this Agreement, subject, in the case of the Merger, to the
receipt of the affirmative vote of a majority of the outstanding shares of Company Common Stock entitled to vote at the Company Stockholders Meeting (the
Company Stockholder Approval
). The Company
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Board has adopted resolutions, by unanimous vote of the directors present at a meeting duly called at which a quorum of directors of the Company was present, (i) approving the execution,
delivery and performance of this Agreement, (ii) determining that entering into this Agreement is in the best interests of the Company and its stockholders, (iii) declaring this Agreement advisable and (iv) recommending that the
Companys stockholders adopt this Agreement and directing that this Agreement be submitted to the Companys stockholders for adoption at a duly held meeting of such stockholders for such purpose (the
Company Stockholders
Meeting
). As of the date of this Agreement, such resolutions have not been amended or withdrawn. Except for the Company Stockholder Approval, no other corporate proceedings on the part of the Company are necessary to authorize or adopt
this Agreement or to consummate the Merger and the other transactions contemplated by this Agreement (except for the filing of the appropriate merger documents as required by the DGCL). The Company has duly executed and delivered this Agreement and,
assuming the due authorization, execution and delivery by Parent and Merger Sub, this Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms except as enforcement may be limited by
bankruptcy, insolvency, reorganization or similar Laws affecting creditors rights generally and by general principles of equity.
(b) The Company Board has adopted such resolutions as are necessary to render inapplicable to this Agreement, the Merger and the other transactions contemplated by this Agreement the restrictions on
business combinations (as defined in Section 203 of the DGCL) as set forth in Section 203 of the DGCL. No fair price, moratorium, control share acquisition or other similar antitakeover
statute or similar statute or regulation applies with respect to this Agreement, the Merger or any of the other transactions contemplated by this Agreement.
SECTION 4.05
No Conflicts; Consents
. (a) The execution and delivery by the Company of this Agreement does not, and the performance by it of its obligations
hereunder and the consummation of the Merger and the other transactions contemplated by this Agreement will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation, any obligation to make an offer to purchase or redeem any Indebtedness or capital stock or any loss of a material benefit under, or result in the creation of any Lien upon any of
the properties or assets of the Company or any Company Subsidiary under, any provision of (i) the Company Charter, the Company By-laws or the comparable charter or organizational documents of any Company Subsidiary (assuming that the Company
Stockholder Approval is obtained), (ii) any Contract to which the Company or any Company Subsidiary is a party or by which any of their respective properties or assets is bound or any Company Permit or (iii) subject to the filings and
other matters referred to in Section 4.05(b), any Judgment or Law, in each case, applicable to the Company or any Company Subsidiary or their respective properties or assets (assuming that the Company Stockholder Approval is obtained), other
than, in the case of clauses (ii) and (iii) above, any matters that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.
(b) No Consent of or from, or registration, declaration, notice or filing made to or with any Governmental Entity is required to be
obtained or made by or with respect to the Company or any Company Subsidiary in connection with the execution and delivery of this Agreement or its performance of its obligations hereunder or the consummation of the Merger and the other transactions
contemplated by this Agreement, other than (i) (A) the filing with the SEC of the Proxy Statement in definitive form, and (B) the filing with the SEC of such reports under, and such other compliance with, the Exchange Act and the
Securities Act, and the rules and regulations thereunder, as may be required in connection with this Agreement, the Merger and the other transactions contemplated by this Agreement, (ii) (A) compliance with and filings under the HSR Act,
(B) compliance with and filings under the EC Merger Regulation, (C) compliance with any applicable requirements under the Canadian federal Competition Act, and (D) such other Consents, registrations, declarations, notices or filings
as are required to be made or obtained under any foreign antitrust, competition, trade regulation or similar Laws, (iii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware and appropriate documents with
the relevant authorities of the other jurisdictions in which Parent and the Company are qualified to do business, (iv) such Consents, registrations, declarations, notices or
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filings as are required to be made or obtained under the securities or blue sky laws of various states in connection with the issuance of the Stock Consideration, (v) such
filings with and approvals of the NYSE as are required to permit the consummation of the Merger and (vi) such other matters that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material
Adverse Effect.
SECTION 4.06
SEC Documents; Undisclosed Liabilities
. (a) The
Company has furnished or filed all reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) required to be furnished or filed by the Company with the SEC since January 3, 2010
(such documents, together with any documents filed with the SEC during such period by the Company on a voluntary basis on a Current Report on Form 8-K, but excluding the Proxy Statement, being collectively referred to as the
Company SEC
Documents
).
(b) Each Company SEC Document (i) at the time filed, complied in all material respects with the
requirements of SOX and the Exchange Act or the Securities Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such Company SEC Document and (ii) did not at the time it was filed (or if amended
or superseded by a filing or amendment prior to the date of this Agreement, then at the time of such filing or amendment) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which they were made, not misleading. Each of the consolidated financial statements of the Company included in the Company SEC Documents complied at the time it was filed as
to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, was prepared in accordance with GAAP (except, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly presented in all material respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods shown (subject, in the case of unaudited statements, to normal year-end audit adjustments).
(c) Except (i) as reflected or reserved against in the Companys consolidated audited balance sheet as of December 31,
2011 (or the notes thereto) included in the Filed Company SEC Documents, (ii) for liabilities and obligations incurred in connection with or contemplated by this Agreement, (iii) for liabilities and obligations that have been incurred in
the ordinary course of business since December 31, 2011 and (iv) for liabilities and obligations that have been discharged or paid in full in the ordinary course of business, neither the Company nor any Company Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) that, individually or in the aggregate, have had or would reasonably be expected to have a Company Material Adverse Effect.
(d) Each of the principal executive officer of the Company and the principal financial officer of the Company (or each former principal
executive officer of the Company and each former principal financial officer of the Company, as applicable) has made all applicable certifications required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302 and 906 of SOX with
respect to the Company SEC Documents, and the statements contained in such certifications are true and accurate as of the date of such certifications. None of the Company or any of the Company Subsidiaries has outstanding, or has arranged any
outstanding, extensions of credit to directors or executive officers within the meaning of Section 402 of SOX.
(e) The Company maintains a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) sufficient to provide reasonable assurance (i) that transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP applied on a consistent basis during the periods involved,
(ii) that transactions are executed only in accordance with the authorization of management and (iii) regarding prevention or timely detection of the unauthorized acquisition, use or disposition of the Companys properties or assets.
(f) The disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act)
utilized by the Company are reasonably designed to ensure that all information (both financial
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and non-financial) required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the SEC and that all such information required to be disclosed is accumulated and communicated to the management of the Company, as appropriate, to allow timely decisions regarding required disclosure and to
enable the chief executive officer and chief financial officer of the Company to make the certifications required under the Exchange Act with respect to such reports.
(g) Neither the Company nor any of the Company Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar Contract (including
any Contract or arrangement relating to any transaction or relationship between or among the Company and any of the Company Subsidiaries, on the one hand, and any unconsolidated Affiliate, including any structured finance, special purpose or limited
purpose entity or Person, on the other hand, or any off-balance sheet arrangements (as defined in Item 303(a) of Regulation S-K under the Exchange Act)), where the result, purpose or intended effect of such Contract is to avoid
disclosure of any material transaction involving, or material liabilities of, the Company or any of the Company Subsidiaries in the Companys or such Company Subsidiarys published financial statements or other Company SEC Documents.
(h) Since January 2, 2011, none of the Company, the Company Board, the audit committee of the Company Board or, to the
Knowledge of the Company, the Companys independent accountants has received any oral or written notification of any (x) significant deficiency in the internal controls over financial reporting of the Company,
(y) material weakness in the internal controls over financial reporting of the Company or (z) fraud, whether or not material, that involves management or other employees of the Company who have a significant role in the
internal controls over financial reporting of the Company.
(i) None of the Company Subsidiaries is, or has at any time since
January 1, 2009 been, subject to the reporting requirements of Section
13(a) or 15(d) of the Exchange Act.
SECTION 4.07
Information Supplied
. None of the
information supplied or to be supplied by the Company for inclusion or incorporation by reference in (i) the Form S-4 will, at the time the Form S-4 or any amendment or supplement thereto is declared effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) the Proxy Statement will, at the date it is first mailed to
the Companys stockholders or at the time of the Company Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading. The Proxy Statement will comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder. No
representation is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by Parent or Merger Sub for inclusion or incorporation by reference therein.
SECTION 4.08
Absence of Certain Changes or Events
. From January 1, 2012 to the date of
this Agreement, there has not occurred any fact, circumstance, effect, change, event or development that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect. From January 1, 2012
to the date of this Agreement, each of the Company and the Company Subsidiaries has conducted its respective business in the ordinary course in all material respects, and has not taken an action that would be prohibited by subsections (iii), (v),
(vi), (vii), (xii), (xiii), (xiv) and (xvi) of Section 5.01(b) if it were taken after the date of this Agreement and prior to the Effective Time.
SECTION 4.09
Taxes
. (a) Except for matters that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company
Material Adverse Effect: (i) each of the Company and each Company Subsidiary has timely filed, taking into account any extensions, all Tax Returns required to have been filed and such Tax Returns are accurate and complete; (ii) each of the
Company and each Company Subsidiary
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has paid all Taxes required to have been paid by it other than Taxes that are not yet due or that are being contested in good faith in appropriate proceedings and have been adequately reserved
under GAAP; (iii) no deficiency for any Tax has been asserted or assessed by a taxing authority against the Company or any Company Subsidiary which deficiency has not been paid or is not being contested in good faith in appropriate proceedings
and has been adequately reserved under GAAP; (iv) the Tax Returns of the Company and the Company Subsidiaries have been examined by the IRS or the appropriate taxing authority (or the applicable statutes of limitation for the assessment of
Taxes for such periods have expired) for all years to and including the year ending January 3, 2009; (v) neither the Company nor any Company Subsidiary has failed to withhold, collect, or timely remit all amounts required to have been
withheld, collected and remitted in respect of Taxes with respect to any payments to a vendor, employee, independent contractor, creditor, shareholder, or any other Person; (vi) neither the Company nor any Company Subsidiary is subject to
income Tax in a jurisdiction in which it does not file income Tax Returns, and no claim has been made in writing by any taxing authority that the Company or any Company Subsidiary is or may be subject to taxation in a jurisdiction in which it does
not file Tax Returns; (vii) neither the Company nor any Company Subsidiary has any liability for Taxes of any Person (other than the Company and the Company Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision
of local, state or foreign Law), as a transferee or successor, by contract, or otherwise; (viii) no Company Subsidiary is subject to income tax in a country other than the country of its incorporation or legal establishment by virtue of
maintaining a permanent establishment (within the meaning of any applicable income tax treaty) or other place of business in such country; and (ix) each Company Subsidiary established outside the United States that is characterized as a
corporation for U.S. federal income tax purposes is a controlled foreign corporation (as defined in Section 957(a) of the Code).
(b) Neither the Company nor any Company Subsidiary is a party to or is bound by any material Tax sharing, allocation or indemnification agreement or arrangement (other than such an agreement or
arrangement exclusively between or among the Company and wholly owned Company Subsidiaries). Neither the Company nor any Company Subsidiary is or has been a member of an affiliated group filing consolidated or combined Tax Returns (other than a
group of which the Company is or was the common parent).
(c) Within the past two years, neither the Company nor any Company
Subsidiary has been a distributing corporation or a controlled corporation in a distribution intended to qualify for tax-free treatment under Section 355 of the Code.
(d) Neither the Company nor any Company Subsidiary has participated in any reportable transaction within the meaning of
Treasury Regulation Section 1.6011-4 (or a similar provision of state or foreign Law).
(e) Except with respect to the
representations and warranties set forth in Sections 4.06(b), 4.08, 4.10, and 4.12, the representations and warranties set forth in this Section 4.09 are the Companys sole and exclusive representations relating to Taxes.
SECTION 4.10
Benefits Matters; ERISA Compliance
. (a) Section 4.10(a) of the Company
Disclosure Letter sets forth, as of the date of this Agreement, a complete and correct list identifying all material Company Benefit Plans. The Company has delivered to Parent true and complete copies of (i) all material Company Benefit Plans
or, in the case of any unwritten material Company Benefit Plan, a description thereof, (ii) the most recent annual report on Form 5500 (or similar filing under applicable Law) (other than Schedule SSA thereto) filed with the Internal
Revenue Service (the
IRS
) with respect to each material Company Benefit Plan (if any such report was required), (iii) the most recent summary plan description for each material Company Benefit Plan for which such summary plan
description is required, (iv) each trust agreement, group annuity contract or other funding mechanism relating to any material Company Benefit Plan, (v) the most recent financial statements and actuarial reports for each material Company
Benefit Plan (if any), and (vi) all determination letters, opinion letters, information letters or advisory opinions in respect of each material Company Benefit Plan issued by the IRS, the United States Department of Labor or the Pension
Benefit Guaranty Corporation (the
PBGC
) during this calendar year or any of the preceding three calendar years. For purposes of this Agreement,
Company Benefit Plans
means, collectively (A) all
employee pension benefit plans (as defined in Section 3(2) of ERISA),
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employee welfare benefit plans (as defined in Section 3(1) of ERISA) and all other bonus, pension, profit sharing, retirement, deferred compensation, incentive compensation,
equity or equity-based compensation, severance, retention, change in control, disability, vacation, death benefit, hospitalization, medical or other plans, arrangements or understandings providing, or designed to provide, material benefits to any
current or former directors, officers, employees or consultants of the Company or any Company Subsidiary and (B) all employment, consulting, indemnification, severance, retention, change of control or termination agreements or arrangements
(including Collective Bargaining Agreements) between the Company or any Company Subsidiary and any current or former directors, officers, employees, agents or consultants of the Company or any Company Subsidiary.
(b) All Company Benefit Plans which are intended to be qualified and exempt from Federal income Taxes under Sections 401(a) and 501(a),
respectively, of the Code, have been the subject of or have timely applied for, as of the date of this Agreement, determination letters from the IRS to the effect that such Company Benefit Plans and the trusts created thereunder are so qualified and
tax-exempt, and no such determination letter has been revoked nor, to the Knowledge of the Company, has revocation been threatened, nor has any such Company Benefit Plan been amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its qualification or materially increase its costs.
(c)
Section 4.10(c) of the Company Disclosure Letter sets forth each Company Benefit Plan that is subject to Title IV of ERISA, Section 302 of ERISA, Section 412 of the Code or Section 4971 of the Code that is maintained, contributed
to, or required to have been contributed to by the Company or any Company Subsidiary (a
Company Pension Plan
). With respect to each Company Pension Plan: (i) there does not exist any material accumulated funding deficiency
within the meaning of Section 412 of the Code or Section 302 of ERISA, whether or not waived; (ii) the fair market value of the assets of such Company Pension Plan equals or exceeds the actuarial present value of all accrued benefits
under such Company Pension Plan (whether or not vested) (based on the actuarial assumptions used to fund such Company Pension Plan); (iii) no reportable event within the meaning of Section 4043(c) of ERISA for which the 30-day notice
requirement has not been waived has occurred, and the consummation of the transactions contemplated by this Agreement will not result in the occurrence of any such reportable event; (iv) all premiums to the PBGC have been timely paid in full;
(v) no material liability (other than for premiums to the PBGC) under Title IV of ERISA has been or is expected to be incurred by the Company or any of the Company Subsidiaries; and (vi) the PBGC has not instituted proceedings to terminate
any such Company Pension Plan and, to the Knowledge of the Company, no condition exists that presents a risk that such proceedings will be instituted or which would constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any such Company Pension Plan. With respect to the Company Employee Retirement Plan, all action has been properly taken to cease the accrual of benefits under the plan on or after January 1, 2003.
(d) (i) No Company Pension Plan is a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA (a
Multiemployer Plan
) or a plan that has two or more contributing sponsors at least two of whom are not under common control, within the meaning of Section 4063 of ERISA (a
Multiple Employer Plan
);
(ii) none of the Company and the Company Subsidiaries nor any of their respective ERISA Affiliates has, at any time during the last six years, contributed to or been obligated to contribute to any Multiemployer Plan or Multiple Employer Plan;
and (iii) none of the Company and the Company Subsidiaries nor any ERISA Affiliates has incurred any Withdrawal Liability that has not been satisfied in full.
(e) None of the Company and the Company Subsidiaries nor, to the Knowledge of the Company, any other Person, including any fiduciary, has engaged in any prohibited transaction (as defined in
Section 4975 of the Code or Section 406 of ERISA), which could subject any of the Company Benefit Plans or their related trusts, the Company, any Company Subsidiary or any Person that the Company or any Company Subsidiary has an obligation
to indemnify, to any material Tax imposed under Section 4975 of the Code or Section 502 of ERISA.
(f) Neither the
Company nor any Company Subsidiary has any express commitment, whether legally enforceable or not, to, or not to, modify, change or terminate any material Company Benefit Plan.
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(g) Except as required by applicable Law, there are no limitations or restrictions on the
right of the Company or the Company Subsidiaries, or, on or at any time after the Effective Time, Parent or Parent Subsidiaries, including the Surviving Company, to merge, amend or terminate any such Company Benefit Plan.
(h) No Company Benefit Plan provides health, medical or other welfare benefits after retirement or other termination of employment (other
than for continuation coverage required under Section 4980(B)(f) of the Code or applicable Law).
(i) Each Company
Benefit Plan and its related trust, insurance contract or other funding vehicle has been administered in all material respects in accordance with its terms and is in material compliance with ERISA (if applicable), the Code and all other Laws
applicable to such Company Benefit Plan, and the Company and each of the Company Subsidiaries is in material compliance with ERISA, the Code and all other Laws applicable to the Company Benefit Plans. No enforcement action has been brought, or to
the Knowledge of the Company has been threatened to be brought, by any Governmental Entity with respect to any Company Benefit Plan.
(j) There are no material pending or, to the Knowledge of the Company, material threatened claims by or on behalf of any participant in any of the Company Benefit Plans, or otherwise involving any such
Company Benefit Plan or the assets of any Company Benefit Plan, other than routine claims for benefits.
(k) None of the
execution and delivery of this Agreement, the obtaining of the Company Stockholder Approval or the consummation of the Merger or any other transaction contemplated by this Agreement (alone or in conjunction with any other event, including any
termination of employment on or following the Effective Time) will (A) entitle any current or former director, officer, employee, agent or consultant of the Company or any of the Company Subsidiaries to any compensation or benefit;
(B) accelerate the time of payment or vesting, or trigger any payment or funding, of any compensation or benefits or trigger any other material obligation under any Company Benefit Plan; or (C) cause any material Company Benefit Plan to
cease to be in material compliance with its terms, ERISA (if applicable), the Code and all other Laws applicable to such Company Benefit Plan.
(l) Each Company Benefit Plan that is a nonqualified deferred compensation plan (as defined in Section 409A(d)(1) of the Code) that is subject to Section 409A of the Code has since
(i) January 1, 2005 been maintained and operated in good faith compliance with Section 409A of the Code and Notice 2005-1, (ii) October 3, 2004, not been materially modified (within the meaning of Notice 2005-1)
and (iii) January 1, 2009, been in documentary and operational compliance in all material respects with Section 409A of the Code.
(m) All material contributions required to be made to any Company Benefit Plan by applicable Law, regulation, any plan document or other contractual undertaking, and all material premiums due or payable
with respect to insurance policies funding any Company Benefit Plan, for any period through the date hereof have been timely made or paid in full or, to the extent not required to be made or paid on or before the date hereof, have been fully
reflected on the financial statements set forth in the Company SEC Documents. Each Company Benefit Plan that is an employee welfare benefit plan under Section 3(1) of ERISA either (i) is funded through an insurance company contract and is
not a welfare benefit fund within the meaning of Section 419 of the Code or (ii) is unfunded.
(n) All
Company Benefit Plans subject to the laws of any jurisdiction outside the United States (i) have, in all material respects, been maintained in accordance with all applicable requirements, (ii) if they are intended to qualify for special
tax treatment, meet all the requirements for such treatment, and (iii) if they are intended to be funded and/or book-reserved, are fully funded and/or book reserved, as appropriate, based upon reasonable actuarial assumptions.
SECTION 4.11
Litigation
. There is no suit, action or other proceeding pending or, to the
Knowledge of the Company, threatened against the Company or any Company Subsidiary or any of their respective properties or assets that, individually or in the aggregate, has had or would reasonably be expected to have a Company
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Material Adverse Effect, nor is there any Judgment outstanding against or, to the Knowledge of the Company, investigation by any Governmental Entity involving the Company or any Company
Subsidiary or any of their respective properties or assets that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect.
SECTION 4.12
Compliance with Applicable Laws
. The Company and the Company Subsidiaries are in
compliance in all material respects with all applicable Laws and Company Permits, including all applicable rules, regulations, directives or policies of any Governmental Entity, in each case that are material to the operations of each of the
Companys business segments (as described in the Filed Company SEC Documents) as presently conducted. To the Knowledge of the Company, no material action, demand or investigation by or before any Governmental Entity is pending or threatened
alleging that the Company or a Company Subsidiary is not in compliance with any applicable Law or Company Permit or which challenges or questions the validity of any rights of the holder of any Company Permit, in each case that are material to the
operations of each of the Companys business segments (as described in the Filed Company SEC Documents) as presently conducted.
SECTION 4.13
Environmental Matters
. (a) The Company and the Company Subsidiaries are in compliance with all applicable Environmental Laws, and neither the
Company nor any Company Subsidiary has received any written communication from a Governmental Entity that alleges that the Company or any Company Subsidiary is in violation of, or has liability under, any Environmental Law or any Permit issued
pursuant to Environmental Law, except for such noncompliance, violation or liability as, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.
(b) The Company and the Company Subsidiaries have obtained and are in compliance with all Permits issued pursuant to any applicable
Environmental Law applicable to the Company, the Company Subsidiaries and the Company Properties and all such Permits are valid and in good standing, in each case, except as, individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect; and no such material Permit will be subject to any material modification or revocation as a result of the transactions contemplated by this Agreement.
