DEFM14A 1 y81027mdefm14a.htm DEFM14A defm14a
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
BPW Acquisition Corp.
 
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
þ   No fee required.
 
o   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)   Title of each class of securities to which transaction applies:
 
     
 
 
  (2)   Aggregate number of securities to which transaction applies:
 
     
 
 
  (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
 
     
 
 
  (4)   Proposed maximum aggregate value of transaction:
 
     
 
 
  (5)   Total fee paid:
 
     
 
o   Fee paid previously with preliminary materials.
o   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)   Amount Previously Paid:
 
     
 
 
  (2)   Form, Schedule or Registration Statement No.:
 
     
 
 
  (3)   Filing Party:
 
     
 
 
  (4)   Date Filed:
 
     
 

 


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MERGER PROPOSED — YOUR VOTE IS VERY IMPORTANT
 
The board of directors of BPW Acquisition Corp., or BPW, and the board of directors of The Talbots, Inc., or Talbots, have each approved a merger agreement which provides for the acquisition of BPW by Talbots. Following completion of the merger, BPW will be wholly owned by Talbots. We must obtain the approval of BPW’s stockholders before we can complete the merger. We are sending this document to BPW stockholders to ask them to vote in favor of the adoption of the merger agreement. Talbots has already obtained the approval of the issuance of its shares of common stock in the merger by its majority stockholder. We are sending this document to the other Talbots stockholders in order to inform them of such approval and of the proposed merger.
 
If the merger is completed, subject to certain exceptions described in this document, each share of BPW common stock outstanding immediately before the merger will automatically be converted into the right to receive a number of shares of Talbots common stock equal to the quotient obtained by dividing $11.25 by the volume weighted average price of Talbots common stock on the New York Stock Exchange, or NYSE, for the 15 consecutive trading days immediately preceding the fifth trading day prior to the date of the special meeting of BPW stockholders (which we refer to in this document as the average Talbots closing price), subject to a maximum of 1.3235 shares of Talbots common stock and a minimum of 0.9000 shares of Talbots common stock for each share of BPW common stock. The following table shows the closing sale prices of Talbots common stock, which trades under the symbol “TLB”, and BPW common stock, which trades under the symbol “BPW”, as reported on the NYSE and the NYSE Amex, respectively, on December 8, 2009, the date of the public announcement of the merger, and on January 25, 2010, the last practicable trading day before the distribution of this document. This table also shows the implied value of the merger consideration proposed for each share of BPW common stock as of each of those dates.
 
                         
            Implied Value of
    Talbots Common
  BPW Common
  Merger
    Stock   Stock   Consideration
 
At December 8, 2009
  $ 8.23     $ 10.32     $ 10.89  
At January 25, 2010
  $ 11.05     $ 10.69     $ 11.25  
 
The implied value of the Talbots shares received by BPW stockholders will fluctuate with the market price of Talbots common stock. You should obtain current price quotations for the common stock of Talbots and BPW.
 
The special meeting of BPW stockholders will be held on February 24, 2010 at 10:00 a.m., local time, at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, NY 10019. At the special meeting of BPW stockholders, BPW stockholders will be asked to vote on the adoption of the merger agreement, a proposal to amend BPW’s certificate of incorporation to extend BPW’s corporate existence by two months, a proposal to amend, conditional upon the completion of the merger, BPW’s certificate of incorporation to provide for BPW’s perpetual existence, and certain other matters. The BPW board of directors unanimously recommends that BPW stockholders vote “FOR” the merger proposal, “FOR” the certificate amendment proposals, and “FOR” the other related proposals.
 
This document is a prospectus related to the issuance of shares of Talbots common stock in the merger, a proxy statement for BPW to use in soliciting proxies for its special meeting of stockholders, and an information statement for those Talbots stockholders who were not party to the approval of the Talbots share issuance in the merger that has already been obtained. It is an important document containing answers to frequently asked questions and a summary description of the merger (beginning on page 61), followed by more detailed information about Talbots, BPW, the proposed merger and the merger agreement. We urge you to read this document carefully and in its entirety. In particular, you should consider the matters discussed under “Risk Factors” beginning on page 30 of this document.
 