(c) There are no material Environmental Claims pending or, to the Knowledge of the Company, threatened against the Company or any of the
Company Subsidiaries.
(d) To the Knowledge of the Company, there have been no Releases of any Hazardous Substance at any
Company Properties that could reasonably be expected to form the basis of any Environmental Claim against the Company or any of the Company Subsidiaries or against any Person whose liabilities for such Environmental Claims the Company or any of the
Company Subsidiaries has retained or assumed, either contractually or by operation of Law other than such matters as, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.
(e) Neither the Company nor any of the Company Subsidiaries has retained or assumed, either contractually or, to the
Knowledge of the Company, by operation of Law, any liabilities or obligations that would reasonably be expected to subject the Company or any of the Company Subsidiaries to an Environmental Claim, except as, individually or in the aggregate, has not
and would not reasonably be expected to have a Company Material Adverse Effect.
(f) The representations and warranties set
forth in this Section 4.13 are the Companys sole and exclusive representations relating to Environmental Law, Hazardous Substances and Environmental Claims.
(g) As used herein:
(i)
Environmental Claim
means any administrative, regulatory or judicial actions, suits, orders, demands, directives, claims, liens, investigations, proceedings or written or oral notices of noncompliance or violation by or from any Person alleging liability of whatever
kind or nature arising out of, based on or
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resulting from (A) the presence or Release of, or exposure to, any Hazardous Substance at any location; or (B) the failure to comply with any Environmental Law or any Permit issued
pursuant to Environmental Law.
(ii)
Environmental Laws
means all federal, state, local and
foreign Laws concerning pollution or protection of the environment, including all those relating to the treatment, storage, disposal, discharge, release, threatened release, control or cleanup of any Hazardous Substances, as such of the foregoing
are promulgated and in effect on or prior to the Closing Date.
(iii)
Hazardous Substance
means any substance whether solid, liquid or gaseous in nature (A) the presence of which requires notification, investigation, or remediation under any applicable Environmental Law; (B) which is defined as toxic, a
hazardous waste, hazardous material or hazardous substance or pollutant or contaminant under any applicable Environmental Law; (C) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is regulated by any Governmental Entity with jurisdiction over the substance in the relevant location; (D) which contains gasoline, diesel fuel or other petroleum
hydrocarbons or volatile organic compounds; (E) which contains polychlorinated biphenyls (PCBs) or asbestos or urea formaldehyde foam insulation; or (F) which contains or emits radioactive particles, waves or materials, including radon
gas.
(iv)
Release
means any actual release, spill, emission, leaking, dumping, injection,
pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) or within any building, structure, facility or fixture.
SECTION 4.14
Contracts
. (a) As of the date of this Agreement, neither the
Company nor any Company Subsidiary is a party to any Contract required to be filed by the Company as a material contract pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act (a
Filed Company
Contract
) that has not been so filed.
(b) Section 4.14(b) of the Company Disclosure Letter sets forth, as of
the date of this Agreement, a true and complete list, and the Company has made available to Parent true and complete copies, of: (i) each Contract to which the Company or any of the Company Subsidiaries is a party that contains any
non-competition, non-solicitation or exclusivity provisions that restrict the Company or any Company Subsidiary with respect to any line of business or geographic area and that is material to the Company and the Company Subsidiaries, taken as a
whole; (ii) each Contract pursuant to which any material amount of Indebtedness (other than any Indebtedness described in clause (vii) of the definition of Indebtedness) of the Company or any of the Company Subsidiaries is outstanding or
may be incurred by its terms, other than any such agreement solely between or among the Company and the wholly owned Company Subsidiaries or between or among wholly owned Company Subsidiaries; (iii) each partnership, joint venture or similar
Contract to which the Company or any of the Company Subsidiaries is a party relating to the formation, creation, operation, management or control of any partnership or joint venture or to the ownership of any equity interest in any entity or
business enterprise other than the Company Subsidiaries (other than equity interests held by the Company through investment funds, pursuant to investments made in the ordinary course of business); (iv) each material Contract between the Company
or any of its Subsidiaries, on the one hand, and, on the other hand, any (A) present executive, officer or director of either the Company or any of the Company Subsidiaries or any person that has served as such an executive, officer or director
within the last five years or any of such officers or directors immediate family members, (B) record or beneficial owner of more than 5% of the shares of Company Common Stock outstanding as of the date hereof or (C) to the
Knowledge of the Company, any affiliate of any such officer, director or owner (other than the Company or any of the Company Subsidiaries), in each case, other than those Contracts filed as exhibits (including exhibits incorporated by reference) to
any Filed Company SEC Documents; (v) each Contract relating to the disposition or acquisition by the Company or any of the Company Subsidiaries, with obligations remaining to be performed or liabilities continuing after the date of this
Agreement, of any material business or any material amount of assets other than any such Contract entered into in the ordinary course of business; (vi) each material hedge, collar, option, forward purchasing, swap, derivative, or similar
Contract; (vii) each Contract containing any standstill provisions or provisions of similar effect to which the Company or any of
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the Company Subsidiaries is a party or of which the Company or any of the Company Subsidiaries is a beneficiary; (viii) each Contract with a Top Customer or a Top Supplier; and
(ix) each Contract to which the Company or any Company Subsidiary is a party that could reasonably be expected to involve payments during calendar year 2012 or any subsequent twelve month period of at least $500,000, and which is not terminable
by either party on less than 30 days written notice without penalty, except for any such Contract which is entered into in the ordinary course of business;
provided
that the following Contracts shall not be required to be listed on
Section 4.14(b) of the Company Disclosure Letter, shall not be required to made available to Parent pursuant to this Section 4.14(b) (it being understood that such Contracts may be required to be made available to Parent pursuant to other
Sections of this Agreement), and shall not be deemed a Material Contract for any purposes hereunder (whether or not a Filed Company Contract): (1) any trademark, license or similar Contract (including amendments thereto and
extensions thereof) between any of Parent or its Subsidiaries, on the one hand, and any of the Company or its Subsidiaries, on the other hand, (2) any Company Benefit Plan, (3) any Contract between the Company, on the one hand, and one or
more Company Subsidiaries, on the other hand, or between one or more Company Subsidiaries, (4) any Sales-Related Contract (any such Contract in clauses (1) through (4), an
Excluded Contract
), and (5) any license
concerning Intellectual Property. Each Contract described in this Section 4.14(b) and each Filed Company Contract, in each case, other than any Excluded Contract or any license concerning Intellectual Property, is referred to herein as a
Material Contract
.
(c) Except for matters which, individually or in the aggregate, have not had and would
not reasonably be expected to have a Company Material Adverse Effect, (i) each Material Contract (including, for purposes of this Section 4.14(c), any Contract entered into after the date of this Agreement that would have been a Material
Contract if such Contract existed on the date of this Agreement) is a valid, binding and legally enforceable obligation of the Company or one of the Company Subsidiaries, as the case may be, and, to the Knowledge of the Company, of the other parties
thereto, except, in each case, as enforcement may be limited by bankruptcy, insolvency, reorganization or similar Laws affecting creditors rights generally and by general principles of equity, (ii) each such Material Contract is in full
force and effect, and (iii) none of the Company or any of the Company Subsidiaries is (with or without notice or lapse of time, or both) in breach or default under any such Material Contract and, to the Knowledge of the Company, no other party
to any such Material Contract is (with or without notice or lapse of time, or both) in breach or default thereunder, except, in the case of clauses (i) or (ii), with respect to any Material Contract which expires by its terms (as in effect as
of the date hereof) or which is terminated in accordance with the terms thereof by the Company in the ordinary course of business consistent with past practice.
(d) Except for any Filed Company Contracts, as of the date of this Agreement, neither the Company nor any of the Company Subsidiaries are parties to or bound by any loan agreement, credit agreement, note,
debenture, bond, indenture, mortgage, security agreement, pledge, capital or financing method leases or other similar agreement that prevents or restricts the Company or any Company Subsidiary from (i) paying dividends or distributions to the
Person or Persons who owns such entity, (ii) incurring or guaranteeing Indebtedness, or (iii) creating Liens that secure Indebtedness.
SECTION 4.15
Properties
. (a) The Company and each Company Subsidiary has good and valid title to, or good and valid leasehold interests in, (i) the
properties and assets set forth on Section 4.15(a) of the Company Disclosure Letter and (ii) all of their other respective material properties and assets (collectively, the
Company Properties
, which, in each case, shall
exclude, for the avoidance of doubt, any intangible properties) except, with respect to clause (i), as would not detract in any material respect from the value, or interfere in any material respect with the current use, operation or occupancy, of
such properties or assets by the Company and the Company Subsidiaries and, with respect to clause (ii), in respects that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.
The Company Properties are, in all respects, adequate and sufficient, and in satisfactory condition, to support the operations of the Company and the Company Subsidiaries as presently conducted, except in respects that, individually or in the
aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. All of the Company Properties are free and clear of all Liens, except for Permitted Liens. This Section 4.15 does not relate to Intellectual
Property Rights matters, which are the subject of Section 4.16.
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(b) The Company and each of the Company Subsidiaries has complied with the terms of all
leases, subleases and licenses entitling it to the use of real property owned by third parties (
Company Leases
), and all Company Leases are valid and in full force and effect, in each case except as, individually or in the
aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect.
SECTION 4.16
Intellectual Property
. (a) Section 4.16(a) of the Company Disclosure Letter sets forth a complete and correct (in all material respects) list, as of the date hereof, of all (i) subsisting registrations and
applications for registration of Intellectual Property Rights owned by the Company, Company Subsidiaries and the Calvin Klein Trust (
Registered Intellectual Property Rights
); (ii) to the Companys Knowledge, unregistered
and/or common law trademarks, service marks and copyrights that are (A) owned by the Company, Company Subsidiaries, and the Calvin Klein Trust, (B) materially different from, or material variations of, the registrations and applications
disclosed pursuant to Section 4.16(a)(i), and (C) material to the businesses of the Company and the Company Subsidiaries as presently conducted under each of the Calvin Klein, Speedo, Chaps, Olga, and Warners trademarks (the
businesses conducted under each such trademark, taken as a whole, are each a
Principal Business
); (iii) pending suits, actions or other inter parties proceedings (including those in Patent and Trademark Offices and courts)
directly related to any material Intellectual Property Rights owned by the Company, Company Subsidiaries, and the Calvin Klein Trust; and (iv) material suits, actions or other proceedings instituted within the six years prior to the date of
this Agreement or threatened in writing within the four years prior to the date of this Agreement (e.g., via cease and desist letters) against the Company, a Company Subsidiary, or the Calvin Klein Trust directly relating to any material
Intellectual Property Rights.
(b) The Calvin Klein Trust, the Company or a Company Subsidiary owns of record, beneficially
owns and/or is licensed or otherwise has the right to use all Intellectual Property Rights necessary to conduct, or material to, any of the Principal Businesses;
provided
,
however
, that the foregoing representation and warranty shall
not apply to infringement, misappropriation, or unauthorized use of third-party Intellectual Property Rights. The Calvin Klein Trust is the sole and exclusive title owner of the Calvin Klein Marks included in the Registered Intellectual Property
Rights, and the Company or a Company Subsidiary, as disclosed in Section 4.16(a) of the Company Disclosure Letter, is the owner of all other Registered Intellectual Property Rights, in each case free and clear of all Liens other than
Sales-Related Contracts, immaterial license agreements and as disclosed on Section 4.16(b) of the Company Disclosure Letter, and the Company, Company Subsidiaries, and the Calvin Klein Trust have not granted any material licenses (including
rights to use and other than Sales-Related Contracts) with respect to the Registered Intellectual Property Rights. All material applications and registrations in the Registered Intellectual Property Rights used by the Company and the Company
Subsidiaries, to the Companys Knowledge, are valid and in full force and effect, and have not been assigned to a third party. All material applications and registrations for Intellectual Property Rights licensed by the Company or a Company
Subsidiary from (i) PRL USA, Inc. (as successor to Polo Ralph Lauren, L.P. and Polo Ralph Lauren Enterprises, L.P.) and (ii) Speedo International Limited or Speedo International B.V., are, to the Knowledge of the Company, valid and, with
respect to applications, in force and effect, or, with respect to registrations, in full force and effect, in each case in jurisdictions material to the applicable Principal Business. There is no Intellectual Property Right necessary to conduct, or
material to, any of the Principal Businesses(whether used by the Company, any Company Subsidiary or any Person authorized by any of the foregoing), that is not owned of record, or beneficially owned, by the Calvin Klein Trust, the Company or a
Company Subsidiary or that the Company or a Company Subsidiary is not properly authorized or otherwise does not have the right to use.
(c) To the Knowledge of the Company, the operation of the business of the Company and the Company Subsidiaries as presently conducted does not infringe, misappropriate or make unauthorized use of, in any
material respect, any Intellectual Property Rights of third parties, and there is no material suit, action or other proceeding pending or threatened in writing that alleges that the use of Intellectual Property Rights by the Company and the Company
Subsidiaries infringes, misappropriates or constitutes the unauthorized use of any Intellectual Property Rights of third parties.
(d) To the Knowledge of the Company, the Intellectual Property Rights set forth in Section 4.16(a) of the Company Disclosure Letter are not being infringed in any material respect by any Person, and
there are no
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material suits, actions or other proceedings pending, for which notice has been provided to the Company, any Company Subsidiary or the Calvin Klein Trust, or threatened in writing, challenging
the Companys, any Company Subsidiarys or the Calvin Klein Trusts ownership of or right to use, or the validity or enforceability or patentability of, any material Intellectual Property Rights.
(e) Section 4.16(e) of the Company Disclosure Letter sets forth, as of the date of this Agreement, a true and complete list, and the
Company has made available to Parent true and complete copies, of: (i) each Contract that purports to materially restrict the ability of the Company, any of the Company Subsidiaries or the Calvin Klein Trust to use or register any of the
material Intellectual Property Rights owned by the Company, any Company Subsidiary or the Calvin Klein Trust, except for any Sales-Related Contracts; and (ii) all material license agreements pursuant to which (A) the Company, any Company
Subsidiary or the Calvin Klein Trust grants any Person the right to use any Intellectual Property Rights owned by either the Company, any Company Subsidiary or the Calvin Klein Trust, except for any Sales-Related Contracts; or (B) any Person
grants either the Company, any Company Subsidiary or the Calvin Klein Trust the right to use any Intellectual Property Rights (other than licenses for commercially available software or hardware that are not material to any of the Principal
Businesses or the operations thereof) (each Contract described in clauses (i) and (ii), in each case, is referred to herein as a
Material Intellectual Property Contract
);
provided
that the Excluded Contracts shall not
be required to be listed on Section 4.16(e) of the Company Disclosure Letter, shall not be required to be made available to Parent pursuant to this Section 4.16(e) (it being understood that such Contracts may be required to be made
available to Parent pursuant to other Sections of this Agreement), and shall not be deemed a Material Intellectual Property Contract for any purposes hereunder. None of the Company, any Company Subsidiary or the Calvin Klein Trust is in
breach of or default in any material respect, or is alleged in writing, to be in breach of or default, in any material respect, under any Material Intellectual Property Contract, nor has an event or condition occurred (or been alleged by any other
party in writing to have occurred) that would constitute a material breach or event of default on the part of the Company, any Company Subsidiary or the Calvin Klein Trust, or would provide a basis for a valid claim, acceleration, additional fees or
termination by any other party under any Material Intellectual Property Contract, in each case that would be material to a Principal Business, except with respect to any Material Intellectual Property Contract which expires by its terms. To the
Knowledge of the Company, no other party is in breach or default, in any material respect, under any Material Intellectual Property Contract, nor, to the Knowledge of the Company, has any event or condition occurred (or been alleged by any other
party in writing to have occurred) that would constitute a material breach or event of default on the part of such other party under any Material Intellectual Property Contract, except with respect to any Material Intellectual Property Contract
which expires by its terms. No waiver or deferral of enforcement of any material rights or benefits of the Company or any Company Subsidiary has been provided in writing by the Company or a Company Subsidiary under any Material Intellectual Property
Contract since January 1, 2012. The consummation of the transactions contemplated by this Agreement will not result in the material loss or impairment of any of the Companys, any Company Subsidiarys or the Calvin Klein Trusts
rights in the Intellectual Property Rights of the Company.
(f) The Company and the Company Subsidiaries take commercially
reasonable measures to protect and preserve the confidentiality of all trade secrets and other material confidential information that are owned by the Company or any Company Subsidiaries. The Company and each Company Subsidiary has a policy to
secure valid written assignments or other written confirmations from all consultants, contractors and employees who contribute or have contributed to the creation or development of any material Intellectual Property Right owned or purported to be
owned by the Company or any Company Subsidiary of all the rights to such contributions that the Company or any Company Subsidiary does not already own by operation of Law.
SECTION 4.17
Agreements with Regulatory Agencies
. Neither the Company nor any of the Company Subsidiaries is subject to any material cease-and-desist or other
material order or enforcement action issued by, or is a party to any material written agreement, consent agreement or memorandum of understanding with, or is a party to any material commitment letter or similar undertaking to, or is subject to any
material order or directive by, or has been ordered to pay any material civil money penalty by, any Governmental Entity (other than a taxing
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authority, which is covered by Section 4.09), other than those of general application that apply to similarly situated providers of the same services or their Subsidiaries (each item in this
sentence, whether or not set forth in the Company Disclosure Letter, a
Company Regulatory Agreement
), nor has the Company or any of the Company Subsidiaries been advised in writing since January 31, 2010, by any Governmental
Entity that it is considering issuing, initiating, ordering or requesting any such Company Regulatory Agreement.
SECTION 4.18
Labor Matters
.
(a) Section 4.18(a) of the Company Disclosure Letter sets forth a list of
all collective bargaining agreements, labor union contracts, trade union agreements and foreign works council contracts to which the Company or any of the Company Subsidiaries is a party or is bound or that is applicable to the business of the
Company and the Company Subsidiaries (
Collective Bargaining Agreement
). To the Knowledge of the Company, as of the date of this Agreement, no labor organization or group of employees of the Company or any Company Subsidiary has
made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or threatened to be brought or filed, with the National Labor
Relations Board or any other labor relations tribunal or authority. To the Knowledge of the Company, there are no organizing activities, strikes, work stoppages, slowdowns, lockouts, material arbitrations or material grievances, or other material
labor disputes pending or threatened against or involving the Company or any Company Subsidiary.
(b) Neither the Company nor
any Company Subsidiary as of the date of this Agreement, has entered into any agreement, arrangement or understanding, whether written or oral, with any union, trade union, works council or other employee representative body or any material number
or category of its employees which would prevent, restrict or materially impede the consummation of the Merger or other transactions contemplated by this Agreement, require advance notification with respect to the Merger or any of the other
transactions contemplated by this Agreement, or the implementation of any layoff, redundancy, severance or similar program within its or their respective workforces (or any part of them).
SECTION 4.19
Brokers Fees and Expenses
. No broker, investment banker, financial advisor
or other Person, other than J.P. Morgan Securities LLC (the Company Financial Advisor), the fees and expenses of which will be paid by the Company, is entitled to any brokers, finders, financial advisors or other
similar fee or commission in connection with the Merger or any of the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company. The Company has furnished to Parent true and complete copies of all
agreements between the Company and the Company Financial Advisor relating to the Merger or any of the other transactions contemplated by this Agreement.
SECTION 4.20
Opinion of Financial Advisor
. The Company has received the oral opinion of the Company Financial Advisor, to be confirmed in writing (with a copy
provided to Parent promptly upon receipt by the Company), to the effect that, as of the date of this Agreement, the Merger Consideration is fair, from a financial point of view, to the holders of Company Common Stock.
SECTION 4.21
Insurance
. Each of the Company and the Company Subsidiaries maintains insurance
policies which, in all material respects, are against risks of a character and in such amounts as customary for companies of a similar size operating in the same or similar industry. Each insurance policy of the Company or any Company Subsidiary is
in full force and effect and was in full force and effect during the periods of time such insurance policy is purported to be in effect, and neither the Company nor any of the Company Subsidiaries is (with or without notice or lapse of time, or
both) in breach or default (including any such breach or default with respect to the payment of premiums or the giving of notice) under any such policy, except in respects that, individually or in the aggregate, have not had and would not reasonably
be expected to have a Company
Material Adverse Effect. There is no material claim by the Company or any of the Company Subsidiaries pending
under any such policies that has been denied or disputed by the insurer other than denials and disputes in the ordinary course of business consistent with past practice.
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SECTION 4.22
Foreign Corrupt Practices Act
. Since
January 1, 2008, (a) the Company and its Affiliates, directors, officers and employees have complied in all material respects with the U.S. Foreign Corrupt Practices Act of 1977, as amended (15 U.S.C. §§ 78a et seq. (1997 and
2000)), the UK Bribery Act of 2010, and any other applicable foreign or domestic anticorruption or antibribery Laws (collectively, the
Fraud and Bribery Laws
), and (b) except as is not material to the operations of each of
the Companys business segments (as described in the Filed Company SEC Documents) as presently conducted, neither the Company, any Company Subsidiary nor, to the Knowledge of the Company, any of the Companys Affiliates, directors,
officers, employees, agents or other representatives acting on the Companys behalf have directly or indirectly, in each case, in violation of the Fraud and Bribery Laws: (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii) offered, promised, paid or delivered any fee, commission or other sum of money or item of value, however characterized, to any finder, agent or other party acting on
behalf of or under the auspices of a governmental or political employee or official or governmental or political entity, political agency, department, enterprise or instrumentality, in the United States or any other country, (iii) made any
payment to any customer or supplier, or to any officer, director, partner, employee or agent of any such customer or supplier, for the unlawful sharing of fees to any such customer or supplier or any such officer, director, partner, employee or
agent for the unlawful rebating of charges, (iv) engaged in any other unlawful reciprocal practice, or made any other unlawful payment or given any other unlawful consideration to any such customer or supplier or any such officer, director,
partner, employee or agent or (v) taken any action or made any omission in violation of any applicable law governing imports into or exports from the United States or any foreign country, or relating to economic sanctions or embargoes, corrupt
practices, money laundering, or compliance with unsanctioned foreign boycotts.
SECTION 4.23
Top Customers and Suppliers
. Section 4.23 of the Company Disclosure Letter
lists (a) the ten largest suppliers (not including any licensor of Intellectual Property Rights) of the Company and the Company Subsidiaries (with respect to consolidated net purchases) (each, a
Top Supplier
) and (b) the
ten largest customers (not including any licensee of Intellectual Property Rights) of the Company and the Company Subsidiaries (with respect to consolidated net sales) (each, a
Top Customer
), each for the 12-month period ended
September 30, 2012. Except as set forth on Section 4.23 of the Company Disclosure Letter, to the Knowledge of the Company, the Company has not received written notice of any termination, cancellation or material reduction by any Top
Supplier or Top Customer of its business relationship with the Company and, to the Knowledge of the Company, no such termination, cancellation or material reduction has been threatened by any such Top Supplier or Top Customer.
SECTION 4.24
No Other Representations or Warranties
. Except for the representations and
warranties contained in this Article IV or in any certificate delivered by Parent or Merger Sub to the Company in accordance with the terms hereof (and notwithstanding the delivery or disclosure to Parent or its Representatives of any documentation,
projections, estimates, budgets or other information), each of Parent and Merger Sub acknowledges that none of the Company, the Company Subsidiaries or any other Person on behalf of the Company makes any other express or implied representation or
warranty in connection with the transactions contemplated by this Agreement.
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01
Conduct of Business
. (a) Conduct of Business by Parent. Except for matters expressly set forth in the Parent Disclosure Letter or otherwise
expressly permitted by this Agreement or required by this Agreement or required by applicable Law or with the prior written consent of the Company (which shall not be unreasonably withheld, conditioned or delayed), from the date of this Agreement to
the Effective Time, Parent shall not, and shall not permit any Parent Subsidiary to, do any of the following:
(i) (A) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property or
any combination thereof) in respect of, any of its capital stock, other equity interests or
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voting securities, other than (x) regular quarterly cash dividends payable by Parent in respect of shares of Parent Common Stock and (y) dividends and distributions by a direct or
indirect Parent Subsidiary; (B) in the case of Parent, split, combine, subdivide or reclassify any of its capital stock, other equity interests or voting securities, or securities convertible into or exchangeable or exercisable for capital
stock or other equity interests or voting securities or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for its capital stock, other equity interests or voting securities, other than as permitted
by Section 5.01(a)(ii); or (C) repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any capital stock or voting securities of, or equity interests in, Parent or any securities of Parent convertible
into or exchangeable or exercisable for capital stock or voting securities of, or equity interests in, Parent, or any warrants, calls, options or other rights to acquire any such capital stock, securities or interests, unless, in each case, Parent
shall also equitably adjust the Stock Consideration to provide the Companys stockholders with the same economic effect as though the Stock Consideration had been issued to the Companys stockholders on the date immediately preceding such
action;
provided
, that Parent shall be permitted to make acquisitions, or deemed acquisitions, of Parent Common Stock or other equity securities of Parent in connection with (1) payments of the exercise price of Parent Stock Options with
Parent Common Stock (including in connection with net exercises); (2) required tax withholdings in connection with the exercise of Parent Stock Options, the vesting of Parent Performance Shares and the vesting or delivery of other
awards pursuant to the Parent Stock Plans; (3) forfeitures of Parent Stock Options, Parent Performance Shares and other awards pursuant to the Parent Stock Plans; and (4) open market purchases of Parent Common Stock;
(ii) (A) amend the Parent Articles or the Parent By-laws or (B) amend in any material respect the charter or
organizational documents of any Parent Subsidiary, except, in the case of each of the foregoing clauses (A) and (B), (i) as may be required by Law or the rules and regulations of the SEC or the NYSE or (ii) as would not reasonably be
expected to affect the holders of Company Common Stock whose shares are converted into Parent Common Stock at the Effective Time in a manner different than holders of Parent Common Stock prior to the Effective Time;
(iii) except as expressly permitted or required by this Agreement, take any actions or omit to take any actions that would
or would be reasonably likely to (A) result in any of the conditions set forth in Article VII not being satisfied; (B) result in new or additional required approvals from any Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement that would materially delay the consummation of the Merger; or (C) materially impair, interfere with, hinder or delay the ability of Parent, the Company or Merger Sub to consummate the Merger and the
other transactions contemplated by this Agreement in accordance with the terms of this Agreement; or
(iv)
authorize any of the foregoing actions or commit, resolve or agree to take any of the foregoing actions.
(b)
Conduct of
Business by the Company
. Except for matters expressly set forth in the Company Disclosure Letter or otherwise expressly permitted by this Agreement or required by this Agreement or required by applicable Law or with the prior written consent of
Parent (which shall not be unreasonably withheld, conditioned or delayed) , from the date of this Agreement to the Effective Time, the Company shall, and shall cause each Company Subsidiary to, (x) conduct its business in the ordinary course
consistent with past practice in all material respects and (y) use reasonable best efforts to preserve intact its business organization and advantageous business relationships and keep available the services of its current officers and
employees;
provided
,
however
, that no action or failure to take action with respect to matters specifically addressed by any of the provisions of the next sentence shall constitute a breach under this sentence unless such action or
failure to take action would constitute a breach of such provision of the next sentence. In addition, and without limiting the generality of the foregoing, except for matters expressly set forth in the Company Disclosure Letter or otherwise
expressly permitted by this Agreement or required by this Agreement or required by applicable Law or with the prior written consent of Parent (which shall not be unreasonably withheld, conditioned or delayed), from the date of this Agreement to the
Effective Time, the Company shall not, and shall not permit any Company Subsidiary to, do any of the following:
(i) (A) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property or
any combination thereof) in respect of, any of its capital stock, other equity interests or
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voting securities, other than dividends and distributions by a direct or indirect wholly owned Company Subsidiary to its parent; (B) split, combine, subdivide or reclassify any of its
capital stock, other equity interests or voting securities or securities convertible into or exchangeable or exercisable for capital stock or other equity interests or voting securities or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for its capital stock, other equity interests or voting securities, other than as permitted by Section 5.01(b)(ii); or (C) repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or
otherwise acquire, any capital stock or voting securities of, or equity interests in, the Company or any Company Subsidiary or any securities of the Company or any Company Subsidiary convertible into or exchangeable or exercisable for capital stock
or voting securities of, or equity interests in, the Company or any Company Subsidiary, or any warrants, calls, options or other rights to acquire any such capital stock, securities or interests, except for acquisitions, or deemed acquisitions, of
Company Common Stock or other equity securities of the Company in connection with (1) the payment of the exercise price of Company Stock Options with Company Common Stock (including in connection with net exercises);
(2) required tax withholding in connection with the exercise of Company Stock Options, the vesting of Company Restricted Stock and the vesting or delivery of Company RSU Awards, and other awards pursuant to the Company Stock Plans; and
(3) forfeitures of Company Stock Options and Company Restricted Stock, pursuant to their terms as in effect on the date of this Agreement;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber or subject to any Lien (other than Liens imposed by applicable securities Laws) (A) any shares of capital stock of the Company or any
Company Subsidiary (other than the issuance of Company Common Stock upon the exercise of Company Stock Options and the vesting or delivery of Company Restricted Stock, or Company RSUs, or other awards pursuant to the Company Stock Plans, in each
case outstanding at the close of business on the date of this Agreement and in accordance with their terms in effect at such time); (B) any other equity interests or voting securities of the Company or any Company Subsidiary; (C) any
securities convertible into or exchangeable or exercisable for capital stock or voting securities of, or other equity interests in, the Company or any Company Subsidiary; (D) any warrants, calls, options or other rights to acquire any capital
stock or voting securities of, or other equity interests in, the Company or any Company Subsidiary; (E) any rights issued by the Company or any Company Subsidiary that are linked in any way to the price of any class of Company Capital Stock or
any shares of capital stock of any Company Subsidiary, the value of the Company, any Company Subsidiary or any part of the Company or any Company Subsidiary or any dividends or other distributions declared or paid on any shares of capital stock of
the Company or any Company Subsidiary; or (F) any Company Voting Debt;
(iii) (A) amend the Company
Charter or the Company By-laws; or (B) amend in any material respect the charter or organizational documents of any Company Subsidiary, except, in the case of each of the foregoing clauses (A) and (B), as may be required by Law or the
rules and regulations of the SEC or the NYSE;
(iv) (A) grant to any current or former employee or
director of the Company or any Company Subsidiary any increase in compensation, bonus or fringe or other benefits, except (1) to the extent required under any Company Benefit Plan as in effect as of the date of this Agreement and in the
ordinary course of business consistent with past practice, (2) in the ordinary course of business consistent with past practice in connection with promotions permitted under clause (D) below, or (3) for the payment of bonuses for
calendar year 2012 in the ordinary course of business consistent with past practice with respect to bonus awards made under the Warnaco Group, Inc. Incentive Compensation Plan (the
WICP
) or the Companys Annual Incentive Plan
the (
AIP
), each as in effect on the date hereof (collectively, the
Existing Bonus Programs
); (B) establish performance targets and/or make bonus awards in respect of any performance period commencing on or
following January 1, 2013; (C) grant any supplemental award pursuant to an Executive Employment Agreement other than in the ordinary course of business consistent with past practice (including, for the avoidance of doubt, with respect to
the timing of the grant); (D) promote any employee, fill open employee positions or modify employee job descriptions except in the ordinary course of business consistent with past practice as to persons who, after such promotion, filling or
modification, are in a position junior to Vice President; (E) grant to any Person any severance, retention, change in control or
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termination compensation or benefits or any increase therein, except with respect to new hires or to employees in the context of promotions based on job performance or workplace requirements, in
each case in the ordinary course of business consistent with past practice, or except to the extent required under any Company Benefit Plan as in effect as of the date of this Agreement; (F) enter into or adopt any material Company Benefit Plan
or amend in any material respect any material Company Benefit Plan or any award issued thereunder, except for any amendments in the ordinary course of business consistent with past practice that do not increase the cost of maintaining or providing
benefits under such Company Benefit Plan or in order to comply with applicable Law (including Section 409A of the Code); or (G) except as permitted by clause (D) above, hire or terminate the employment of any Person who has (in the
case of a Person to be terminated) or would have (in the case of a Person to be hired) an annual base salary of $150,000 or more;
provided
that the Company or any of its Subsidiaries may terminate an employee for cause (as such term is used
by the Company in the ordinary course of business consistent with past practice);
(v) make or adopt any change
in its accounting methods, principles or practices, except insofar as may have been required by a change in GAAP or Law (after the date of this Agreement);
(vi) directly or indirectly acquire or agree to acquire in any transaction any equity interest in or business of any firm, corporation, partnership, company, limited liability company, trust, joint
venture, association or other entity or division thereof or any properties or assets, except (A) acquisitions in the ordinary course of business consistent with past practice (which shall include purchases of, or joint ventures with,
distributors or franchise partners);
provided
that, in no event shall the consideration paid or transferred by the Company or any Company Subsidiary exceed $10,000,000 in the aggregate (not including any amount spent in connection with
acquisitions otherwise permitted by clauses (B)-(D) of this clause (vi)), (B) acquisitions of raw materials used in the production of inventory in the ordinary course of business consistent with past practice, (C) acquisitions as set
forth in Section 5.01(b) of the Company Disclosure Letter that are required by the terms of Contracts in existence on the date of this Agreement (which terms are in effect as of the date of this Agreement), or (D) with respect to
transactions between the Company, on the one hand, and any wholly owned Company Subsidiary, on the other hand, or between wholly owned Company Subsidiaries;
(vii) except in relation to Liens to secure Indebtedness for borrowed money permitted to be incurred under Section 5.01(b)(viii), sell, lease (as lessor), license, mortgage, sell and leaseback or
otherwise subject to any Lien (other than Permitted Liens), or otherwise dispose of any properties or assets or any interests therein other than (A) in the ordinary course of business consistent with past practice;
provided
that, in no
event shall the consideration paid or transferred by the Company or any Company Subsidiary exceed $5,000,000 in the aggregate (not including any consideration transferred pursuant to transactions otherwise permitted by clauses (B)-(D) of this
clause (vii)), (B) transactions with respect to inventory in the ordinary course of business consistent with past practice, (C) such transactions that are required by the terms of Contracts in existence on the date of this Agreement (which
terms are in effect as of the date of this Agreement), or (D) with respect to transactions between the Company, on the one hand, and any wholly owned Company Subsidiary, on the other hand, or between wholly owned Company Subsidiaries;
(viii) incur any additional Indebtedness, except for (A) the incurrence of additional Indebtedness
incurred in the ordinary course of business consistent with past practice in respect of borrowings under, or issuances of letters of credit pursuant to, unfunded revolving credit facilities of the Company or any Company Subsidiary in existence as of
the date hereof, not to exceed $65,000,000 in the aggregate at any one time outstanding, (B) Indebtedness in replacement of existing Indebtedness,
provided
that (1) the execution, delivery, and performance of this Agreement and the
consummation of the Merger and other transactions contemplated hereby shall not conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or any loss of a material benefit under, or result in the creation of any Lien, under such replacement Indebtedness; and (2) such replacement Indebtedness shall otherwise be on substantially similar terms or terms
that are more favorable to the Company, shall contain covenants that are no more restrictive to the Company, and shall be for the same or lesser principal amount, as the Indebtedness being replaced, (C) Indebtedness incurred by the Company or
any Company Subsidiary
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pursuant to clause (vii) of the definition of Indebtedness, or (D) Indebtedness between the Company, on the one hand, and any wholly owned Company Subsidiary, on the other hand, or
between wholly owned Company Subsidiaries;
(ix) make, or agree or commit to make, any
capital expenditure except (A) in accordance with the capital forecast set forth in Section 5.01(b)(ix) of the Company Disclosure Letter or (B) for capital expenditures not in excess of $1,000,000 in the aggregate;
(x) enter into or amend any material Contract to the extent consummation of the Merger or compliance by the Company or any
Company Subsidiary with the provisions of this Agreement would reasonably be expected to conflict with, or result in a violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation, any obligation to make an offer to purchase or redeem any Indebtedness or capital stock or any loss of a material benefit under, or result in the creation of any Lien upon any of the material
properties or assets of the Company or any Company Subsidiary under, or require Parent, the Company or any of their respective Subsidiaries to license or transfer any of its material properties or assets under, or give rise to any increased,
additional, accelerated, or guaranteed right or entitlements of any third party under, or result in any material alteration of, any provision of such Contract or amendment;
(xi) enter into any Collective Bargaining Agreement or other labor union Contract applicable to the employees of the
Company or any of the Company Subsidiaries;
(xii) assign, transfer, lease, cancel, fail to renew or fail to
extend any material Company Permit;
(xiii) settle or compromise any litigation, or release, dismiss or
otherwise dispose of any claim, liability, obligation or arbitration, other than settlements or compromises of litigation or releases, dismissals or dispositions of claims, liabilities, obligations or arbitration that (A) involve the payment of
monetary damages in an amount not in excess of $50,000 individually by the Company or any Company Subsidiary and do not involve any material injunctive or other non-monetary relief or impose material restrictions on the business or operations of the
Company and the Company Subsidiaries, taken as whole, or (B) involve the payment of monetary damages in an amount not in excess of $1,000,000 in the aggregate (not including in such aggregate, any settlements or compromises of litigation or
releases, dismissals or dispositions of claims, liabilities, obligations or arbitration pursuant to clause (A)) by the Company or any Company Subsidiary and do not involve any material injunctive or other non-monetary relief or impose material
restrictions on the business or operations of the Company and the Company Subsidiaries, taken as a whole;
(xiv) abandon, encumber, convey title (in whole or in part), exclusively license or grant any right or other licenses to
material Intellectual Property Rights owned by or exclusively licensed to the Company or any Company Subsidiary, or enter into licenses or agreements that impose material restrictions upon the Company or any of its Affiliates with respect to
Intellectual Property Rights owned by any third party, in each case, other than in the ordinary course of business consistent with past practice;
(xv) except for amendments, terminations or non-renewals in the ordinary course of business consistent with past practice, amend, waive, fail to enforce (in each case, in any material respect), assign or
terminate any Material Contract or enter into a Contract that would be a Material Contract if entered into prior to the date hereof;
(xvi) make, change or revoke any material election with respect to Taxes, file any amended material Tax Return, settle or compromise any material Tax liability, enter into any closing agreement with
respect to any material Tax or surrender any right to claim a material Tax refund;
(xvii) enter into any new
line of business outside of its existing business;
(xviii) take any actions or omit to take any actions that
would or would be reasonably likely to (i) result in any of the conditions set forth in Article VII not being satisfied, (ii) result in new or additional required approvals from any Governmental Entity in connection with the Merger and
other transactions contemplated by this Agreement that would materially delay the consummation of the Merger or (iii) materially impair,
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interfere with, hinder or delay the ability of Parent, the Company or Merger Sub to consummate the Merger and other transactions contemplated by this Agreement in accordance with the terms of
this Agreement; or
(xix) authorize any of, or commit, resolve or agree to take any of the foregoing actions.
(c)
No Control
. Nothing contained in this Agreement shall give Parent or Merger Sub, directly or indirectly, the right
to control or direct the Companys or its Subsidiaries operations prior to the Effective Time, and nothing contained in this Agreement shall give the Company, directly or indirectly, the right to control or direct Parents or its
Subsidiaries operations prior to the Effective Time. Prior to the Effective Time, each of the Company, Parent and Merger Sub shall exercise, subject to the terms and conditions of this Agreement, complete control and supervision over its and
its Subsidiaries respective operations.
SECTION 5.02
No Solicitation by the
Company; Company Board Recommendation
. (a) The Company agrees that neither it nor any of the Company Subsidiaries shall, and that it shall direct its and their respective directors, officers, employees, accountants, consultants, legal
counsel, financial advisors and agents and other representatives (collectively,
Representatives
) not to, and shall not publicly announce any intention to, directly or indirectly, (i) solicit or initiate, or knowingly
encourage (including by providing information or assistance), facilitate or induce any Alternative Proposal, (ii) participate in any discussions or negotiations (other than informing Persons of the provisions set forth in this
Section 5.02) regarding, or furnish or cause to be furnished to any Person or Group (as such term is defined in Section 13(d) under the Exchange Act) any nonpublic information with respect to, or take any other action to
facilitate any inquiries or the making of any offer or proposal that constitutes, or may reasonably be expected to lead to, an Alternative Proposal, (iii) approve, agree to, accept, endorse or recommend any Alternative Proposal,
(iv) submit to a vote of its stockholders, approve, endorse or recommend any Alternative Proposal, or (v) enter into any letter of intent or agreement in principle or any agreement providing for any Alternative Proposal (except for
confidentiality agreements permitted under Section 5.02(b)). Without limiting the foregoing, it is agreed that any violation of the restrictions set forth in this
Section 5.02(a) by any Representative of the Company or any Company Subsidiary shall constitute a breach of this Section 5.02(a) by the Company.
(b) Notwithstanding anything to the contrary in Section 5.02(a), if the Company or any of its Subsidiaries or any of its or their
respective Representatives receives an unsolicited, written Alternative Proposal by any Person or Group at any time prior to the Company Stockholders Meeting that did not result from or arise in connection with a breach of
Section 5.02(a), the Company and its Representatives may, prior to (but not after) obtaining the Company Stockholder Approval, take the actions set forth in subsections (A) and (B) of this Section 5.02(b) if the Company Board (or
any committee thereof) has determined, in its good faith judgment (after consultation with the Companys financial advisors and outside legal counsel), that such Alternative Proposal constitutes or would reasonably be expected to lead to a
Superior Proposal and that the failure to take such action would be inconsistent with the directors exercise of their fiduciary duties under applicable Law: (A) obtain from such Person or Group an executed confidentiality
agreement containing terms at least as restrictive with respect to such Person or Group as the terms of the Confidentiality Agreement are with respect to Parent and, following the entry into such confidentiality agreement, furnish
information to such Person or Group, and (B) enter into discussions and negotiations with, such Person or Group with respect to such Alternative Proposal.
(c) Promptly (but in no event more than 24 hours) following receipt of any Alternative Proposal or any request for nonpublic information
or any inquiry that could reasonably be expected to lead to any Alternative Proposal, the Company shall advise Parent in writing of the receipt of such Alternative Proposal, request or inquiry, and the terms and conditions of such Alternative
Proposal, request or inquiry (including, in each case, the identity of the Person or Group making any such Alternative Proposal, request or inquiry), and the Company shall as promptly as practicable provide to Parent (i) a copy of
such Alternative Proposal, request or inquiry, if in writing, or (ii) a written summary of the material terms of such Alternative Proposal, request or inquiry, if oral. The Company agrees that it shall provide to Parent (on a substantially
simultaneous basis) any non-public information concerning the Company or any of its Subsidiaries that may be provided (pursuant to
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Section 5.02(b)) to any other Person or Group in connection with any written Alternative Proposal that has not previously been provided to Parent. In addition, the Company shall
provide Parent as promptly as practicable with notice setting forth all such information as is reasonably necessary to keep Parent informed on a current basis in all material respects of all communications regarding (including material amendments or
proposed material amendments to) such Alternative Proposal, request or inquiry.