We look forward to the successful combination of Talbots and BPW.
 
     
    

-s- Trudy F. Sullivan
Trudy F. Sullivan
President and Chief Executive Officer
The Talbots, Inc.
 
-s- Gary S. Barancik

Gary S. Barancik
Chief Executive Officer
BPW Acquisition Corp.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this document or determined that this document is accurate or complete. Any representation to the contrary is a criminal offense.
 
This document is dated January 26, 2010 and is first being mailed to stockholders of Talbots and BPW on or about January 26, 2010.


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The Talbots, Inc.
One Talbots Drive
Hingham, Massachusetts 02043
 
NOTICE OF APPROVAL GIVEN AND ACTION TO BE TAKEN
 
To the Stockholders of The Talbots, Inc.:
 
WE ARE NOT ASKING YOU FOR YOUR PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. THE ACTIONS DESCRIBED BELOW HAVE ALREADY BEEN APPROVED BY WRITTEN CONSENT OF HOLDERS OF A MAJORITY OF THE TALBOTS, INC.’S OUTSTANDING SHARES OF COMMON STOCK. A VOTE OF THE REMAINING STOCKHOLDERS IS NOT NECESSARY.
 
This information statement is being furnished in connection with the Agreement and Plan of Merger, dated as of December 8, 2009, by and among The Talbots, Inc., which we refer to as Talbots, Tailor Acquisition, Inc., which we refer to as Merger Sub, and BPW Acquisition Corp., which we refer to as BPW, as such agreement may be amended from time to time. If BPW stockholders approve and adopt the merger agreement and the merger is subsequently completed, BPW will merge into Merger Sub, and each share of BPW common stock, subject to certain exceptions regarding conversion rights and other matters that are described in this document, will be converted into the right to receive a number of shares of common stock of Talbots, par value $0.01 per share, equal to the quotient obtained by dividing $11.25 by the average Talbots closing price, subject to a maximum of 1.3235 shares of Talbots common stock and a minimum of 0.9000 shares of Talbots common stock for each share of BPW common stock. We currently anticipate that between approximately 27.3 million and 56.3 million shares of Talbots common stock will be issued in the merger.
 
Approval of the issuance of Talbots common stock in the merger by the holders of a majority of the outstanding shares of Talbots common stock is required by the rules of the New York Stock Exchange. However, on December 8, 2009, AEON (U.S.A.), Inc., which on that date owned a majority of the outstanding shares of Talbots common stock, executed a written consent approving such issuance. Therefore, no further action on the part of Talbots stockholders is required in connection with the merger. However, pursuant to the requirements of Section 14(c) of the Securities Exchange Act of 1934 and Section 228(d) of the General Corporation Law of the State of Delaware, Talbots is required to send to its stockholders a written information statement, which is satisfied by delivery of this document, at least 20 calendar days prior to the date upon which the issuance of shares in connection with the merger can occur. This document is being mailed on or about January 26, 2010.
 
By Order of the Board of Directors,
 
(-s- Richard T. o'Connell, Jr.)
    
Richard T. O’Connell, Jr.
Secretary
 
January 26, 2010


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BPW Acquisition Corp.
750 Washington Boulevard
Stamford, Connecticut 06901
 
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
 
To the Stockholders of BPW Acquisition Corp.:
 
Notice is hereby given that a Special Meeting of Stockholders of BPW Acquisition Corp. will be held on February 24, 2010 at 10:00 a.m., local time, at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, NY 10019, to consider and vote upon the following matters:
 
  •  a proposal to approve an amendment to BPW’s Amended and Restated Certificate of Incorporation, which we refer to as the BPW certificate of incorporation, to extend BPW’s corporate existence by two months, to twenty-six months in total from the date of its initial public offering. We refer to this proposal as the “pre-closing certificate amendment proposal”;
 
  •  a proposal to approve and adopt the Agreement and Plan of Merger, dated as of December 8, 2009, by and among The Talbots, Inc., Tailor Acquisition, Inc. and BPW Acquisition Corp., as such agreement may be amended from time to time, and the transactions that it contemplates. We refer to this proposal as the “merger proposal”;
 