(d) Notwithstanding anything herein to the
contrary, at any time prior to the Company Stockholders Meeting, upon the occurrence of an Intervening Event or in the event that the Company has received a Superior Proposal (after taking into account the terms of any revised offer by Parent
pursuant to this Section 5.02(d)), the Company Board may withdraw, qualify or modify, or propose publicly to withdraw, qualify or modify, in a manner adverse to Parent, the Company Recommendation or take any action, or make any public
statement, filing or release inconsistent with the Company Recommendation (any of the foregoing being an
Adverse Recommendation Change
) (including, for the avoidance of doubt, recommending against the Merger or approving,
endorsing or recommending any Alternative Proposal) and, if the Company has received a Superior Proposal (after taking into account the terms of any revised offer by Parent pursuant to this Section 5.02(d)), terminate this Agreement pursuant to
Section 8.01(d) to enter into a definitive written agreement providing for such Superior Proposal simultaneously with the termination of this Agreement, if the Company Board has determined in good faith, after consultation with outside legal
counsel, that the failure to take such action would be inconsistent with the directors exercise of their fiduciary duties under applicable Law;
provided
that the Company Board may not make an Adverse Recommendation Change or, in the
case of a Superior Proposal, terminate this Agreement pursuant to Section 8.01(d), unless:
(i) the
Company has complied in all material respects with this Section 5.02;
(ii) the Company has provided prior
written notice to Parent at least four Business Days in advance (the
Notice Period
) of taking such action, which notice shall advise Parent, in the case of a Superior Proposal, that the Company Board has received a Superior
Proposal and shall include a copy of such Superior Proposal, or, in cases involving an Intervening Event, of the circumstances giving rise to the Adverse Recommendation Change;
(iii) during the Notice Period, the Company has and has caused its financial advisors and outside legal counsel to
negotiate with Parent in good faith (to the extent Parent desires to so negotiate) to make such adjustments in the terms and conditions of this Agreement so that, in the case of a Superior Proposal, such Superior Proposal ceases to constitute (in
the judgment of the Company Board) a Superior Proposal, or in cases involving an Intervening Event, the failure to make such Adverse Recommendation Change (in the judgment of the Company Board) would no longer be inconsistent with the
directors exercise of their fiduciary duties under applicable Law; and
(iv) the Company Board has
determined in good faith, after considering the results of such negotiations and giving effect to any proposals, amendments or modifications made or agreed to by Parent, if any, that, in the case of a Superior Proposal, such Superior Proposal
remains a Superior Proposal or, in cases involving an Intervening Event, that the failure to make such Adverse Recommendation Change continues to be inconsistent with the directors exercise of their fiduciary duties under applicable Law.
If during the Notice Period any revisions are made to the Superior Proposal, the Company shall deliver a new written notice to Parent and
shall comply with the requirements of this Section 5.02(d) with respect to such new written notice;
provided
,
however
, that for purposes of this sentence, references to the four Business Day period above shall be deemed to be
references to a two Business Day period.
(e) The Company and its Subsidiaries shall, and the Company shall direct its and
their respective Representatives to, (i) immediately cease and cause to be terminated any and all existing activities, discussions or negotiations with any Persons conducted heretofore with respect to any offer or proposal that constitutes, or
may reasonably be expected to lead to, an Alternative Proposal, (ii) request the prompt return or destruction of all
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confidential information previously furnished to any Person (other than Parent) that has, within the one year period prior to the date of this Agreement, made or indicated an intention to make,
or engaged in diligence or substantive discussions with respect to, an Alternative Proposal and (iii) not waive or amend any standstill provision or provisions of similar effect to which it is a party or of which it is a beneficiary
and shall strictly enforce any such provisions.
(f) Nothing contained in this Agreement shall prevent the Company or the
Company Board from issuing a stop, look and listen communication pursuant to Rule 14d-9(f) under the Exchange Act or complying with Rule 14d-9 and Rule 14e-2 under the Exchange Act with respect to an Alternative Proposal or from making
any disclosure to the Companys stockholders if the Company Board (after consultation with outside legal counsel) concludes that its failure to do so would be inconsistent with its fiduciary duties under applicable Law;
provided
that any
Adverse Recommendation Change may only be made in accordance with Section 5.02(d). For the avoidance of doubt, a factually accurate public statement that describes the Companys receipt of an Alternative Proposal and the operation of this
Agreement with respect thereto (without including such reaffirmation) shall not be deemed an Adverse Recommendation Change.
(g) If (i) any public announcement regarding an Alternative Proposal is made by the Company, any of the Company Subsidiaries or any
of the Companys Representatives or by the Person making such Alternative Proposal, (ii) within five Business Days following such public announcement, Parent delivers to the Company in writing a request that the Company Board expressly
publicly reaffirm the Company Recommendation, and (iii) the Company Board does not expressly publicly reaffirm the Company Recommendation during the period of five Business Days following the delivery to the Company of such request, then the
Company shall be deemed to have made an Adverse Recommendation Change at 11:59 p.m., New York City time, on the last day of such period of five Business Days.
(h) For purposes of this Agreement:
(i)
Alternative
Proposal
means any proposal or offer (whether or not in writing), with respect to any (i) merger, consolidation, share exchange, other business combination or similar transaction involving the Company; (ii) sale, lease,
contribution or other disposition, directly or indirectly (including by way of merger, consolidation, share exchange, other business combination, partnership, joint venture, sale of capital stock of or other equity interests in a Company Subsidiary
or otherwise) of any business or assets of the Company or the Company Subsidiaries representing 20% or more of the consolidated revenues, net income or assets of the Company and the Company Subsidiaries, taken as a whole; (iii) issuance, sale
or other disposition, directly or indirectly, to any Person (or the stockholders of any Person) or Group of securities (or options, rights or warrants to purchase, or securities convertible into or exchangeable for, such securities) representing 20%
or more of the voting power of the Company; (iv) transaction in which any Person (or the stockholders of any Person) shall acquire, directly or indirectly, beneficial ownership, or the right to acquire beneficial ownership, or formation of any
group which beneficially owns or has the right to acquire beneficial ownership of, 20% or more of the Company Common Stock or securities (or options, rights or warrants to purchase, or securities convertible into or exchangeable for, such
securities) representing 20% or more of the voting power of the Company; or (v) any combination of the foregoing (in each case, other than the Merger).
(ii)
Intervening Event
means a material event, development, occurrence, state of facts or change that was not known or reasonably foreseeable (or if known or reasonably foreseeable, the
probability or magnitude of consequences of which were not known or reasonably foreseeable) to the Company Board as of the date of this Agreement, which event, development, occurrence, state of facts or change (including any change in probability or
magnitude of consequences) becomes known to the Company Board prior to the Company Stockholders Meeting;
provided
, that (A) in no event shall any action taken by either party hereto to the extent required by the affirmative covenants set
forth in Section 6.03(c), and the consequences of any such action, constitute an Intervening Event; (B) in no event shall any decline in the market price or trading volume of the securities of Parent constitute an Intervening Event
(provided that the underlying causes of
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any such decline may be considered in determining whether an Intervening Event has occurred); and (C) in no event shall the receipt, existence of or terms of an Alternative Proposal or any
inquiry relating thereto or the consequences thereof constitute an Intervening Event.
(iii)
Superior
Proposal
means any bona fide written proposal or offer made by a third party or Group pursuant to which such third party (or, in a parent-to-parent merger involving such third party, the stockholders of such third party) or Group would
acquire, directly or indirectly, more than 50% of the Company Common Stock or assets of the Company and the Company Subsidiaries, taken as a whole; (i) on terms which the Company Board determines in good faith (after consultation with outside
counsel and a financial advisor of nationally recognized reputation) to be more favorable from a financial point of view to the holders of Company Common Stock than the Merger, taking into account all the terms and conditions of such proposal and
this Agreement (including any changes proposed by Parent to the terms of this Agreement); and (ii) that is reasonably likely to be completed, taking into account all financial, regulatory, legal and other aspects of such proposal.
ARTICLE VI
Additional Agreements
SECTION 6.01
Preparation of the Form S-4 and the Proxy Statement; Company Stockholders Meeting
. (a) As promptly as reasonably practicable following the
date of this Agreement, Parent and the Company shall jointly prepare and cause to be filed with the SEC a proxy statement to be sent to the stockholders of the Company relating to the Company Stockholders Meeting (together with any amendments or
supplements thereto, the Proxy Statement) and Parent shall prepare and cause to be filed with the SEC the Form S-4, in which the Proxy Statement will be included as a prospectus, and Parent and the Company shall use their respective
reasonable best efforts to have the Form S-4 declared effective under the Securities Act as promptly as reasonably practicable after such filing. Each of the Company and Parent shall furnish all information concerning such Person and its
Affiliates to the other, and provide such other assistance, as may be reasonably requested in connection with the preparation, filing and distribution of the Form S-4 and Proxy Statement, and the Form S-4 and Proxy Statement shall include all
information reasonably requested by such other party to be included therein. Each of the Company and Parent shall promptly notify the other upon the receipt of any comments from the SEC or any request from the SEC for amendments or supplements to
the Form S-4 or Proxy Statement and shall provide the other with copies of all correspondence between it and its Representatives, on the one hand, and the SEC, on the other hand. Each of the Company and Parent shall use its reasonable best efforts
to respond as promptly as reasonably practicable to any comments from the SEC with respect to the Form S-4 or Proxy Statement. Notwithstanding the foregoing, prior to filing the Form S-4 (or any amendment or supplement thereto) or mailing the Proxy
Statement (or any amendment or supplement thereto) or responding to any comments of the SEC with respect thereto, each of the Company and Parent (i) shall provide the other an opportunity to review and comment on such document or response
(including the proposed final version of such document or response), (ii) shall consider in good faith all comments reasonably proposed by the other and (iii) shall not file or mail such document or respond to the SEC prior to receiving
the approval of the other, which approval shall not be unreasonably withheld, conditioned or delayed. Each of the Company and Parent shall advise the other, promptly after receipt of notice thereof, of the time of effectiveness of the Form S-4, the
issuance of any stop order relating thereto or the suspension of the qualification of the Stock Consideration for offering or sale in any jurisdiction, and each of the Company and Parent shall use its reasonable best efforts to have any such stop
order or suspension lifted, reversed or otherwise terminated. Each of the Company and Parent shall also take any other action (other than qualifying to do business in any jurisdiction in which it is not now so qualified) required to be taken under
the Securities Act, the Exchange Act, any applicable foreign or state securities or blue sky laws, and the rules and regulations thereunder in connection with the Merger and the issuance of the Stock Consideration.
(b) If prior to the Effective Time any event occurs with respect to Parent or any Parent Subsidiary, or any change occurs with respect to
other information supplied by Parent for inclusion in the Proxy Statement or
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the Form S-4, which is required to be described in an amendment of, or a supplement to, the Proxy Statement or the Form S-4, Parent shall promptly notify the Company of such event, and
Parent and the Company shall cooperate in the prompt filing with the SEC of any necessary amendment or supplement to the Proxy Statement or the Form S-4 and, as required by Law, in disseminating the information contained in such amendment or
supplement to the Companys stockholders. Nothing in this Section 6.01(b) shall limit the obligations of any party under Section 6.01(a).
(c) If prior to the Effective Time any event occurs with respect to the Company or any Company Subsidiary, or any change occurs with respect to other information supplied by the Company for inclusion in
the Proxy Statement or the Form S-4, which is required to be described in an amendment of, or a supplement to, the Proxy Statement or the Form S-4, the Company shall promptly notify Parent of such event, and the Company and Parent shall
cooperate in the prompt filing with the SEC of any necessary amendment or supplement to the Proxy Statement or the Form S-4 and, as required by Law, in disseminating the information contained in such amendment or supplement to the
Companys stockholders. Nothing in this Section 6.01(c) shall limit the obligations of any party under Section 6.01(a).
(d) The Company shall, as soon as reasonably practicable following the date of this Agreement, duly call, give notice of, convene and hold the Company Stockholders Meeting for the sole purpose of seeking
the Company Stockholder Approval. The Company shall use its reasonable best efforts to (i) cause the Proxy Statement to be mailed to the Companys stockholders as promptly as practicable after the Form S-4 is declared effective under the
Securities Act and to hold the Company Stockholders Meeting as soon as practicable after the Form S-4 becomes effective and (ii) subject to Section 5.02(d), solicit the Company Stockholder Approval. The Company shall, through the
Company Board, recommend to its stockholders that they give the Company Stockholder Approval (the
Company Recommendation
) and shall include such recommendation in the Proxy Statement, in each case, except to the extent that the
Company Board shall have made an Adverse Recommendation Change as permitted by Section 5.02(d). Notwithstanding the foregoing provisions of this Section 6.01(d), if on a date for which the Company Stockholders Meeting is scheduled, the
Company has not received proxies representing a sufficient number of shares of Company Common Stock to obtain the Company Stockholder Approval, whether or not a quorum is present, the Company may (and shall, at the request of Parent) make one or
more successive postponements or adjournments of the Company Stockholders Meeting;
provided
that the Company Stockholders Meeting is not postponed or adjourned to a date that is more than 20 days after the date for which the Company
Stockholders Meeting was originally scheduled (excluding any adjournments or postponements required by applicable Law). The Company agrees that, unless this Agreement is terminated in accordance with its terms prior thereto, its obligations to hold
the Company Stockholders Meeting pursuant to this Section 6.01 shall not be affected by the commencement, public proposal, public disclosure or communication to the Company of any Alternative Proposal or by the making of any Adverse
Recommendation Change by the Company Board;
provided
,
however
, that (x) if the public announcement of an Adverse Recommendation Change or the delivery of notice by the Company to Parent pursuant to Section 5.02(d)(ii) occurs
less than ten Business Days prior to the Company Stockholders Meeting, the Company shall be entitled to postpone the Company Stockholders Meeting to a date not more than ten Business Days after the later of such event; and (y) the Company shall
not submit to the vote of its stockholders any Alternative Proposal.
SECTION 6.02
Access to Information; Confidentiality
. Subject to applicable Law, the Company shall, and shall cause each of its Subsidiaries to, afford to Parent and to the Representatives of Parent reasonable access, upon reasonable advance notice, during
the period prior to the Effective Time, to all their respective properties, books, contracts, commitments, personnel (including in order to allow Parent to evaluate such personnel) and records and, during such period, the Company shall, and shall
cause each of its Subsidiaries to, furnish promptly to Parent (a) to the extent not publicly available, a copy of each report, schedule, registration statement and other document filed by it during such period pursuant to the requirements of
Federal or state securities laws or commission actions and (b) all other information concerning its business, properties and personnel as Parent may reasonably request (in each case, in a manner so as to not interfere in any material respect
with the normal business operations of the Company or any Company Subsidiary);
provided
, however, that the Company shall
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not be required to permit such access or make such disclosure, to the extent it determines, after consultation with outside counsel, that such disclosure or access would reasonably be likely to
(i) violate the terms of any confidentiality agreement or other Contract with a third party (provided that the Company shall use its reasonable best efforts to obtain the required consent of such third party to such access or disclosure),
(ii) result in the loss of any attorney-client privilege (provided that the Company shall use its reasonable best efforts to allow for such access or disclosure (or as much of it as possible) in a manner that does not result in a loss of
attorney-client privilege), or (iii) violate any Law (provided that the Company shall use its reasonable best efforts to provide such access or make such disclosure in a manner that does not violate Law). If any material is withheld by the
Company pursuant to the proviso to the preceding sentence, the Company shall inform Parent as to the general nature of what is being withheld. Notwithstanding anything contained in this Agreement to the contrary, the Company shall not be required to
provide any access or make any disclosure to Parent pursuant to this Section 6.02 to the extent such access or information is reasonably pertinent to a litigation where the Company or any of its Affiliates, on the one hand, and Parent or any of
its Affiliates, on the other hand, are adverse parties. All information exchanged pursuant to this Section 6.02 shall be subject to the confidentiality agreement, dated as of September 11, 2012, between Parent and the Company (the
Confidentiality Agreement
). Subject to the limitations and restrictions set forth in, and without expanding the obligations of the Parties under, this Section 6.02, the Company shall, and shall cause its Subsidiaries to,
reasonably cooperate with Parent and its Subsidiaries to facilitate the planning of the integration of the parties and their respective businesses after the Closing Date.
SECTION 6.03
Efforts to Consummate
. (a) Subject to the terms and conditions herein provided, each of Parent and the Company shall use their respective
reasonable best efforts to promptly take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under this Agreement and applicable Laws to consummate and make effective as promptly as practicable
after the date hereof the transactions contemplated by this Agreement, including (i) preparing as promptly as practicable all necessary applications, notices, petitions, filings, ruling requests, and other documents and to obtain as promptly as
practicable all Consents necessary or advisable to be obtained from any Governmental Entity in order to consummate the transactions contemplated by this Agreement (collectively, the
Governmental Approvals
) and (ii) as
promptly as practicable taking all steps as may be necessary to obtain all such Governmental Approvals. In furtherance and not in limitation of the foregoing, each party hereto agrees to (A) make an appropriate and complete filing of a
Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated hereby within ten Business Days of the date of this Agreement, (B) make all other required filings pursuant to other Regulatory Laws with respect
to the transactions contemplated hereby as promptly as practicable and (C) not extend any waiting period under the HSR Act or enter into any agreement with the FTC or the DOJ or any other Governmental Entity not to consummate the transactions
contemplated by this Agreement, except with the prior written consent of the other party hereto (which shall not be unreasonably withheld, conditioned or delayed). Parent and the Company shall supply as promptly as practicable any additional
information or documentation that may be requested pursuant to the HSR Act or any other Regulatory Law and use its reasonable best efforts to take all other actions necessary, proper or advisable to cause the expiration or termination of the
applicable waiting periods under the HSR Act and any other Regulatory Law as soon as possible.
(b) Each of Parent and the
Company shall, in connection with the actions referenced in Section 6.03(a) to obtain all Governmental Approvals for the transactions contemplated by this Agreement under the HSR Act or any other Regulatory Laws (i) cooperate in all
respects with each other in connection with any communication, filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party; (ii) keep the other party and/or its counsel
informed of any communication received by such party from, or given by such party to, the FTC, the DOJ or any other U.S. or other Governmental Entity and of any communication received or given in connection with any proceeding by a private party, in
each case regarding any of the transactions contemplated hereby; (iii) consult with each other in advance of any meeting or conference with the FTC, the DOJ or any other Governmental Entity or, in connection with any proceeding by a private
party, with any other person, and to the extent permitted by the FTC, the DOJ or such other
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Governmental Entity or other person, give the other party and/or its counsel the opportunity to attend and participate in such meetings and conferences; and (iv) permit the other party
and/or its counsel to review in advance any submission, filing or communication (and documents submitted therewith) intended to be given by it to the FTC, the DOJ or any other Governmental Entity;
provided
that materials may be redacted to
remove references concerning the valuation of the businesses of the Company and its Subsidiaries. Parent and the Company may, as each deems advisable and necessary, reasonably designate any competitively sensitive material to be provided to the
other under this Section 6.03(b) as Antitrust Counsel Only Material. Such materials and the information contained therein shall be given only to the outside antitrust counsel of the recipient and will not be disclosed by such
outside counsel to employees, officers or directors of the recipient unless express permission is obtained in advance from the source of the materials (Parent or the Company, as the case may be) or its legal counsel.
(c) In furtherance and not in limitation of the covenants of the parties contained in Sections 6.03(a) and 6.03(b), Parent and the
Company shall take any and all steps not prohibited by Law to (i) avoid the entry of, or to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that would
restrain, prevent or delay the Closing on or before the End Date, including defending through litigation on the merits any claim asserted in any court with respect to the transactions contemplated by this Agreement by the FTC, the DOJ or any other
applicable Governmental Entity or any private party; and (ii) avoid or eliminate each and every impediment under any Regulatory Law so as to enable the Closing to occur as soon as possible (and in any event no later than the End Date),
including (x) proposing, negotiating, committing to and effecting, by consent decree, hold separate order, or otherwise, the sale, divestiture or disposition of such businesses, product lines or assets of Parent, the Company and their
respective Subsidiaries, and (y) otherwise taking or committing to take actions that after the Closing would limit Parents and/or its Subsidiaries (including the Companys and the Company Subsidiaries) freedom of action
with respect to, or its or their ability to operate and/or retain, one or more of the businesses, product lines or assets of Parent, the Company and/or their respective Subsidiaries;
provided
,
however
, that any action contemplated by
clauses (x) and (y) is conditioned upon the consummation of the transactions contemplated by this Agreement and that nothing contained in this Agreement shall require Parent to take any actions specified in this Section 6.03(c) that
would reasonably be expected in the aggregate to have a Material Adverse Effect on Parent, its Subsidiaries, the Company and the Company Subsidiaries, taken as a whole.
(d) The Company shall give prompt written notice to Parent, and Parent shall give prompt written notice to the Company, of (i) the occurrence, or failure to occur, of any event which occurrence or
failure to occur has resulted in or would reasonably be expected to result in the failure to satisfy or be able to satisfy any of the conditions specified in Article VII, and such written notice shall specify the condition which has failed or will
fail to be satisfied, (ii) any written notice from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement; and (iii) any written notice from any
Governmental Entity in connection with the transactions contemplated by this Agreement;
provided
that the delivery of any notice pursuant to this Section 6.03(d) shall not limit or otherwise affect the remedies available hereunder to
Parent or the Company.
(e) Notwithstanding anything else contained in this Agreement, during the term of this Agreement
neither the Company nor any of its Affiliates or any of their respective Representatives shall cooperate with any other Person in seeking regulatory clearance of any Alternative Proposal.
SECTION 6.04
Company Equity and Equity-Based Awards
.
(a)
Company Stock Options
. Effective as of the Effective Time, each then outstanding Company Stock Option, whether vested or
unvested, shall, at the Effective Time, be assumed by Parent and converted into an option to acquire, on the same terms and conditions (including vesting schedules and post-employment exercise periods) as were applicable to such Company Stock Option
immediately prior to the Effective Time, the number of shares of Parent Common Stock equal to the product of (1) the number of shares of Company Common Stock
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subject to such Company Stock Option immediately prior to the Effective Time,
multiplied by
(2) the Stock Award Exchange Ratio, rounded down to the nearest whole share, at a per share
exercise price equal to the quotient of (x) the per share exercise price of such Company Stock Option immediately prior to the Effective Time,
divided by
(y) the Stock Award Exchange Ratio, rounded up to the nearest whole cent (such
options, collectively, the
Assumed Parent Stock Options
).