  •  a proposal to approve the amendment and restatement, effective upon the completion of the merger, of BPW’s certificate of incorporation to provide for the perpetual existence of BPW and to eliminate provisions of the BPW certificate of incorporation that related to BPW’s operation as a blank check company, as reflected in the amended and restated certificate of incorporation attached to this document as Appendix C. We refer to this proposal as the “post-closing certificate amendment proposal”; and
 
  •  a proposal to approve the adjournment of the special meeting, including, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the foregoing proposals. We refer to this proposal as the “adjournment proposal.”
 
The BPW board of directors has fixed the close of business on January 15, 2010 as the record date for the BPW special meeting. Only BPW stockholders of record at that time are entitled to notice of, and to vote at, the BPW special meeting, or any adjournment or postponement of the BPW special meeting.
 
Approval of the pre-closing certificate amendment proposal and the post-closing certificate amendment proposal require the affirmative vote of a majority of the outstanding shares of BPW common stock. Approval of the merger proposal requires the affirmative vote of a majority of the outstanding shares of BPW common stock, provided that a majority of shares of BPW common stock issued in BPW’s initial public offering and present and entitled to vote at the special meeting are voted in favor of the merger proposal. In addition, BPW’s certificate of incorporation prohibits BPW from completing the merger if holders of 35% or more of the outstanding shares of BPW common stock issued in BPW’s initial public offering vote, on a cumulative basis, against either the pre-closing certificate amendment proposal or the merger proposal, or both, and properly exercise their rights to convert their shares of BPW common stock to cash.
 
The sponsors of BPW, Perella Weinberg Partners Acquisition LP, or PWPA, and BNYH BPW Holdings LLC, or BNYH, have entered into an agreement with BPW and Talbots, which we refer to as the BPW sponsors’ agreement, under which PWPA, on behalf of itself and BNYH, has agreed to, among other things, surrender an aggregate of 1,776,498 shares of BPW common stock at or prior to completion of the merger for no consideration, to vote all of its shares of BPW common stock at the special meeting in the manner described in this document, and to exchange, at the completion of the merger, warrants to purchase shares of BPW common stock for shares of Talbots common stock, at an exchange ratio in which each warrant to purchase shares of BPW common stock would receive one tenth of the stock consideration received for each share of BPW common stock based on the floating exchange ratio in the merger. Except for the 1,776,498 shares of BPW common stock held by the sponsors that will be surrendered for no consideration, all shares of BPW common stock held by the sponsors will be exchanged for shares of Talbots common stock based on the floating exchange ratio in the merger. The independent directors on BPW’s board of directors (referred to as the non-sponsor founders), have entered into an agreement with BPW and Talbots, pursuant to which the non-sponsor founders have agreed to surrender 76,443 shares of BPW common stock at or prior to completion of the merger for no consideration, and to exchange, at the completion of the merger,


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warrants to purchase shares of BPW common stock for shares of Talbots common stock on the same terms as the sponsors, discussed above.
 
Following the special meeting of BPW stockholders and assuming receipt of the requisite approvals of the BPW stockholders of the merger proposal, as contemplated by the merger agreement Talbots intends to commence an exchange offer for warrants to acquire shares of BPW common stock, which we refer to as the warrant exchange offer. The completion of the merger is conditioned upon the completion of the warrant exchange offer. The terms of the warrant exchange offer are described in this document, including in the section entitled “The Warrant Exchange Offer.”
 
Whether or not you plan to attend the special meeting, please vote by the method described below to ensure that your shares are represented and voted in accordance with your wishes. Please vote as soon as possible by submitting your proxy card by mail. To submit your proxy by mail, please complete, sign, date and return the accompanying proxy card in the enclosed self-addressed, stamped envelope. This will not prevent you from voting in person, but it will help to secure a quorum and avoid additional solicitation costs. Any holder of BPW common stock who is present and entitled to vote at the BPW special meeting may vote in person instead of by proxy, thereby cancelling any previously submitted proxy. In any event, a proxy may be revoked in writing at any time before the BPW special meeting in the manner described in the accompanying document.
 