(b)
Company Restricted Stock Awards
. As
of the Effective Time, each Company Restricted Stock Award that is outstanding immediately prior to the Effective Time, shall, at the Effective Time, be assumed by Parent and converted into an award of or relating to shares of Parent Common Stock
that is otherwise subject to the same terms and conditions (including vesting schedules) as were applicable to such Company Restricted Stock Award immediately prior to the Effective Time (collectively, the
Assumed Parent Restricted Stock
Awards
). The number of shares of Parent Common Stock in respect of each such Assumed Parent Restricted Stock Award shall be equal to (1) the number of shares of Company Common Stock subject to such Company Restricted Stock Award
immediately prior to the Effective Time,
multiplied by
(2) the Stock Award Exchange Ratio, rounded to the nearest whole share.
(c)
Company Performance Shares and Company PSUs
. As of the Effective Time, (1) each Company Performance Share and Company PSU granted under the Company Stock Plans that is outstanding
immediately prior to the Effective Time and with respect to which the applicable performance period had not been completed as of the Effective Time shall thereupon become fully vested at the target level and the holder of each such Company
Performance Share or Company PSU shall be entitled to receive, promptly following the Effective Time, the Merger Consideration in respect of the target number of shares of Company Common Stock subject thereto, less applicable tax withholding, and
(2) if any award of Company Performance Shares or Company PSUs with respect to which the applicable period had been completed as of the Effective Time remains outstanding immediately prior to the Effective Time, the holder of each such Company
Performance Share or Company PSU shall be entitled to receive the Merger Consideration in respect of the number of shares of Company Common Stock determined to be earned for such performance period in respect of such award (as set forth in
Section 5.01(b)(iv) of the Company Disclosure Letter), less applicable tax withholding.
(d)
Company Actions
. At
the Effective Time, all Company Stock Plans will be terminated in accordance with their respective terms and no further equity awards or other rights with respect to shares of Company Common Stock will be granted thereunder. Prior to the Effective
Time, the Company will adopt such resolutions as may reasonably be required in its discretion to effectuate the actions contemplated by this Section 6.04.
(e)
Registration Statement
. Promptly following the Effective Time, Parent shall prepare and file with the SEC an effective registration statement on Form S-8 (or other applicable form) with respect
to the shares of Parent Common Stock subject to Assumed Parent Stock Options and Assumed Parent Restricted Stock Awards (unless such shares of Parent Common Stock are otherwise covered by such an outstanding registration statement), and Parent shall
exercise reasonable commercial efforts to maintain the effectiveness of such registration statement for so long as such Assumed Parent Stock Options and Assumed Parent Restricted Stock Awards remain outstanding.
SECTION 6.05
Indemnification, Exculpation and Insurance
. (a) Parent agrees that all
rights to indemnification, advancement of expenses and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time now existing in favor of the current or former directors, officers or employees of the Company and
the Company Subsidiaries as provided in their respective certificates of incorporation or by-laws (or comparable organizational documents) and any indemnification or other similar agreements of the Company or any of the Company Subsidiaries, in each
case as in effect on the date of this Agreement, shall continue in full force and effect in accordance with their terms. From and after the Effective Time, the Surviving Company agrees that it will indemnify and hold harmless each individual who is
as of the date of this Agreement, or who becomes prior to the Effective Time, a director or officer of the Company or any of the Company Subsidiaries or
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who is as of the date of this Agreement, or who thereafter commences prior to the Effective Time, serving at the request of the Company or any of the Company Subsidiaries as a director or officer
of another Person (the Company Indemnified Parties), against all claims, losses, liabilities, damages, judgments, inquiries, fines and
reasonable fees, costs and expenses, including attorneys fees and disbursements, incurred in connection with any claim, action, suit or proceeding, whether civil, criminal, administrative or
investigative (including with respect to matters existing or occurring at or prior to the Effective Time (including this Agreement and the transactions and actions contemplated hereby)), arising out of or pertaining to the fact that the Company
Indemnified Party is or was an officer or director of the Company or any Company Subsidiary or is or was serving at the request of the Company or any Company Subsidiary as a director or officer of another Person, whether asserted or claimed prior
to, at or after the Effective Time, to the fullest extent permitted under applicable Law. In the event of any such claim, action, suit or proceeding, (x) each Company Indemnified Party will be entitled to advancement of expenses incurred in the
defense of any such claim, action, suit or proceeding from the Surviving Company within ten Business Days of receipt by the Surviving Company from the Company Indemnified Party of a request therefor;
provided
that any person to whom expenses
are advanced provides an undertaking, if and only to the extent required by the DGCL or the Surviving Companys certificate of incorporation or by-laws, to repay such advances if it is ultimately determined by final adjudication that such
person is not entitled to indemnification and (y) the Surviving Company shall cooperate in the defense of any such matter.
(b) In the event that the Surviving Company or any of its successors or assigns (i) consolidates with or merges into any other
Person and is not the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, the Surviving
Company shall cause proper provision to be made so that the successors and assigns of the Surviving Company assume the obligations set forth in this Section 6.05.
(c) For a period of six years from and after the Effective Time, the Surviving Company shall either cause to be maintained in effect the current policies of directors and officers liability
insurance and fiduciary liability insurance maintained by the Company or its Subsidiaries or provide substitute policies for the Company and its current and former directors and officers who are currently covered by the directors and
officers and fiduciary liability insurance coverage currently maintained by the Company in either case, of not less than the existing coverage and having other terms not less favorable to the insured persons than the directors and
officers liability insurance and fiduciary liability insurance coverage currently maintained by the Company with respect to claims arising from facts or events that occurred on or before the Effective Time (with insurance carriers having at
least an A rating by A.M. Best with respect to directors and officers liability insurance and fiduciary liability insurance), except that in no event shall the Surviving Company be required to pay with respect to such
insurance policies in respect of any one policy year more than 300% of the aggregate annual premium most recently paid by the Company prior to the date of this Agreement (the
Maximum Amount
), and if the Surviving Company is unable
to obtain the insurance required by this Section 6.05 it shall obtain as much comparable insurance as possible for the years within such six-year period for an annual premium equal to the Maximum Amount, in respect of each policy year within
such period. In lieu of such insurance, prior to the Closing Date the Company may, at its option (following reasonable consultation with Parent), purchase a tail directors and officers liability insurance policy and fiduciary
liability insurance policy for the Company and its current and former directors and officers who are currently covered by the directors and officers and fiduciary liability insurance coverage currently maintained by the Company, such
tail to provide coverage in an amount not less than the existing coverage and to have other terms not less favorable to the insured persons than the directors and officers liability insurance and fiduciary liability insurance coverage
currently maintained by the Company with respect to claims arising from facts or events that occurred on or before the Effective Time;
provided
that in no event shall the cost of any such tail policy in respect of any one policy year exceed
the Maximum Amount. In the event the Company purchases such tail coverage, the Surviving Company shall cease to have any obligations under the first sentence of this Section 6.05(c). The Surviving Company shall maintain such policies in full
force and effect, and continue to honor the obligations thereunder.
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(d) The provisions of this Section 6.05 (i) shall survive consummation of the
Merger, (ii) are intended to be for the benefit of, and will be enforceable by, each indemnified or insured party (including the Company Indemnified Parties), his or her heirs and his or her representatives, and (iii) are in addition to,
and not in substitution for, any other rights to indemnification or contribution that any such Person may have by contract or otherwise.
(e) From and after the Effective Time, Parent shall guarantee the prompt payment of the obligations of the Surviving Company and the Company Subsidiaries under this Section 6.05.
SECTION 6.06
Transaction Litigation
. The Company shall give Parent the opportunity to
participate in the defense or settlement of any stockholder litigation against the Company and/or its directors relating to the Merger and the other transactions contemplated by this Agreement, and no such settlement shall be agreed to without the
prior written consent of Parent, which consent shall not be unreasonably withheld, conditioned or delayed. Without limiting in any way the parties obligations under Section 6.03, the Company shall cooperate, shall cause the Company
Subsidiaries to cooperate, and shall use its reasonable best efforts to cause its directors, officers and other Representatives to cooperate in the defense against such litigation.
SECTION 6.07
Section 16 Matters
. Prior to the Effective Time, the Company, Parent and
Merger Sub each shall take all such steps as may be required to cause (a) any dispositions of Company Common Stock (including derivative securities with respect to Company Common Stock) resulting from the Merger and the other transactions
contemplated by this Agreement by each individual who will be subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company immediately prior to the Effective Time to be exempt under Rule 16b3
promulgated under the Exchange Act, and (b) any acquisitions of Parent Common Stock (including derivative securities with respect to Parent Common Stock) resulting from the Merger and the other transactions contemplated by this Agreement, by
each individual who may become or is reasonably expected to become subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to Parent to be exempt under Rule 16b-3 promulgated under the Exchange Act.
SECTION 6.08
Financing
.
(a) Each of Parent and Merger Sub will use reasonable best efforts to obtain the Financing (or in the event any portion or all of the
Financing becomes unavailable, alternative debt financing (in an amount sufficient, together with the remaining Financing, if any, and any other sources available to Parent and Merger Sub, to fund the payment of the Cash Consideration) from the same
or other sources (such portion from sources other than any source providing the Financing contemplated by the Commitment Letter as of the date hereof, the
Alternate Financing
)) required to consummate the transactions contemplated
by this agreement and to pay the related fees and expenses on the Closing Date. Parent shall keep the Company informed on a reasonable basis and in reasonable detail of the status of its efforts to arrange the Financing. Parent shall give the
Company prompt notice upon becoming aware of, or receiving notice or other communication with respect to, any material breach of or default under, or any event or circumstance that (with or without notice, lapse of time or both) could reasonably be
expected to give rise to any material breach of or default under, the Commitment Letter by a party thereto or any termination, withdrawal or rescission of the Commitment Letter. Notwithstanding anything in this Agreement to the contrary, each of
Parent and Merger Sub expressly acknowledges and agrees that neither the availability nor terms of the Financing or any Alternate Financing are conditions to the obligations of Parent and Merger Sub to consummate the Merger, and each of Parent and
Merger Sub reaffirms its obligation to consummate the Merger and the other transactions contemplated by this Agreement subject only to the express conditions set forth in Article VII, irrespective and independent of the availability or terms of the
Financing or any Alternate Financing, Parents or Merger Subs use of efforts in accordance with this Section 6.08, or otherwise.
(b) Prior to the Closing, the Company shall provide, shall cause the Company Subsidiaries and its and their respective officers and employees to provide, and shall use reasonable best efforts to cause its
and their respective Representatives to provide, on a timely basis, all cooperation that is reasonably requested by Parent
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and customary in connection with the arrangement of the Financing, including using its reasonable best efforts to (i) facilitate the execution and delivery of definitive financing, pledge,
security and guarantee documents (which documents shall only be required to become effective as of the Closing Date) and the provision of guarantees and security and the performance of the other obligations thereunder; (ii) promptly provide
financial and other information regarding the Company and the Company Subsidiaries as may be reasonably requested in writing by Parent (x) in order to consummate the Financing or (y) as necessary to satisfy the conditions set forth in the
Commitment Letter, including (A)(1) audited consolidated financial statements of the Company consisting of balance sheets as of the last date of each of the two fiscal years of the Company ended at least 90 days prior to the Closing Date and income
statements and statements of stockholders equity and cash flows for each of the three fiscal years of the Company ended at least 90 days prior to the Closing Date and an unqualified audit report relating thereto, (2) unaudited
consolidated financial statements of the Company consisting of balance sheets and income statements and statements of cash flows as of the last day of and for the most recently completed fiscal quarter ended at least 45 days before the Closing Date,
or, in the case of the statement of cash flows, for the period from the beginning of the most recently completed fiscal year ended at least 90 days before the Closing Date to the last day of the most recently completed fiscal quarter ended at least
45 days before the Closing Date (all of which shall have been reviewed by the independent accountants for the Company (as applicable) as provided in the Statement on Auditing Standards No. 100), in each case other than with respect to any
quarter-end that is also a fiscal year-end, and (3) all financial information about the Company requested in writing required in order to prepare (I) a pro forma consolidated statement of income of Parent and its Subsidiaries for the most
recently completed fiscal year ended at least 90 days before the Closing Date, (II) (X) a pro forma consolidated balance sheet of Parent and its Subsidiaries as of the last day of the most recently completed fiscal quarter ended at least 45
days before the Closing Date and (Y) a pro forma consolidated statement of income of Parent and its Subsidiaries for the period from the beginning of the most recently completed fiscal year ended at least 90 days before the Closing Date to the
last day of the most recently completed fiscal quarter ended at least 45 days before the Closing Date, together with, in the case of this clause (Y), a corresponding statement for the corresponding period of the prior year and (III) a pro forma
consolidated income statement for the twelve-month period ended on the last day of the most recently completed fiscal quarter ended at least 45 days before the Closing Date, or, if the most recently completed fiscal period is the end of a fiscal
year, ended at least 90 days before the Closing Date, in each case prepared after giving effect to the transactions described herein as if they had occurred as of such date (in the case of each such balance sheet) or at the beginning of such period
(in the case of each such statement of income) and, in each case contemplated by clauses (1) and (2), meeting the requirements of Regulation S-X (subject to exceptions customary for a Rule 144A offering) and (B) to the extent not
already provided under clause (A), all financial statements and other financial data relating to the Company and the Company Subsidiaries requested in writing to be included in a complete printed preliminary prospectus or preliminary offering
memorandum or preliminary private placement memorandum suitable for use in a customary high-yield road show for offerings of debt securities similar to the Notes (as defined in the Commitment Letter) by issuers similar to Parent which
contains all financial statements and other financial data to be included therein (including all audited financial statements, all unaudited financial statements (which shall have been reviewed by the independent accountants as provided in Statement
on Auditing Standards No. 100 (subject to exceptions customary for a Rule 144A offering)) and all appropriate
pro forma
financial statements prepared in accordance with, or reconciled to, generally accepted accounting principles in
the United States and prepared in accordance with Regulation S-X under the Securities Act of 1933, as amended, as if the Notes were registered, unless otherwise agreed, but subject to exceptions customary for a Rule 144A offering), and all
other data requested in writing (including selected financial data) that the Securities and Exchange Commission would require in a registered offering of the Notes (subject to exceptions customary for a Rule 144A offering), and that would be
necessary in order to receive customary comfort (including negative assurance comfort) from independent accountants of Parent and the Company in connection with the offering of the Notes (and the Company shall arrange the
delivery of such comfort with respect to such information) (all such information specified in clause (A) or clause (B), the
Required Information
; (iii) provide customary certificates and other documents and instruments
relating to the Financing; (iv) obtain customary authorization letters, comfort letters, and accountants consent letters, as may be requested by Parent in writing; (v) cooperate with Parent to obtain surveys and title insurance as
may be requested by
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Parent in writing; (vi) cause its senior officers to be available, upon reasonable advance notice and at times and locations reasonably acceptable to the Company, to participate in a
reasonable number of informational meetings, sessions and presentations with rating agencies and road show meetings in connection with the Financing; (vii) cooperate with Parent and Parents efforts to obtain customary corporate and
facilities rating; (viii) provide customary authorization letters to the Lenders and agents in respect of the Financing authorizing the distribution of information to prospective lenders and containing a representation to such financing sources
that the public side versions of such documents, if any, do not include material non-public information about the Company or its Affiliates or its or their securities; and (ix) assist Parent and its financing sources in the preparation of all
offering documents, an offering memorandum and other marketing and rating agency materials for the Financing. The Company and its counsel shall be given reasonable opportunity to review and comment upon any offering memoranda or similar documents,
or any materials for rating agencies, that include information about the Company or any of its Subsidiaries prepared in connection with the Financing. Notwithstanding anything in this Agreement to the contrary, none of the Company or any of the
Company Subsidiaries shall be required to (A) pay any commitment or other similar fee or incur any other liability or obligation of any kind, including under any guarantee or pledge or any other document relating to the Financing, in connection
with the Financing prior to the Closing Date, (B) enter into any binding agreement or commitment, or adopt any resolution or otherwise take any corporate or similar action, in connection with the Financing (or any Alternate Financing) that is
not conditioned on the occurrence of the Closing Date, or (C) take any action that would reasonably be expected to (1) unreasonably interfere with the ongoing operations of the Company and its Subsidiaries, (2) cause any
representation, warranty or covenant in this Agreement to be breached or any condition set forth in Article VII to fail to be satisfied except where Parent expressly waives such breach or non-compliance, (3) cause any director, officer or
employee of the Company or any of its Subsidiaries to incur any personal liability, (4) result in the disclosure of the Companys financial position or results of operations prior to the date such information has been released by the
Company to the public or (5) require the Company or its Subsidiaries to provide any access, documents or information that would not be required pursuant to Section 6.02. Parent shall promptly, upon request by the Company, reimburse the
Company for all reasonable out-of-pocket costs (including reasonable attorneys fees) incurred by the Company or any of the Company Subsidiaries in connection with the cooperation of the Company and the Company Subsidiaries contemplated by this
Section 6.08 and shall indemnify and hold harmless the Company, the Company Subsidiaries and their respective directors and other Representatives from and against any and all losses, damages, claims, costs or expenses suffered or incurred by
any of them in connection with the Financing and any information used in connection therewith (except with respect to fraud or any intentional misrepresentation with respect to any information provided by the Company or any of the Company
Subsidiaries), and any action taken by any of them at the request of Parent or Merger Sub pursuant to this Section 6.08(b).
(c) For purposes of this Section 6.08, the term Financing shall also be deemed to include any alternative arrangement arranged by Parent in lieu of the financing contemplated by the
Commitment Letter.
(d) All non-public or otherwise confidential information regarding either party obtained by
the other party pursuant to this Section 6.08 shall be kept confidential in accordance with the Confidentiality Agreement;
provided
,
however
, that Parent and its Representatives shall be permitted to disclose information as
necessary and consistent with customary practices in connection with the Financing subject to customary confidentiality arrangements reasonably satisfactory to the Company.
(e) With respect to any outstanding Indebtedness of the Company or any of the Company Subsidiaries identified by Parent in writing at least 15 Business Days prior to the Closing Date to be repaid in
connection with the consummation of the Merger, (i) the Company shall, or shall have caused the Company Subsidiaries to, use reasonable best efforts to deliver all notices and take other actions required to facilitate the termination of
commitments in respect of such Indebtedness, repayment in full of all obligations in respect of such Indebtedness and release of any Liens and guarantees in connection therewith on the Closing Date and (ii) no later than one (1) Business
Day prior to the Closing Date, the Company shall, or shall have caused the Company Subsidiaries to, use reasonable best efforts to furnish to Parent customary payoff letters with respect to such Indebtedness
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(each, a
Payoff Letter
) in substantially final form and in form and substance reasonably satisfactory to Parent from all financial institutions and other Persons to which such
Indebtedness is owed, or the applicable agent, trustee or other representative on behalf of such Persons, which Payoff Letters shall (x) indicate the total amount required to be paid to fully satisfy all principal, interest, prepayment
premiums, penalties, breakage costs or other outstanding and unpaid obligations related to such Indebtedness as of the Closing Date (the
Payoff Amount
) and (y) state that all obligations (including guarantees) in respect
thereof and Liens in connection therewith on the assets of the Company or any Company Subsidiary or otherwise on the Business shall be, substantially concurrently with the receipt of the Payoff Amount on the Closing Date by the Persons holding such
Indebtedness, released or arrangements reasonably satisfactory to Parent for such release shall have been made by such time, subject, as applicable, to the replacement (or cash collateralization or backstopping) of any then outstanding letters of
credit or similar Indebtedness.
SECTION 6.09
Public Announcements
. Except with
respect to any Adverse Recommendation Change or announcement made with respect to any Alternative Proposal, Superior Proposal or related matters in accordance with the terms of this Agreement, or any dispute between the parties regarding this
Agreement or the transactions contemplated hereby, Parent and the Company shall consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, including the Merger, and shall not issue any such press release or make any such public statement prior to such consultation except as such party may reasonably conclude may be required by applicable
Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system. The Company and Parent agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement shall be in the form heretofore agreed to by the parties. Nothing in this Section 6.09 shall limit the ability of any party hereto to make internal announcements to their respective employees that are
consistent in all material respects with the prior public disclosures regarding the transactions contemplated by this Agreement.
SECTION 6.10
Stock Exchange Listing
. Parent shall use its reasonable best efforts to cause the shares of Parent Common Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance, prior to the Closing Date.
SECTION 6.11
Employee Matters
.
(a) From the Effective Time through the last day of Parents 2013 fiscal
year, each employee of the Company or a Company Subsidiary who remains in the employment of Parent or a Parent Subsidiary following the Effective Time (a
Continuing Employee
) shall receive a base salary no lower than the base
salary provided to such Continuing Employee immediately prior to the Effective Time. For Parents 2013 fiscal year, each Continuing Employee shall (i) have a target annual bonus opportunity from Parent no less than his or her target annual
bonus opportunity for calendar year 2012 (and any such Parent bonus shall be pro-rated to reflect that the Effective Time occurs after the start of Parents 2013 fiscal year, if applicable), and (ii) receive an annual equity grant that is
substantially comparable in amount and terms to the equity grant provided to similarly situated employees of Parent for such year;
provided
that if Parent grants annual equity awards to Continuing Employees in respect of Parents 2013
fiscal year after the time that it grants such awards in respect of such fiscal year to similarly situated Parent employees, the applicable vesting periods and vesting dates for such awards granted to Continuing Employees shall coincide with the
vesting periods and dates of comparable equity awards granted to similarly situated Parent employees. From the Effective Time through December 31, 2013 (the
Continuation Period
), each Continuing Employee shall be entitled to
continue to participate on the same basis in the Surviving Companys health, welfare and retirement benefit plans as the Continuing Employee participated immediately prior to the Effective Time in the Companys health, welfare and
retirement benefit plans, and during the Continuation Period Parent shall not amend or terminate or cause the Surviving Company to amend or terminate any such health, welfare or retirement benefit plan other than as required by Law or in a manner
which would not have an adverse impact on the benefits provided under any such plan.