The BPW board of directors unanimously recommends that the BPW stockholders vote “FOR” each of the pre-closing certificate amendment proposal, the merger proposal, the post-closing certificate amendment proposal and the adjournment proposal.
 
By Order of the Board of Directors,
 
(-s- Richard J. Jenson)
    
Richard J. Jensen
Senior Vice President and Secretary
 
January 26, 2010
 
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING.


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ADDITIONAL INFORMATION
 
This document incorporates important business and financial information about Talbots and BPW from documents that each company has filed with the Securities and Exchange Commission but that have not been included in or delivered with this document. You may read and copy documents incorporated by reference in this document, other than certain exhibits to those documents, at the Securities and Exchange Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can also obtain such documents free of charge through the Securities and Exchange Commission’s website (www.sec.gov) or by requesting them in writing or by telephone from the appropriate company at the following addresses:
 
     
The Talbots, Inc.   BPW Acquisition Corp.
One Talbots Drive
Hingham, Massachusetts 02043
(781) 749-7600
Attn.: Investor Relations
  750 Washington Boulevard
Stamford, Connecticut 06901
(203) 653-5800
Attn.: Investor Relations
 
If you would like to request any documents, please do so by February 17, 2010 in order to receive them before the BPW special meeting.
 
You should rely only on information contained in or incorporated by reference into this document. No one has been authorized to provide you with information that is different from the information contained in, or incorporated by reference into, this document. This document is dated January 26, 2010. You should not assume that the information contained in, or incorporated by reference into, this document is accurate as of any date other than that date. Neither our mailing of this document to Talbots stockholders or BPW stockholders, nor the issuance by Talbots of common stock in connection with the merger, will create any implication to the contrary. For a listing of documents incorporated by reference into this document, please see “Where You Can Find More Information” beginning on page 104.
 
Information on the websites of Talbots or BPW, or any subsidiary of Talbots or BPW, is not part of this document. You should not rely on that information in deciding how to vote.
 
This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this document regarding Talbots has been provided by Talbots and information contained in this document regarding BPW has been provided by BPW.


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APPENDICES
 
APPENDIX A
 
Agreement and Plan of Merger, dated as of December 8, 2009, by and among The Talbots, Inc., Tailor Acquisition, Inc. and BPW Acquisition Corp.
 
APPENDIX B
 
Proposed Amendment to the Amended and Restated Certificate of Incorporation of BPW Acquisition Corp., providing for an extension of the corporation’s existence
 
APPENDIX C
 
Proposed Amendment and Restatement of the Amended and Restated Certificate of Incorporation of BPW Acquisition Corp., providing for the perpetual existence of BPW and eliminating provisions related to operation as a blank check company
 
APPENDIX D
 
Repurchase, Repayment and Support Agreement, dated as of December 8, 2009, by and among The Talbots, Inc., BPW Acquisition Corp., AEON (U.S.A.), Inc. and AEON Co., Ltd.
 
APPENDIX E
 
Opinion of Financo Securities, LLC
 
APPENDIX F
 
Sponsors’ Agreement, dated as of December 8, 2009, by and among Perella Weinberg Partners Acquisition LP, BNYH BPW Holdings LLC, The Talbots, Inc. and BPW Acquisition Corp.
 
APPENDIX G
 
Letter Agreement, dated as of December 8, 2009, by and among BPW Acquisition Corp., The Talbots, Inc., Tailor Acquisition Inc., Roger W. Einiger, J. Richard Fredericks and Wolfgang Schoellkopf
 
APPENDIX H
 
Written Consent of AEON (U.S.A.), Inc., dated December 8, 2009
 
APPENDIX I
 
Warrant Exchange Term Sheet


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QUESTIONS AND ANSWERS
 
The following questions and answers briefly address some commonly asked questions about the special meeting of BPW stockholders and the merger. Talbots and BPW urge you to read the remainder of this document carefully. Additional important information is also contained in the appendices to, and the documents incorporated by reference into, this document.
 