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(b) With respect to any Parent Benefit Plan in which Continuing Employees and their eligible
dependents will be eligible to participate at any time after the Effective Time, for purposes of determining eligibility to participate, level of benefits and vesting (other than benefit accruals and early retirement subsidies under any defined
benefit pension plan), service recognized by the Company and any Company Subsidiary immediately prior to the Effective Time shall be treated as service with Parent or the Parent Subsidiaries;
provided
,
however
, that, notwithstanding
the foregoing, the date of initial participation of each Continuing Employee in any Parent Benefit Plan shall be no earlier than (but may be after) the Effective Time;
provided
,
further
, that such service need not be recognized
(i) under any retiree medical plan or program of Parent or (ii) to the extent that (A) the applicable Company Benefit Plan did not recognize such service or (B) such recognition would result in any duplication of benefits.
(c) From the Effective Time through the first anniversary of the Effective Time (the
Severance Protection
Period
), Parent shall provide or cause the Surviving Company to provide to each Continuing Employee (other than Continuing Employees who are party to Executive Employment Agreements) whose employment is terminated by Parent or the
Surviving Company other than for cause (as such term is used for purposes of Parents severance arrangements during such period), the severance benefits set forth in Section 6.11(c) of the Parent Disclosure Letter, subject to the
terminated employees execution and non-revocation of a release of claims in form and substance equivalent to the release that Parent requires of similarly situated employees, and during the Severance Protection Period Parent shall not amend or
terminate or cause the Surviving Company to amend or terminate its commitment to provide such benefits.
(d) Within 30 days
following the Effective Time, Parent shall, or shall cause the Surviving Company to, pay to each employee who was a participant in the WICP for 2012 and who remains employed by the Company as of immediately prior to the Effective Time, a pro rata
target award under the WICP which becomes payable by reason of the Closing. With respect to Continuing Employees who were participating in the AIP for 2012, Parent shall pay or cause the Surviving Corporation to pay to each such Continuing Employee
who continues in employment for a period of two months following the Effective Time (or who is involuntarily terminated without cause (as such term is used for similarly situated employees of Parent) within such two month period) an amount
representing a pro rata target bonus (based on such employees target bonus opportunity in effect for 2012) for the period January 1, 2013 to the Effective Time. Such payment shall be made within ten days following the expiration of such
two month period or following such termination of employment, as the case may be.
(e) In consultation with Parent, the
Company shall, or shall cause the applicable Company Subsidiary to, provide all notices to, and engage in any consultation procedures with, any trade unions, works councils or similar bodies, in each case, that are required to be taken following the
date hereof, whether by Law, Contract, Collective Bargaining Agreement or otherwise, as soon as reasonably practicable following the date hereof (and in any event prior to the Closing Date).
(f) Nothing herein, expressed or implied, is intended or shall be construed to constitute an amendment to any Parent Benefit Plan or
Company Benefit Plan or any other compensation or benefits plan maintained for or provided to employees, directors or consultants of Parent or the Company prior to or following the Effective Time.
(g) Without otherwise limiting the generality of Section 9.07, the provisions of this Section 6.11 are for the sole benefit of
the parties to this Agreement and nothing herein, expressed or implied, is intended or shall be construed to confer upon or give to any person (including, for the avoidance of doubt, any Continuing Employee or other current or former employee of the
Company or any of its Affiliates), other than the parties hereto and their respective permitted successors and assigns, any legal or equitable or other rights or remedies (including with respect to the matters provided for in this Section 6.11)
under or by reason of any provision of this Agreement. Nothing in this Section 6.11 shall amend, or be deemed to amend (or, except as otherwise provided in this Section 6.11, prevent the amendment or termination of) any Company Benefit
Plan or any Parent Benefit
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Plan. Parent shall have no obligation to continue to employ or retain the services of any Continuing Employee for any period of time following the Closing and, except as specifically provided in
this Section 6.11, Parent shall be entitled to modify any compensation or benefits provided to, and any other terms or conditions of employment of, any such employees in its absolute discretion.
SECTION 6.12
Merger Sub; Parent Subsidiaries; Company Subsidiaries
. Parent shall cause each of
Merger Sub and any other applicable Subsidiary of Parent to comply with and perform all of its obligations under or relating to this Agreement, including in the case of Merger Sub to consummate the Merger on the terms and conditions set forth in
this Agreement. The Company shall cause each of the Company Subsidiaries to comply with and perform all of its obligations under or relating to this Agreement.
ARTICLE VII
Conditions Precedent
SECTION 7.01
Conditions to Each Partys Obligation to Effect the Merger
. The respective
obligation of each party to effect the Merger is subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions:
(a)
Stockholder Approval
. The Company Stockholder Approval shall have been obtained.
(b)
Listing
. The shares of Parent Common Stock issuable as Stock Consideration pursuant to this Agreement shall have been approved for listing on the NYSE, subject to official notice of issuance.
(c)
Regulatory Approvals
. (i) Any waiting period (and any extension thereof) applicable to the Merger under the
HSR Act shall have been terminated or shall have expired, (ii) the European Commission shall have issued a decision under the EC Merger Regulation declaring the Merger compatible with the common market, (iii) any waiting period (and any
extension thereof) applicable to the Merger under the Canadian federal Competition Act shall have been terminated or shall have expired, (iv) the parties shall have received the Consents set forth on Section 7.01(c) of the Company
Disclosure Letter, and (v) the parties shall have received any other Consents from, and made all other registrations, filings, notices and notifications with, Governmental Entities which are required under applicable Law to be received or made
prior to the Closing, other than such Consents where the failure to receive, or any such registrations, filings, notices and notification where the failure to make, individually or in the aggregate, would not reasonably be expected to have a Company
Material Adverse Effect, a Parent Material Adverse Effect, or result in a reversal of the Merger.
(d)
No Legal
Restraints
. No applicable Law and no Judgment, preliminary, temporary or permanent, or other legal restraint or prohibition and no binding order or determination by any Governmental Entity (collectively, the
Legal Restraints
)
shall be in effect that prevents, makes illegal or prohibits the consummation of the Merger and the other transactions contemplated hereby.
(e)
Form S-4
. The Form S-4 shall have become effective under the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order, and Parent shall have received
all state securities or blue sky authorizations necessary for the issuance of the Stock Consideration.
SECTION 7.02
Conditions to Obligations of the Company
. The obligations of the Company to consummate the Merger are further subject to the following conditions:
(a)
Representations and Warranties
. (i) The representations and warranties of Parent and Merger Sub contained in this Agreement (except for the representations and warranties contained in
Sections 3.01, 3.03(a), 3.04(a) and 3.11) shall be true and correct (without giving effect to any limitation as to materiality or Parent Material Adverse Effect set forth therein) at and as of the date of this Agreement
and at and as of the Closing
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Date as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such earlier date), except where the failure of such representations and
warranties to be true and correct (without giving effect to any limitation as to materiality or Parent Material Adverse Effect set forth therein), individually or in the aggregate, has not had and would not reasonably be
expected to have a Parent Material Adverse Effect, (ii) the representations and warranties of Parent and Merger Sub contained in Sections 3.01, 3.04(a) and 3.11 shall be true and correct in all material respects at and as of the date of
this Agreement and at and as of the Closing Date as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such earlier date), (iii) the representations and warranties of Parent and Merger
Sub contained in Section 3.03(a) shall be true and correct in all respects at and as of the date of this Agreement and at and as of the Closing Date as if made at and as of such time, except for
de minimis
inaccuracies, and (iv) the
representations and warranties of Parent and Merger Sub contained in the first sentence of Section 3.08 shall be true and correct in all respects at and as of the date of this Agreement and at and as of the Closing Date as if made at and as of
such time.
(b)
Performance of Obligations of Parent and Merger Sub
. Parent and Merger Sub shall have performed in all
material respects all material obligations required to be performed by them under this Agreement at or prior to the Closing Date.
(c)
No Parent Material Adverse Effect
. During the period from the date of this Agreement to the Closing Date, there shall not have occurred any fact, circumstance, effect, change, event or
development that, individually or in the aggregate, has had or would reasonably be expected to have a Parent Material Adverse Effect.
(d)
Parent Certificate
. Parent shall have delivered to the Company a certificate, dated as of the Closing Date and signed by its Chief Executive Officer or Chief Financial Officer, certifying to
the effect that the conditions set forth in Sections 7.02(a), 7.02(b) and 7.02(c) have been satisfied.
SECTION 7.03
Conditions to Obligation of Parent
. The obligation of Parent and Merger Sub to consummate the Merger is further subject to the following conditions:
(a)
Representations and Warranties
. (i) The representations and warranties of the Company contained in this Agreement (except
for the representations and warranties contained in Sections 4.01, 4.03(a) and 4.04(a), the first sentence of Section 4.08 and Section 4.19) shall be true and correct (without giving effect to any limitation as to
materiality or Company Material Adverse Effect set forth therein) at and as of the date of this Agreement and at and as of the Closing Date as if made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such earlier date), except where the failure of such representations and warranties to be true and correct (without giving effect to any limitation as to materiality or Company Material Adverse
Effect set forth therein), individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect, (ii) the representations and warranties of the Company contained in
Sections 4.01, 4.04(a) and 4.19 shall be true and correct in all material respects at and as of the date of this Agreement and at and as of the Closing Date as if made at and as of such time (except to the extent expressly made as of an earlier
date, in which case as of such earlier date), (iii) the representations and warranties of the Company contained in Section 4.03(a) shall be true and correct in all respects at and as of the date of this Agreement and at and as of the
Closing Date as if made at and as of such time, except for
de minimis
inaccuracies, and (iv) the representations and warranties of the Company contained in the first sentence of Section 4.08 shall be true and correct in all respects
at and as of the date of this Agreement and at and as of the Closing Date as if made at and as of such time.
(b)
Performance of Obligations of the Company
. The Company shall have performed in all material respects all material obligations required to be performed by it under this Agreement at or prior to the Closing Date.
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(c)
No Company Material Adverse Effect
. During the period from the date of this
Agreement to the Closing Date, there shall not have occurred any fact, circumstance, effect, change, event or development that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect.
(d)
Company Certificate
. The Company shall have delivered to Parent a certificate, dated as of the Closing Date and
signed by its Chief Executive Officer or Chief Financial Officer, certifying to the effect that the conditions set forth in Sections 7.03(a), 7.03(b) and 7.03(c) have been satisfied.
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01
Termination
. This Agreement may be terminated at any time prior to the Effective Time, whether before or after receipt of the Company Stockholder
Approval:
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent:
(i) if the Merger is not consummated on or before the End Date. The
End Date
shall mean the six month anniversary of the date hereof;
provided
,
however
, that if all of the
conditions to Closing shall have been satisfied or shall be then capable of being satisfied (other than the condition set forth in Section 7.01(c)), the End Date may be extended by Parent or the Company, by written notice to the other party,
for one or more 30-day periods up to an aggregate extension of three months from the first End Date; and
provided
,
further
, that the right to extend or terminate this Agreement under this Section 8.01(b)(i) shall not be available
to any party whose breach of any provision of this Agreement directly or indirectly causes the failure of the Closing to be consummated by the End Date;
(ii) if the condition set forth in Section 7.01(d) is not satisfied and the Legal Restraint giving rise to such non-satisfaction shall have become final and non-appealable;
provided
that the
terminating party shall have complied with its obligations pursuant to Section 6.03; or
(iii) if the
Company Stockholder Approval shall not have been obtained at a duly convened Company Stockholders Meeting or any adjournment or postponement thereof at which the vote was taken;
provided
,
however
, that the right to terminate this
Agreement under this Section 8.01(b)(iii) shall not be available to (A) the Company where the failure to obtain the Company Stockholder Approval shall have been caused by the action or failure to act of the Company and such action or
failure to act constitutes a material breach by the Company of this Agreement or (B) Parent where the failure to obtain the Company Stockholder Approval shall have been caused by the action or failure to act of Parent or Merger Sub and such
action or failure to act constitutes a material breach by Parent or Merger Sub of this Agreement;
(c) by the Company, if
Parent or Merger Sub has breached any representation, warranty, covenant or agreement contained in this Agreement, or if any representation or warranty of Parent or Merger Sub has become untrue, in each case, such that the conditions set forth in
Section 7.02(a) or Section 7.02(b), as the case may be, could not be satisfied as of the Closing Date;
provided
,
however
, that the Company may not terminate this Agreement pursuant to this Section 8.01(c) unless any such
breach or failure to be true has not been cured within 30 days after written notice by the Company to Parent informing Parent of such breach or failure to be true, except that no cure period shall be required for a breach which by its nature cannot
be cured prior to the End Date; and
provided
,
further
, that the Company may not terminate this Agreement pursuant to this Section 8.01(c) if the Company is then in breach of this Agreement in any material respect;
(d) by the Company prior to receipt of the Company Stockholder Approval, in order to enter into a definitive written agreement providing
for a Superior Proposal in accordance with Section 5.02(d),
provided
that the Company pays the Termination Fee prior to or simultaneously with such termination (it being understood that the Company shall be required to enter into such
definitive written agreement simultaneously with such termination of this Agreement);
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(e) by Parent, if the Company has breached any representation, warranty, covenant or
agreement contained in this Agreement, or if any representation or warranty of the Company has become untrue, in each case, such that the conditions set forth in Section 7.03(a) or Section 7.03(b), as the case may be, could not be
satisfied as of the Closing Date;
provided
,
however
, that Parent may not terminate this Agreement pursuant to this Section 8.01(e) unless any such breach or failure to be true has not been cured within 30 days after written notice
by Parent to the Company informing the Company of such breach or failure to be true, except that no cure period shall be required for a breach which by its nature cannot be cured prior to the End Date; and
provided
,
further
, that
Parent may not terminate this Agreement pursuant to this Section 8.01(e) if Parent is then in breach of this Agreement in any material respect;
(f) by Parent prior to the Company Stockholders Meeting, in the event that an Adverse Recommendation Change shall have occurred; or
(g) by Parent prior to the Company Stockholders Meeting, in the event that (i) the Company shall have materially breached its
obligations under Section 5.02 (A) in a manner materially adverse to Parent or (B) which results in the making of an Alternative Proposal, or (ii) the Company shall have breached in any material respect its obligations under
Section 6.01(d) by failing to call, give notice of, convene or and/or hold the Company Stockholders Meeting in accordance with Section 6.01(d).
SECTION 8.02
Effect of Termination
. In the event of termination of this Agreement by either Parent or the Company as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of the Company, Parent or Merger Sub, other than the penultimate sentence of Section 6.02, the reimbursement and indemnification
obligations of Parent pursuant to Section 6.08, this Section 8.02, Section 8.03 and Article IX, which provisions shall survive such termination,
provided
,
however
, that, no such termination shall relieve any party
from any liability or damages for any willful breach of this Agreement, except in the event that the Company pays to Parent, and Parent accepts as payment, the Termination Fee. For purposes of this Agreement, willful breach means a
breach that is a consequence of an act or omission undertaken by the breaching party with the knowledge that the taking of, or failure to take, such act would, or would reasonably be expected to, cause or constitute a material breach of this
Agreement; it being acknowledged and agreed, without limitation, that any failure by any party to consummate the Merger and the other transactions contemplated hereby after the applicable conditions thereto have been satisfied or waived (other than
those conditions that by their nature are to be satisfied at the Closing, which conditions would be capable of being satisfied at such time) shall constitute a willful breach of this Agreement.
SECTION 8.03
Fees and Expenses
. (a) Except as specifically provided for herein, all fees
and expenses incurred in connection with the Merger and the other transactions contemplated by this Agreement shall be paid by the party incurring such fees or expenses, whether or not such transactions are consummated.
(b) The Company shall pay to Parent a fee of $100,000,000 (the
Termination Fee
) if:
(i) the Company terminates this Agreement pursuant to Section 8.01(d) or Parent terminates this Agreement pursuant to
Section 8.01(f) (other than as a result of any Adverse Recommendation Change made by the Company relating to a Parent Material Adverse Effect) or Section 8.01(g);
provided
that if either the Company or Parent terminates this
Agreement pursuant to Section 8.01(b)(iii) at any time after Parent would have been permitted to terminate this Agreement pursuant to Section 8.01(f) (other than as a result of any Adverse Recommendation Change made by the Company relating
to a Parent Material Adverse Effect) or 8.01(g), this Agreement shall be deemed terminated pursuant to either Section 8.01(f) (other than as a result of any Adverse Recommendation Change made by the Company relating to a Parent Material Adverse
Effect) or 8.01(g), as applicable, for purposes of this Section 8.03(b)(i); or
(ii) (A) an Alternative
Proposal shall have been made to the Company and not publicly withdrawn at least five Business Days prior to the Company Stockholders Meeting or shall have been made directly to the stockholders of the Company generally and not publicly withdrawn at
least five Business Days prior to the
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Company Stockholders Meeting or shall otherwise become generally known to the public and not publicly withdrawn at least five Business Days prior to the Company Stockholders Meeting or any Person
or Group shall have publicly announced an intention (whether or not conditional) to make an Alternative Proposal not subsequently publicly withdrawn at least five Business Days prior to the Company Stockholders Meeting;
(B) thereafter this Agreement is terminated pursuant to Section 8.01(b)(i), 8.01(b)(iii) or 8.01(e); and (C) within 12 months of such termination, the Company enters into a definitive Contract to consummate any Alternative Proposal or
any Alternative Proposal is consummated;
provided
,
however
, that for purposes of this Section 8.03(b)(ii), the references to 20% in the definition of Alternative Proposal shall be deemed to be references to 50.1%.
Any Termination Fee due under this Section 8.03(b) shall be paid by wire transfer of same-day funds (x) in the case of
clause (i) above, on the Business Day immediately following the date of termination of this Agreement (or simultaneously with such termination, in the case of termination pursuant to Section 8.01(d)) and (y) in the case of
clause (ii) above, on the date of the first to occur of the events referred to in clause (ii)(C) above.
(c) The Company
acknowledges and agrees that the agreements contained in Section 8.03(b) are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Parent would not enter into this Agreement. Accordingly, if
the Company fails promptly to pay the amount due pursuant to Section 8.03(b), and, in order to obtain such payment, Parent commences a suit, action or other proceeding that results in a Judgment in its favor for such payment, the Company shall
pay to Parent its costs and expenses (including attorneys fees and expenses) in connection with such suit, action or other proceeding, together with interest on the amount of such payment from the date such payment was required to be made
until the date of payment at a rate per annum equal to the prime interest rate published in
The Wall Street Journal
on the date such interest begins accruing. The parties agree that the payment of the Termination Fee shall be the sole and
exclusive monetary remedy available to Parent and Merger Sub with respect to this Agreement and the transactions contemplated hereby in the event any such payment becomes due and payable, and, upon payment of the Termination Fee by the Company and
the acceptance of such Termination Fee by Parent, the Company, the Companys Affiliates and its and their respective directors, officers, employees, stockholders and Representatives shall have no further liability to Parent and Merger Sub under
this Agreement. In no event shall the Company be obligated to pay the Termination Fee on more than one occasion. Notwithstanding the foregoing, nothing herein shall require Parent to accept the Termination Fee or forego its right to seek specific
performance pursuant to Section 9.10.
SECTION 8.04
Amendment
. This Agreement
may be amended by the parties at any time before or after receipt of the Company Stockholder Approval;
provided
, however, that (i) after receipt of the Company Stockholder Approval, there shall be made no amendment that by Law requires
further approval by the stockholders of the Company without the further approval of such stockholders, and (ii) except as provided above, no amendment of this Agreement shall be submitted to be approved by the stockholders of the Company unless
required by Law. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties.
SECTION 8.05
Extension; Waiver
. At any time prior to the Effective Time, the parties may
(a) extend the time for the performance of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in the representations and warranties contained in this Agreement or in any document delivered pursuant to
this Agreement, (c) waive compliance with any covenants and agreements contained in this Agreement or (d) waive the satisfaction of any of the conditions contained in this Agreement. No extension or waiver by the Company shall require the
approval of the stockholders of the Company unless such approval is required by Law. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights.
SECTION 8.06
Procedure for Termination, Amendment, Extension or Waiver
. A termination of this Agreement pursuant to Section 8.01, an amendment of this
Agreement pursuant to Section 8.04 or an extension
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or waiver pursuant to Section 8.05 shall, in order to be effective, require, in the case of the Company, Parent or Merger Sub, action by its Board of Directors or the duly authorized
designee thereof. Termination of this Agreement prior to the Effective Time shall not require the approval of the stockholders of either Parent or the Company.
ARTICLE IX
General Provisions
SECTION 9.01
Nonsurvival of Representations and Warranties
. None of the representations and
warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time. This Section 9.01 shall not limit Section 8.02 or any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 9.02
Notices
. All
notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally, or if by facsimile, upon written confirmation of receipt by
facsimile, (b) on the 1st Business Day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (c) on the earlier of confirmed receipt or the 5th Business Day following the date of
mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the
party to receive such notice:
(a) if to the Company, to:
The Warnaco Group, Inc.
501 7th Avenue
New York, NY 10018
Phone: (212) 287-8000
Facsimile: (212) 287-8511
Attention: Jay L. Dubiner, Executive Vice President,
General Counsel & Secretary
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Phone: (212) 735-3000
Facsimile: (212) 735-2000
Attention: Alan C. Myers
Peter D. Serating
(b) if to Parent or Merger Sub, to:
PVH Corp.
200 Madison Avenue
New York, NY 10016
Phone: (212) 381-3500
Facsimile: (212) 381-3993
Attention: Mark D. Fischer, Senior Vice President, General Counsel & Secretary
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with a copy (which shall not constitute notice) to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Phone: (212) 403-1000
Facsimile: (212) 403-2000
Attention: Andrew J. Nussbaum
Gregory E. Ostling
SECTION 9.03
Definitions
. For purposes of this Agreement:
An
Affiliate
of any Person means another Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such first Person.
Business Day
means any day
other than (i) a Saturday or a Sunday or (ii) a day on which banking and savings and loan institutions are authorized or required by Law to be closed in New York City.
Calvin Klein Marks
means the trademarks and service marks Calvin Klein, ck Calvin Klein, ck, Calvin Klein Collection,
and all variations and combinations thereof owned by the Calvin Klein Trust throughout the entire world in connection with all products and services (other than to the extent a trademark or service mark is subject to the Class A interest in the
Calvin Klein Trust), together with all related recordations, applications for registration and registrations, and all goodwill associated therewith.
Calvin Klein Trust
means the Calvin Klein Trademark Trust;
provided
that all references herein to the Calvin Klein Trust shall only be with respect to the interests therein owned
by the Company and shall exclude for all purposes of this Agreement, the Class A ownership interests of Calvin Klein Inc. in the Calvin Klein Trust and or any action taken by or on behalf of Calvin Klein Inc. with respect to the Calvin Klein
Trust or its interests therein.
Code
means the Internal Revenue Code of 1986, as amended.
Company Career Share
means any award of Company Common Stock that forms part of a Company Supplemental Award.
Company Career Unit
means any award of the right to receive Company Common Stock that is subject to
restrictions based on certain retirement eligibility requirements and that forms part of a Company Supplemental Award.
Company Material Adverse Effect
means a Material Adverse Effect with respect to the Company.
Company Performance Share
means any award of the right to receive Company Common Stock that is subject to restrictions
based, in whole or in part, on the satisfaction of performance conditions and which is granted under any Company Stock Plan.
Company PSU
means any award of the right to receive Company Common Stock that is subject to restrictions based on
performance and certain retirement eligibility requirements, and which is granted under any Company Stock Plan.
Company Restricted Stock Award
means any award of or relating to Company Common Stock (including Company Career
Shares, Company Career Units and Company RSUs, but excluding Company Stock Options, Company Performance Shares and Company PSUs) that is subject to restrictions based on continuing service (i.e., is not subject to performance conditions) and which
is granted under any Company Stock Plan or otherwise.
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Company RSU
means any award of the right to receive Company Common Stock
that is subject to restrictions based solely on continuing service (i.e., is not subject to performance conditions) and which is granted under any Company Stock Plan.
Company Stock Option
means any option to purchase Company Common Stock granted under any Company Stock Plan.
Company Stock Plans
means the Companys equity-based compensation plans, including the Warnaco Group, Inc. 2003 Stock Incentive Plan and the Warnaco Group, Inc. 2005 Stock
Incentive Plan.
Company Supplemental Award
means any award of supplemental retirement benefits, payable in
the form of Company Career Shares and credits to a bookkeeping account, granted to an executive officer of the Company pursuant to an Executive Employment Agreement.
ERISA
means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
ERISA Affiliate
means, with respect to any entity, trade or business, any other entity, trade or business that is a
member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes the first entity, trade or business, or that is a member of the same controlled group as the
first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
Executive Employment
Agreement
means any employment agreement by and between the Company and an executive officer (as defined in Rule 3b-7 under the Exchange Act) of the Company.
Expected Date
means the latest to occur of (i) the date Parent has received the Required Information with respect to the Marketing Period and (ii) the later to occur of
(a) the first Business Day following the date on which the conditions set forth in Sections 7.01 and 7.03 have been satisfied (other than those conditions that by their terms are to be satisfied at the Closing and other than the condition set
forth in Section 7.01(a)) and (b) the date on which the Company has mailed or otherwise made available the Proxy Statement to the stockholders of the Company.
Indebtedness
means, with respect to any Person, without duplication, (i) all obligations of such Person for borrowed money, or with respect to deposits or advances of any kind to
such Person, (ii) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (iii) all capitalized lease obligations of such Person or obligations of such Person to pay the deferred and unpaid purchase
price of property and equipment, other than trade payables incurred in the ordinary course of business, (iv) all obligations of such Person pursuant to securitization or factoring programs or arrangements, (v) all guarantees and
arrangements having the economic effect of a guarantee of such Person of any other Indebtedness of any other Person, (vi) all obligations or undertakings of such Person to maintain or cause to be maintained the financial position or financial
covenants of others or to purchase any other Persons Indebtedness of the type referred to in any other clause of this definition or any security therefor, (vii) net cash payment obligations of such Person under swaps, options, derivatives
and other hedging agreements or arrangements that will be payable upon termination thereof (assuming they were terminated on the date of determination), or (viii) reimbursement obligations under letters of credit, bank guarantees, and other
similar contractual obligations entered into by or on behalf of such Person.
Intellectual Property Rights
means (i) all trademarks, service marks, trade dress, design marks, logos, trade names, domain names, brand names and corporate names, whether registered or unregistered, together with all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (ii) rights in all inventions and designs (whether patentable or unpatentable and whether or not reduced to practice), and in all improvements thereto, and all patents, patent applications,
and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions and reexaminations thereof, (iii) rights in all artwork, photographs, websites, advertising and promotional materials and
computer software
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and all copyright applications, registrations and renewals in connection therewith, (iv) all trade secrets and rights in confidential business information (including rights in ideas,
research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information), (v) all other
rights in all of the foregoing, including such rights as are provided by treaties, conventions and common law, (vi) rights in any library of historical examples of products, as well as the CAD systems with historical data and information
relating to such product lines and (vii) all rights to pursue, recover and retain damages and costs and attorneys fees for past, present and future infringement of any of the foregoing.
The
Knowledge
of any Person that is not an individual means, with respect to any matter in question, in the case of
the Companys Knowledge, the actual knowledge, after making reasonable inquiry consistent with such Persons position in the ordinary course of business, of the executive officers of the Company set forth in Section 9.03 of the
Company Disclosure Letter, and, in the case of Parent and Merger Sub, the actual knowledge, after making reasonable inquiry consistent with such Persons position in the ordinary course of business, of the executive officers of Parent set forth
in Section 9.03 of the Parent Disclosure Letter.
Marketing Period
means the first period of 20
consecutive calendar days after the Expected Date throughout and at the end of which (a) Parent shall have the Required Information;
provided
that if the Company shall in good faith reasonably believe it has provided the Required
Information, it may deliver to Parent a written notice to that effect (stating when it believes it completed such delivery), in which case the Company shall be deemed to have complied with the foregoing requirements unless Parent in good faith
reasonably believes the Company has not completed the delivery of the Required Information and, within four Business Days after the delivery of such notice by the Company, delivers a written notice to the Company to that effect (stating with
reasonable specificity which Required Information the Company has not delivered); and (b) the conditions set forth in Sections 7.01 and 7.03 have been satisfied (other than those conditions that by their terms are to be satisfied at the Closing
and other than the condition set forth in Section 7.01(a)) and no condition exists that would cause any of the conditions set forth in Sections 7.01 and 7.03 to fail to be satisfied assuming the Closing was to be scheduled for any time during
such consecutive day period;
provided
,
further,
that the Marketing Period shall not be deemed to have commenced if, prior to the completion of the Marketing Period, (i) Deloitte & Touche LLP shall have withdrawn its audit
opinion with respect to the applicable Required Information, in which case the Marketing Period shall not be deemed to commence unless and until a new unqualified audit opinion is issued with respect to the applicable Required Information by
Deloitte & Touche LLP, another big four accounting firm or another independent public accounting firm reasonably acceptable to Parent, (ii) the financial statements included in the Required Information that is available to
Parent on the first day of any such 20 consecutive calendar day period would be required to be updated under Rule 3-12 of Regulation S-X in order to be sufficiently current on any day during such 20 consecutive calendar day period to permit a
registration statement using such financial statements to be declared effective by the SEC on the last day of such 20 consecutive calendar day period, in which case the Marketing Period shall not be deemed to commence unless and until, at the
earliest, the receipt by Parent of updated Required Information that would be required under Rule 3-12 of Regulation S-X to permit a registration statement using such financial statements to be declared effective by the SEC on the last day of such
new 20 consecutive calendar day period, or (iii) the Company determines to restate its or any of the Company Subsidiaries historical financial statements, in which case the Marketing Period shall not be deemed to commence unless and
until, at the earliest, such restatement has been completed and the relevant financial statement has been amended or the Company has indicated that it has concluded that no restatement shall be required in accordance with GAAP;
provided
,
however
, that the Marketing Period shall end on any earlier date that is the date on which the proceeds of the Financing or any Alternate Financing are obtained. Notwithstanding anything to the contrary herein, if the Marketing Period has not
ended prior to December 19, 2012, it shall be deemed not to have commenced until after January 4, 2013;
provided
that such period shall not consider November 22, 2012 through November 25, 2012 as calendar days (it being
understood that any period including such dates shall be deemed consecutive for purposes of the foregoing).
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Material Adverse Effect
with respect to any Person means any fact,
circumstance, occurrence, effect, change, event or development that (i) materially adversely affects the business, properties, financial condition or results of operations of such Person and its Subsidiaries, taken as a whole;
provided
,
however
, that any fact, circumstance, occurrence, effect, change, event or development arising from or related to (except, in the case of clauses (a), (b), (c), (d), (e), (f) or (j) below, to the extent disproportionately affecting
such Person and its Subsidiaries, taken as a whole, relative to other companies in the industries in which such Person and its Subsidiaries operate, in which case only the incremental disproportionate effect shall be taken into account):
(a) conditions affecting the United States economy, or any other national or regional economy or the global economy generally, (b) political conditions (or changes in such conditions) in the United States or any other country or region in
the world or acts of war, sabotage or terrorism (including any escalation or general worsening of any such acts of war, sabotage or terrorism) in the United States or any other country or region of the world occurring after the date hereof,
(c) changes in the financial, credit, banking or securities markets in the United States or any other country or region in the world (including any disruption thereof and any decline in the price of any security or any market index),
(d) changes required by GAAP or other accounting standards (or interpretations thereof), (e) changes in any Laws or other binding directives issued by any Governmental Entity (or interpretations thereof), (f) changes that are
generally applicable to the industries in which the Person and its Subsidiaries operate, (g) any failure by such Person to meet any internal or published projections, forecasts or revenue or earnings predictions for any period ending on or
after the date of this Agreement or any decline in the market price or trading volume of such Persons stock (
provided
that the underlying causes of any such failure or decline may be considered in determining whether a Material Adverse
Effect has occurred or would reasonably be expected to occur to the extent not otherwise excluded by another exception herein), (h) the public announcement (including as to the identity of the parties hereto) or consummation of the Merger or
any of the transactions contemplated hereby (it being understood that for purposes of Sections 3.05 and 4.05, effects resulting from or arising in connection with the matters set forth in this clause (h) of this definition shall not be excluded
in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur), (i) changes in such Persons credit rating (
provided
that the underlying causes of such decline may be considered in
determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur to the extent not otherwise excluded by another exception herein), (j) the occurrence of natural disasters or (k) any action required by
the terms of this Agreement or with the prior written consent or at the direction of the other party, shall not be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur, or
(ii) would prevent such Person from consummating the transactions contemplated by this Agreement.
Parent
Benefit Plan
means, any (i) employee pension benefit plan (as defined in Section 3(2) of ERISA, other than any plan which is a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA,
employee welfare benefit plan (as defined in Section 3(1) of ERISA) and any other bonus, pension, profit sharing, retirement, deferred compensation, incentive compensation, equity or equity-based compensation, severance, retention,
change in control, disability, vacation, death benefit, hospitalization, medical or other plan, arrangement or understanding providing, or designed to provide, material benefits to any current or former directors, officers, employees or consultants
of Parent or any Parent Subsidiary, or (ii) employment, consulting, indemnification, severance, retention, change of control or termination agreement or arrangement (including any Collective Bargaining Agreement) between Parent or any Parent
Subsidiary and any current or former director, officer, employee or consultant of Parent or any Parent Subsidiary.
Parent Material Adverse Effect
means a Material Adverse Effect with respect to Parent.
Parent Performance Share
means any award of contingently issuable Parent Common Stock that is subject to restrictions
based on performance and continuing service and granted under any Parent Stock Plan.
Parent RSU Award
means any award of the right to receive Parent Common Stock that is subject to restrictions based on performance or continuing service and granted under any Parent Stock Plan.
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Parent Stock Option
means any option to purchase Parent Common Stock
granted under any Parent Stock Plan.
Parent Stock Plan
means each Parent Benefit Plan that provides for
the award of rights of any kind to receive shares of Parent Common Stock or benefits measured in whole or in part by reference to shares of Parent Common Stock, including the PVH Corp. 2006 Stock Incentive Plan, the PVH Corp. 2003 Stock Option Plan,
the PVH Corp. 2000 Stock Option Plan, and the PVH Corp. 1997 Stock Option Plan.
Permitted Liens
means,
collectively, (i) suppliers, mechanics, carriers, workmens, repairmens, materialmens, warehousemens, construction and other similar Liens arising or incurred by operation of law or otherwise incurred in
the ordinary course of business, (ii) Liens for Taxes, utilities and other governmental charges that are not due and payable or which are being contested in good faith by appropriate proceedings and for which adequate accruals or reserves have
been established in accordance with GAAP, (iii) requirements and restrictions of zoning, building and other applicable Laws and municipal by-laws, and development, site plan, subdivision or other agreements with municipalities that do not
materially interfere with the business of the Company and the Company Subsidiaries as currently conducted, (iv) licenses or other grants of rights in Intellectual Property Rights made in the ordinary course of business, (v) statutory Liens
of landlords for amounts not due and payable or which are being contested in good faith by appropriate proceedings, (vii) deposits made in the ordinary course of business to secure payments of workers compensation, unemployment insurance
or other types of social security benefits or the performance of bids, tenders, sales, contracts (other than for the repayment of borrowed money), public or statutory obligations, and surety, stay, appeal, customs or performance bonds, or similar
obligations arising in each case in the ordinary course of business, (viii) Liens in favor of customs and revenue authorities arising as a matter of law and in the ordinary course of business to secure payment of customs duties in connection
with the importation of goods, (ix) Liens resulting from securities Laws, (x) Liens incurred in the ordinary course of business in connection with any purchase money security interests, equipment leases or similar financing arrangements,
and (xii) Liens that do not materially detract from the value of such property or interfere in any material respect with the use, operation or occupancy by the Company or any Company Subsidiary of such property.
Person
means any natural person, firm, corporation, partnership, company, limited liability company, trust, joint
venture, association, Governmental Entity or other entity.
Regulatory Laws
means the HSR Act, the Sherman
Antitrust Act of 1890, as amended, and the rules and regulations promulgated thereunder, the Clayton Act of 1914, as amended, and the rules and regulations promulgated thereunder, the Federal Trade Commission Act of 1914, as amended, and the rules
and regulations promulgated thereunder, the EC Merger Regulation, the Canadian federal Competition Act and any other federal, state and foreign statutes, rules, regulations, orders, decrees, administrative and judicial doctrines and other Laws that
are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition.
Sales-Related Contract
means a Contract entered into by the Company or any Company Subsidiary in the ordinary course
of business relating to the sale of the Companys or any Company Subsidiarys products, including (i) franchise agreements that grant a third party the right to open retail stores under any trademark included in the Intellectual
Property Rights that is owned by or licensed to the Company, (ii) sales agency agreements, (iii) concession agreements, (iv) distribution agreements, and (v) sales representation agreements.
A
Subsidiary
of any Person means another Person, an amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing person or body (or, if there are no such voting interests, more than 50% of the equity interests of which) is owned directly or
indirectly by such first Person.
Stock Award Exchange Ratio
means the sum of (1) the Stock
Consideration
plus
(2) a fraction resulting from dividing the Cash Consideration by the closing price per share of Parent Common Stock on the NYSE on the last trading day immediately preceding the Closing Date.
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Taxes
means all federal, state, local, and foreign income, excise, gross
receipts, gross income, ad valorem, profits, gains, property, capital, sales, transfer, use, payroll, employment, severance, withholding, franchise, value added and other taxes, customs, tariffs, imposts, levies, duties, fees or other like
assessments or charges of any kind imposed by a Governmental Entity, together with all interest, penalties and additions imposed with respect to such amounts.
Tax Returns
means all Tax returns, declarations, statements, reports, schedules, forms and information returns, any amended Tax return and any other document filed or required to be
filed relating to Taxes.
Withdrawal Liability
means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as those terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 9.04
Interpretation
. When a reference is made in this Agreement to an Article, a Section or an Exhibit, such reference shall be to an Article, a Section
or an Exhibit of or to this Agreement unless otherwise indicated. The table of contents, index of defined terms and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Any capitalized term used in any Exhibit but not otherwise defined therein shall have the meaning assigned to such term in this Agreement. Whenever the words include, includes or including are used
in this Agreement, they shall be deemed to be followed by the words without limitation. The words hereof, hereto, hereby, herein and hereunder and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The term or is not exclusive. The word extent in the phrase to the extent shall mean the
degree to which a subject or other thing extends, and such phrase shall not mean simply if. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms. All pronouns and any
variations thereof refer to the masculine, feminine or neuter as the context may require. Any agreement, instrument or Law defined or referred to herein means such agreement, instrument or Law as from time to time amended, modified or supplemented,
unless otherwise specifically indicated. References to a Person are also to its permitted successors and assigns. Unless otherwise specifically indicated, all references to dollars and $ will be deemed references to the
lawful money of the United States of America.
SECTION 9.05
Severability
. If any
term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as
either the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party or such party waives its rights under this Section 9.05 with respect thereto. Upon such determination
that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.06
Counterparts
. This Agreement may be executed in one or more counterparts,
including by facsimile or by email with .pdf attachments, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other
parties.
SECTION 9.07
Entire Agreement; No Third-Party Beneficiaries
. This
Agreement, taken together with the Parent Disclosure Letter, the Company Disclosure Letter, and the Confidentiality Agreement, (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the Merger and the other transactions contemplated by this Agreement and (b) except for Sections 6.05 and 9.12, is not intended to confer upon any Person other than the parties any rights or remedies.
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SECTION 9.08
Governing Law
. THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER ANY APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS OF THE STATE OF DELAWARE.
SECTION 9.09
Assignment
. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by operation of Law or otherwise by any of the parties without the prior written consent of the other parties;
provided
that the rights, interests and obligations of
Merger Sub may be assigned to another direct or indirect wholly owned subsidiary of Parent. Any purported assignment without such consent shall be void. Subject to the preceding sentences, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and assigns.
SECTION 9.10
Specific Enforcement; Jurisdiction; Venue
. The parties acknowledge and agree 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, and that monetary damages, even if available, would not be an adequate
remedy therefor. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement and to enforce specifically the performance of the terms and provisions of this
Agreement, including the right of a party to cause the other parties to consummate the Merger and the other transactions contemplated hereby. It is agreed that the parties are entitled to enforce specifically the performance of terms and provisions
of this Agreement in any court referred to in clause (a) below, without proof of actual damages (and each party hereby waives any requirement for the securing or posting of any bond in connection with such remedy), this being in addition to any
other remedy to which they are entitled at law or in equity. The parties further agree not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to Law or inequitable for any reason, nor to assert that a remedy of
monetary damages would provide an adequate remedy for any such breach. In addition, each of the parties hereto (a) consents to submit itself to the personal jurisdiction of the Delaware Court of Chancery and any state appellate court therefrom
within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware), (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court and (c) except as set forth in Section 9.12, agrees that it will not bring any action relating to this Agreement, the Merger or any of the other transactions
contemplated by this Agreement in any court other than the aforesaid courts.
SECTION 9.11
Waiver of Jury Trial
. Each party hereto hereby waives, to the fullest extent permitted by applicable Law, any right it may have to a trial by jury in respect of any suit, action or other proceeding arising out of this Agreement, the Merger or
any of the other transactions contemplated by this Agreement. Each party hereto (a) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such party would not, in the event of any
action, suit or proceeding, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement by, among other things, the mutual waiver and certifications in this
Section 9.11.
SECTION 9.12
Certain Lender Agreements
. Each party hereto
agrees that (a) any action or proceeding involving any Lender arising out of or relating to the Financing or the performance of any services under the Commitment Letter is subject to the exclusive jurisdiction of a state or federal court
sitting in the Borough of Manhattan in the City of New York; (b) each party hereto will not, and will not permit any of their respective controlled Affiliates to, bring or encourage anyone else to bring any such action or proceeding in any
court other than as specified in subclause (a); (c) waives, to the fullest extent permitted by applicable Law, any right to trial by jury in respect of any such action or proceeding; and (d) the Lenders (and their respective Affiliates)
are express third party beneficiaries of this Section 9.12.
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IN WITNESS WHEREOF, the Company, Parent and Merger Sub have duly executed this Agreement,
all as of the date first written above.
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THE WARNACO GROUP, INC.
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By:
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/s/ Helen McCluskey
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Title:
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President and Chief Executive Officer
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PVH CORP.
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By:
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/s/ Mark D. Fischer
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Title:
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Senior Vice President
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WAND ACQUISITION CORP.