General Questions and Answers
 
Q: What will happen in the merger?
 
A: Talbots and BPW have agreed to enter into a merger transaction pursuant to which a subsidiary of Talbots will merge with and into BPW, with BPW stockholders receiving Talbots common stock in exchange for their shares of BPW common stock. A copy of the merger agreement is attached to this document as Appendix A. Based on the number of shares of BPW common stock outstanding as of January 21, 2010, and based on the price of Talbots common stock as of January 25, 2010, Talbots expects to issue in the merger approximately 30.9 to 43.3 million shares of Talbots common stock in connection with the merger. Based on the number of shares of BPW common stock and the number of shares of Talbots common stock outstanding on the record date, immediately after completion of the merger, former BPW stockholders will own approximately 55.2% to 63.3% of the then-outstanding shares of Talbots common stock.
 
Q: When do you expect to complete the merger?
 
A: We expect to complete the merger as soon as possible once all the conditions to the merger, including obtaining the approval of BPW stockholders, are fulfilled. While we cannot predict the exact timing, we currently expect to complete the merger by the end of the first quarter of 2010.
 
Q: Where can I find more information about Talbots and BPW?
 
A: You can find more information about Talbots and BPW from reading this document and the various sources described in this document under the section entitled “Where You Can Find More Information.”
 
Questions and Answers for Talbots Stockholders
 
Q: Why are you not asking for Talbots stockholders’ vote?
 
A: Talbots stockholders are not voting on any matter because Talbots’ majority stockholder, AEON, has already approved the issuance of Talbots common stock in the merger.
 
Q: Are there risks associated with the merger that I should be aware of?
 
A: Yes. You should consider the risk factors set out in the section entitled “Risk Factors” beginning on page 30 of this document.
 
Q: Do I have dissenter’s rights or appraisal rights?
 
A: Holders of shares of Talbots common stock are not entitled to any dissenter’s rights or appraisal rights under the General Corporation Law of the State of Delaware, or the DGCL, in connection with the merger.
 
Q: Who can help answer my questions?
 
A: If you have any questions about the merger or if you need additional copies of this document, you should contact:
 
Talbots Investor Relations
One Talbots Drive
Hingham, Massachusetts 02043
Telephone: (781) 741-4500 or email investor.relations@talbots.com
 
Questions and Answers for BPW Stockholders
 
Q: What am I voting on?
 
A: Talbots is proposing to acquire BPW. BPW stockholders are being asked to vote to approve and adopt the merger agreement. In the merger, Merger Sub will merge into BPW. BPW would be the surviving entity in the merger and would become a wholly owned subsidiary of Talbots.


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BPW is also seeking your approval of a proposal to amend the BPW certificate of incorporation prior to the completion of the merger to extend the time period of BPW’s corporate existence for two months, and to amend and restate the BPW certificate of incorporation immediately after and conditional upon the completion of the merger, to provide for BPW’s perpetual existence and to eliminate certain provisions relating to BPW’s operation as a blank check company, as reflected in the amended and restated certificate of incorporation attached to this document as Appendix C. BPW is also seeking your approval of a proposal to adjourn or postpone the special meeting, if necessary, to solicit additional proxies in favor of approval of these proposals.
 
Talbots stockholders are not voting on any matter, because Talbots’ majority stockholder, AEON, has already approved the issuance of Talbots common stock in the merger.
 
Q: What will I receive in exchange for my BPW shares?
 
A: Upon completion of the merger, you will receive a number of shares of Talbots common stock equal to the quotient (rounded to the nearest ten-thousandth) obtained by dividing $11.25 by the average Talbots closing price, subject to a maximum of 1.3235 shares of Talbots common stock and a minimum of 0.9000 shares of Talbots common stock, for each share of BPW common stock that you own, unless you exercise conversion rights as explained below. Holders of shares of BPW common stock will receive a cash payment instead of fractional shares.
 
Q: Are there risks associated with the merger that I should be aware of?
 
A: Yes. You should consider the risk factors set out in the section entitled “Risk Factors” beginning on page 30 of this document.
 