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By:
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/s/ Mark D. Fischer
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Title:
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Senior Vice President
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Adverse Recommendation Change
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Section 5.02(d)
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Affiliate
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Section 9.03
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Agreement
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Preamble
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AIP
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Section 5.01(b)(iv)
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Alternative Proposal
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Section 5.02(h)(i)
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Business Day
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Section 9.03
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Calvin Klein Marks
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Section 9.03
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Calvin Klein Trust
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Section 9.03
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Cash Consideration
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Section 2.01(iii)
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Certificate
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Section 2.01(iii)
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Certificate of Merger
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Section 1.03
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Closing
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Section 1.02
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Closing Date
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Section 1.02
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Code
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Section 9.03
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Collective Bargaining Agreement
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Section 4.18
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Commitment Letter
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Section 3.12(b)
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Company
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Preamble
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Company Benefit Plans
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Section 4.10(a)
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Company Board
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Section 4.06(b)
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Company By-laws
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Section 4.01
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Company Capital Stock
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Section 4.03(a)
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Company Career Share
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Section 9.03
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Company Career Unit
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Section 9.03
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Company Charter
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Section 4.01
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Company Common Stock
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Section 2.01
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Company Disclosure Letter
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ARTICLE IV
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Company Financial Advisor
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Section 4.19
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Company Indemnified Parties
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Section 6.05(a)
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Company Leases
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Section 4.15(b)
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Company Material Adverse Effect
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Section 9.03
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Company Pension Plan
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Section 4.10(c)
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Company Performance Share
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Section 9.03
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Company Permits
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Section 4.01
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Company Preferred Stock
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Section 4.03(a)
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Company Properties
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Section 4.15(a)
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Company PSU
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Section 9.03
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Company Recommendation
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Section 6.01(d)
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Company Regulatory Agreement
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Section 4.17
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Company Restricted Stock Award
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Section 9.03
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Company RSU
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Section 9.03
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Company SEC Documents
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Section 4.06(a)
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Company Stock Option
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Section 9.03
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Company Stock Plans
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Section 9.03
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Company Stockholder Approval
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Section 4.04(a)
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Company Stockholders Meeting
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Section 4.04(a)
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Company Subsidiaries
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Section 4.01
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Company Supplemental Award
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Section 9.03
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Company Voting Debt
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Section 4.03(b)
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Confidentiality Agreement
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Section 6.02(a)
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Consent
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Section 3.05(b)
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Continuing Employee
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Section 6.11(a)
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Contract
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Section 3.05(a)
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DGCL
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Section 1.01
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Dissenting Shares
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Section 2.03
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EC Merger Regulation
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Section 3.05(b)
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Effective Time
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Section 1.03
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End Date
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Section 8.01(b)(i)
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Environmental Claim
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Section 4.13(g)(i)
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Environmental Laws
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Section 4.13(g)(ii)
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ERISA
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Section 9.03
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ERISA Affiliate
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Section 9.03
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Exchange Act
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Section 3.05(b)
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Exchange Agent
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Section 2.02(a)
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Exchange Fund
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Section 2.02(a)
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Excluded Contract
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Section 4.14(b)
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Executive Employment Agreement
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Section 9.03
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Existing Bonus Programs
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Section 5.01(b)(iv)
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Expected Date
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Section 9.03
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Filed Company Contract
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Section 4.14(a)
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Filed Company SEC Documents
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ARTICLE IV
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Filed Parent SEC Documents
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ARTICLE III
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Financing
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Section 3.12(b)
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Form S-4
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Section 3.05(b)
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Fraud and Bribery Laws
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Section 4.22
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GAAP
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Section 3.06(b)
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Governmental Approvals
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Section 6.03(a)
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Governmental Entity
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Section 3.05(b)
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Grant Date
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Section 4.03(b)
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Hazardous Substance
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Section 4.13(g)(iii)
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HSR Act
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Section 3.05(b)
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Indebtedness
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Section 9.03
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Intellectual Property Rights
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Section 9.03
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Intervening Event
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Section 5.02(h)(ii)
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IRS
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Section 4.10(a)
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Judgment
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Section 3.05(a)
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Knowledge
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Section 9.03
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Law
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Section 3.05(a)
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Legal Restraints
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Section 7.01(d)
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Lenders
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Section 3.12(b
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Letter of Transmittal
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Section 2.02(b)
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Liens
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Section 3.02(a)
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Marketing Period
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Section 9.03
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Material Adverse Effect
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Section 9.03
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Material Contract
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Section 4.14(b)
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Material Intellectual Property Contract
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Section 4.16(e)
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Maximum Amount
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Section 6.05(c)
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Merger
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Section 1.01
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Merger Consideration
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Section 2.01(iii)
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Merger Sub
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Preamble
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Merger Sub Common Stock
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Section 2.01
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Multiemployer Plan
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Section 4.10(d)
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Multiple Employer Plan
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Section 4.10(d)
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Notice Period
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Section 5.02(d)(ii)
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NYSE
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Section 2.02(f)
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Parent
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Preamble
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Parent Articles
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Section 3.01
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Parent Benefit Plan
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Section 9.03
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Parent Board
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Section 3.04(a)
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Parent By-laws
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Section 3.01
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Parent Capital Stock
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Section 3.03(a)
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Parent Common Stock
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Section 2.01(iii)
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Parent Disclosure Letter
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ARTICLE III
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Parent Material Adverse Effect
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Section 9.03
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Parent Performance Share
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Section 9.03
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Parent Permits
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Section 3.01
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Parent Preferred Stock
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Section 3.03(a)
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Parent RSU Award
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Section 9.03
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Parent SEC Documents
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Section 3.06(a)
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Parent Series A Shares
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Section 3.03(a)
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Parent Stock Option
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Section 9.03
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Parent Stock Plan
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Section 9.03
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Parent Subsidiaries
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Section 3.01
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Parent Voting Debt
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Section 3.03(b)
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Payoff Letter
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Section 6.08(d)
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PBGC
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Section 4.10(a)
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Permits
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Section 3.01
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Permitted Liens
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Section 9.03
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Person
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Section 9.03
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Principal Business
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Section 4.16(a)
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principal executive officer
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Section 3.06(d)
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principal financial officer
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Section 3.06(d)
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Proxy Statement
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Section 6.01(a)
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Registered Intellectual Property Rights
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Section 4.16(a)
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Regulatory Laws
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Section 9.03
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Release
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Section 4.13(g)(iv)
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Representatives
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Section 5.02(a)
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Required Information
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Section 6.08(a)
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Sales-Related Contract
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Section 9.03
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SEC
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Section 3.05(b)
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Securities Act
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Section 3.05(b)
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SOX
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Section 3.06(b)
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Stock Award Exchange Ratio
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Section 9.03
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Stock Consideration
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Section 2.01(iii)
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Subsidiary
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Section 9.03
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Superior Proposal
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Section 5.02(h)(iii)
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Surviving Company
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Section 1.01
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Tax Returns
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Section 9.03
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Taxes
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Section 9.03
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Termination Fee
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Section 8.03(b)
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Top Customer
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Section 4.23
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Top Supplier
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Section 4.23
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WICP
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Section 5.01(b)(iv)
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Withdrawal Liability
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Section 9.03
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Annex B
October 29, 2012
The Board of Directors
The Warnaco Group, Inc.
501 Seventh Avenue
New York, NY 10018
Members of the Board of Directors:
You have requested our opinion as to the fairness, from a financial point of view, to the holders of shares of common stock, par value $0.01 per share (the
Company Common Stock
), of The
Warnaco Group, Inc. (the
Company
), of the Consideration (as defined below) to be paid to such holders in the proposed merger (the
Transaction
) of the Company with a wholly-owned subsidiary (
Merger
Sub
) of PVH Corp. (the
Merger Partner
). We understand that pursuant to the Agreement and Plan of Merger dated as of October 29, 2012 (the
Agreement
) by and among the Company, the Merger Partner
and Merger Sub, Merger Sub shall merge with and into the Company, the Company shall continue as the surviving company and become a subsidiary of the Merger Partner and each outstanding share of Company Common Stock (other than (i) shares of
Company Common Stock owned by the Company as treasury stock or by the Merger Partner or Merger Sub or by any direct or indirect wholly owned subsidiary of the Company or the Merger Partner and (ii) Dissenting Shares (as defined in the
Agreement)), will be converted into the right to receive 0.1822 shares of common stock, par value $1.00 per share (
Merger Partner Common Stock
), of Merger Partner (the
Stock Consideration
) and $51.75 in cash
(the
Cash Consideration
and, together with the Stock Consideration, the
Consideration
).
In connection with preparing our opinion, we have (i) reviewed the Agreement; (ii) reviewed certain publicly available business
and financial information concerning the Company and the Merger Partner and the industries in which they operate; (iii) compared the proposed financial terms of the Transaction with the publicly available financial terms of certain transactions
involving companies we deemed relevant and the consideration paid for such companies; (iv) compared the financial and operating performance of the Company and the Merger Partner with publicly available information concerning certain other
companies we deemed relevant and reviewed the current and historical market prices of the Company Common Stock and of the Merger Partner Common Stock and certain publicly traded securities of such other companies; (v) reviewed certain internal
financial analyses and forecasts prepared by or at the direction of the managements of the Company and the Merger Partner relating to their respective businesses, as well as the estimated amount and timing of the cost savings and related expenses
and synergies expected to result from the Transaction (the
Synergies
); and (vi) performed such other financial studies and analyses and considered such other information as we deemed appropriate for the purposes of this
opinion.
In addition, we have held discussions with certain members of the management of the Company and the Merger Partner
with respect to certain aspects of the Transaction, and the past and current business operations of the Company and the Merger Partner, the financial condition and future prospects and operations of the Company and the Merger Partner, the effects of
the Transaction on the financial condition and future prospects of the Company and the Merger Partner, and certain other matters we believed necessary or appropriate to our inquiry.
In giving our opinion, we have relied upon and assumed the accuracy and completeness of all information that was publicly available or
was furnished to or discussed with us by the Company and the Merger Partner or otherwise reviewed by or for us, and we have not independently verified (nor have we assumed responsibility or
B-1
liability for independently verifying) any such information or its accuracy or completeness. We have not conducted or been provided with any valuation or appraisal of any assets or liabilities,
nor have we evaluated the solvency of the Company or the Merger Partner under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to us or derived therefrom,
including the Synergies, we have assumed that they have been reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial
condition of the Company and the Merger Partner to which such analyses or forecasts relate. We express no view as to such analyses or forecasts (including the Synergies) or the assumptions on which they were based. We have also assumed that the
Transaction and the other transactions contemplated by the Agreement will be consummated as described in the Agreement. We have also assumed that the representations and warranties made by the Company, Merger Sub and the Merger Partner in the
Agreement and the related agreements are and will be true and correct in all respects material to our analysis. We are not legal, regulatory or tax experts and have relied on the assessments made by the Company and its advisors with respect to such
issues. We have further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the Transaction will be obtained without any adverse effect on the Company, Merger Sub or the Merger Partner
or on the contemplated benefits of the Transaction.
Our opinion is necessarily based on economic, market and other conditions
as in effect on, and the information made available to us as of, the date hereof. It should be understood that subsequent developments may affect this opinion and that we do not have any obligation to update, revise, or reaffirm this opinion. Our
opinion is limited to the fairness, from a financial point of view, of the Consideration to be paid to the holders of the Company Common Stock in the Transaction, and we express no opinion as to the fairness of the Transaction to, or any
consideration paid in connection therewith by, the holders of any other class of securities, creditors or other constituencies of the Company or as to the underlying decision by the Company to engage in the Transaction. Furthermore, we express no
opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the Transaction, or any class of such persons relative to the Consideration to be paid to the holders of the Company Common
Stock in the Transaction or with respect to the fairness of any such compensation. We are expressing no opinion herein as to the price at which the Company Common Stock or the Merger Partner Common Stock will trade at any future time.
We note that we were not authorized to and did not solicit any expressions of interest from any other parties with respect to the sale of
all or any part of the Company or any other alternative transaction.
We have acted as financial advisor to the Company with
respect to the Transaction and will receive a fee from the Company for our services, a substantial portion of which will become payable only if the Transaction is consummated. In addition, the Company has agreed to indemnify us for certain
liabilities arising out of our engagement. Please be advised that during the two years preceding the date of this letter, we and our affiliates have had commercial or investment banking relationships with the Company and Merger Partner, for which we
and such affiliates have received customary compensation, which services include acting as a lender and providing treasury and securities services to each of the Company and the Merger Partner, respectively, and acting as lead arranger and
bookrunner for a credit facility of the Company in June 2011. In the ordinary course of our businesses, we and our affiliates may actively trade the debt and equity securities of the Company or the Merger Partner for our own account or for the
accounts of customers and, accordingly, we may at any time hold long or short positions in such securities.
On the basis of
and subject to the foregoing, it is our opinion as of the date hereof that the Consideration to be paid to the holders of the Company Common Stock in the Transaction is fair, from a financial point of view, to such holders.
The issuance of this opinion has been approved by a fairness opinion committee of J.P. Morgan Securities LLC. This letter is provided to
the Board of Directors of the Company (in its capacity as such) in connection with and for the purposes of its evaluation of the Transaction. This opinion does not constitute a recommendation to
B-2
any shareholder of the Company as to how such shareholder should vote with respect to the Transaction or any other matter. This opinion may not be disclosed, referred to, or communicated (in
whole or in part) to any third party for any purpose whatsoever except with our prior written approval. This opinion may be reproduced in full in any proxy or information statement mailed to shareholders of the Company but may not otherwise be
disclosed publicly in any manner without our prior written approval.
Very truly yours,
/s/ J.P. MORGAN SECURITIES LLC
B-3
ANNEX C
SECTION 262
OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
§ 262 of DGCL
§ 262. Appraisal rights.
(a) Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who
continuously holds such shares through the effective date of the Merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the Merger or consolidation nor consented thereto in
writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholders shares of stock under the circumstances described in subsections (b) and (c) of this
section. As used in this section, the word stockholder means a holder of record of stock in a corporation; the words stock and share mean and include what is ordinarily meant by those words; and the words
depository receipt mean a receipt or other instrument issued by a depository representing an interest in one or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a
merger or consolidation to be effected pursuant to § 251 (other than a merger effected pursuant to § 251(g) of this title), § 252, § 254, § 255, § 256, § 257, § 258,
§ 263 or § 264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available
for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the Surviving Corporation as provided in subsection (f) of § 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be
available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263
and 264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation
surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
b. Shares
of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a
national securities exchange or held of record by more than 2,000 holders;
c. Cash in lieu of fractional
shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected
under § 253 or § 267 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the
shares of any class or series of its stock as a result of an amendment to its certificate of
C-1
incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of
incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted
for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting (or such members who received notice in accordance with
§ 255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are available for any or all of the shares of the constituent
corporations, and shall include in such notice a copy of this section and, if one of the constituent corporations is a nonstock corporation, a copy of § 144 of this title. Each stockholder electing to demand the appraisal of such
stockholders shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholders shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholders shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder
electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to § 228, § 253, or § 267 of this
title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall
include in such notice a copy of this section and, if one of the constituent corporations is a nonstock corporation, a copy of § 144 of this title. Such notice may, and, if given on or after the effective date of the merger or
consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving
or resulting corporation the appraisal of such holders shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such
holders shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or
consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holders shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent
of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either
notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation,
the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.
C-2
(e) Within 120 days after the effective date of the merger or consolidation, the surviving
or resulting corporation or any stockholder who has complied with subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of
Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not commenced an
appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholders demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date
of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) of this section hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or
resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of
such shares. Such written statement shall be mailed to the stockholder within 10 days after such stockholders written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever is later. Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a
voting trust or by a nominee on behalf of such person may, in such persons own name, file a petition or request from the corporation the statement described in this subsection.
(f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting
corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the
stockholders shown on the list at the addresses therein stated. Such notice shall also be given by one or more publications at least one week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington,
Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become
entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder.
(h) After the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery, including any rules
specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together
with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown,
interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during
the period between the effective date of the merger and the date of payment of the judgment. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its
discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection
(f) of this section and who has submitted such
C-3
stockholders certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not
entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Courts decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or
resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by
the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorneys fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in
subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholders demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of
Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however that this provision shall not affect the right of any stockholder
who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholders demand for appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective
date of the merger or consolidation, as set forth in subsection (e) of this section.
(l) The shares of the surviving or
resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.
8 Del. C. 1953, § 262; 56 Del. Laws, c. 50; 56 Del. Laws, c. 186, § 24; 57 Del. Laws, c. 148, §§ 27-29;
59 Del. Laws, c. 106, § 12; 60 Del. Laws, c. 371, §§ 3-12; 63 Del. Laws, c. 25, § 14; 63 Del. Laws, c. 152, §§ 1, 2; 64 Del. Laws, c. 112, §§ 46-54; 66 Del. Laws, c. 136,
§§ 30-32; 66 Del. Laws, c. 352, § 9; 67 Del. Laws, c. 376, §§ 19, 20; 68 Del. Laws, c. 337, §§ 3, 4; 69 Del. Laws, c. 61, § 10; 69 Del. Laws, c. 262, §§ 1-9; 70
Del. Laws, c. 79, § 16; 70 Del. Laws, c. 186, § 1; 70 Del. Laws, c. 299, §§ 2, 3; 70 Del. Laws, c. 349, § 22; 71 Del. Laws, c. 120, § 15; 71 Del. Laws, c. 339, §§ 49-52;
73 Del. Laws, c. 82, § 21; 76 Del. Laws, c. 145, §§ 11-16; 77 Del. Laws, c.14 §§ 12, 13; 77 Del. Laws, c. 253, §§ 47-50; 77 Del. Laws, c. 290, §§ 16, 17.
C-4
PLEASE VOTE TODAY!
SEE REVERSE SIDE
FOR THREE EASY WAYS TO VOTE.
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TO VOTE BY MAIL, PLEASE DETACH HERE, SIGN AND DATE PROXY CARD, AND RETURN
IN THE POSTAGE-PAID ENVELOPE PROVIDED
q
THE WARNACO GROUP, INC.
This proxy is solicited on behalf of the board of directors of The Warnaco Group, Inc.
for the special meeting of stockholders.
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The undersigned, a stockholder of The Warnaco Group, Inc., hereby appoints Helen McCluskey, Lawrence R. Rutkowski, Jay L. Dubiner and Ericka N. Alford, and each of them,
the proxies of the undersigned, with full power of substitution in each, to vote at the special meeting of stockholders to be held on February 13, 2013, and at any adjournment or postponement thereof, all of the undersigneds shares of
common stock of The Warnaco Group, Inc. held of record on January 14, 2013, in the manner indicated on the reverse side hereof. The undersigned acknowledges receipt of the notice of the special meeting of stockholders and the accompanying proxy
statement.
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THIS PROXY WHEN EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREBY BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED:
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FOR ADOPTION OF THE AGREEMENT AND PLAN OF MERGER,
DATED AS OF OCTOBER 29, 2012, AMONG THE WARNACO GROUP, INC., PVH CORP., AND WAND ACQUISITION CORP., A WHOLLY OWNED SUBSIDIARY OF PVH CORP., AS SUCH AGREEMENT MAY BE AMENDED FROM TIME TO TIME;
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FOR APPROVAL OF THE (NON-BINDING) ADVISORY
RESOLUTION ON MERGER-RELATED COMPENSATION FOR NAMED EXECUTIVE OFFICERS; AND
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FOR ADJOURNMENT OF THE SPECIAL MEETING AS NECESSARY
OR APPROPRIATE TO SOLICIT ADDITIONAL PROXIES.
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THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR
DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. IF ANY FURTHER MATTERS PROPERLY COME BEFORE THE SPECIAL MEETING, IT IS THE INTENTION OF THE PERSONS NAMED ABOVE TO VOTE SUCH PROXIES IN ACCORDANCE WITH THEIR BEST
JUDGMENT.
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This proxy revokes any previously executed proxy
with respect to all our proposals.
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(Continued, and to be signed and dated on the reverse side.)
THE WARNACO GROUP, INC.
YOUR VOTE IS IMPORTANT
Please take a moment now to vote your shares of The Warnaco Group, Inc.
common
stock for the upcoming special meeting of stockholders.
YOU CAN VOTE TODAY IN ONE OF THREE WAYS:
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1.
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Vote by Telephone
Call toll-free from the U.S. or Canada at
1-866-209-1656
on a touch-tone telephone. If outside the U.S. or Canada, call
1-215-521-1342
.
Please follow the simple instructions provided. You will be required to provide the unique control number printed below.
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OR
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2.
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Vote by Internet
Please access
https://www.proxyvotenow.com/wrc
and follow the simple instructions provided. Please note you must type an s after
http. You will be required to provide the unique control number printed below.
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CONTROL NUMBER:
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You may vote by telephone or Internet 24 hours a day, 7 days a week. Your telephone or Internet
vote authorizes the named proxies to vote your shares in the same manner as if you had signed and mailed a proxy card.
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OR
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3.
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Vote by Mail
If you do not have access to a touch-tone telephone or to the Internet, please sign, date and return the proxy card in the envelope provided, or mail to:
The Warnaco Group, Inc., c/o Innisfree M&A Incorporated, FDR Station, P.O. Box 5155, New York, NY 10150-5155.
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TO VOTE BY MAIL, PLEASE DETACH HERE, SIGN AND
DATE PROXY CARD, AND RETURN IN THE POSTAGE-PAID ENVELOPE PROVIDED
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x
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Please mark your vote as in this example
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS LISTED BELOW.
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FOR
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AGAINST
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ABSTAIN
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1.
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Proposal to adopt the Agreement and Plan of Merger, dated as of October 29, 2012, among The Warnaco Group, Inc., PVH Corp., and Wand Acquisition Corp., a wholly owned
subsidiary of PVH Corp., as such agreement may be amended from time to time (the Merger Agreement).
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¨
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FOR
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AGAINST
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ABSTAIN
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2.
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Proposal to approve the (non-binding) advisory resolution on merger-related compensation for named executive officers.
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¨
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3.
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Proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the
Merger Agreement.
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¨
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¨
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¨
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In their discretion, the proxies are authorized to vote upon such other business as may properly come before the special meeting or any adjournment or postponement
thereof on behalf of the undersigned, provided The Warnaco Group, Inc. does not know, at a reasonable time before the special meeting, that such matters are to be presented at the meeting.
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Date:
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Signature
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Signature
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Title
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NOTE: Please sign exactly as your name or names appear hereon. When shares are held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please print full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
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