Q: When and where will the BPW special meeting be held?
 
A: The BPW special meeting will be held at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, NY 10019 on February 24, 2010 at 10:00 a.m., local time.
 
Q: What vote is required to approve the proposals presented at the special meeting of BPW stockholders?
 
A: Approval of the pre-closing certificate amendment proposal and the post-closing certificate amendment proposal require the affirmative vote of a majority of the outstanding shares of BPW common stock.
 
Approval of the merger proposal requires the affirmative vote of a majority of the outstanding shares of BPW common stock, provided that a majority of shares of BPW common stock issued in BPW’s initial public offering and present and entitled to vote at the special meeting are voted in favor of the merger proposal. In addition, BPW’s certificate of incorporation prohibits BPW from completing the merger if holders of 35% or more of the outstanding shares of BPW common stock issued in BPW’s initial public offering vote, on a cumulative basis, against either the pre-closing certificate amendment proposal or the merger proposal, or both, and properly exercise their rights to convert their shares of BPW common stock to cash.
 
Approval of the adjournment proposal requires the affirmative vote of a majority of the outstanding shares of BPW common stock that are represented at the special meeting and entitled to vote thereon.
 
Q: What percentage of BPW common stock is owned by BPW directors, executive officers and their affiliates?
 
A: As of the record date for the BPW special meeting, directors and executive officers of BPW and their affiliates (including BPW’s sponsors, PWPA and BNYH) have the right to vote 6,176,471 shares of BPW common stock, or approximately 15% of the outstanding BPW common stock entitled to vote at the BPW special meeting.
 
Q: How does the BPW board of directors recommend that I vote?
 
A: The BPW board of directors unanimously recommends that the BPW stockholders vote “FOR” each of the pre-closing certificate amendment proposal, the merger proposal, the post-closing certificate amendment proposal and the adjournment proposal.
 
Q: How do I vote if I am a stockholder of record of BPW?
 
A: If you are a stockholder of record of BPW as of the record date for the BPW special meeting, you may vote in person by attending the BPW special meeting or, to ensure your shares are represented at the meeting, you may vote by completing, signing and returning the enclosed proxy card in the postage-paid envelope provided.


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If you hold BPW shares in the name of a bank or broker, please see the discussion below.
 
Q: If my shares are held in street name by my broker, will my broker vote my shares for me?
 
A: If you hold your shares in a stock brokerage account or if your shares are held by a bank or nominee (that is, in street name), you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your bank or broker. Please note that you may not vote shares held in street name by returning the proxy card directly to BPW or by voting in person at the BPW special meeting unless you provide a “legal proxy,” which you must obtain from your bank or broker. Further, brokers who hold shares of BPW common stock on behalf of their customers may not give a proxy to BPW to vote those shares on the proposals unless they have received voting instructions from their customers.
 
Q: What will happen if I fail to vote or abstain from voting?
 
A: The failure to vote or abstention from voting of a BPW stockholder with respect to any proposal other than the adjournment proposal will have the same effect as a vote against that proposal. However, you must also take additional steps if you wish to exercise your conversion rights, as described below.
 
Q: What will happen if I return my proxy card without indicating how to vote?
 
A: If you return your signed proxy card without indicating how to vote on any particular proposal, the BPW common stock represented by your proxy will be voted on that proposal consistent with the recommendation of BPW’s board of directors.
 
Q: Can I change my vote after I have returned a proxy or voting instruction card?
 
A: Yes. You can change your vote at any time before your shares are voted at the BPW special meeting. You can do this in one of three ways:
 
• you can send a signed notice of revocation,
 
• you can grant a new, valid proxy by proxy card with a later date, or
 
• if you are a stockholder of record, you can attend the BPW special meeting and vote in person, which will automatically cancel any proxy previously given, or you may revoke your proxy in person, but your attendance alone will not revoke any proxy that you have previously given.
 
If you choose either of the first two methods, you must submit your notice of revocation or your new signed proxy to the Secretary of BPW to be received no later than the beginning of the BPW special meeting. If your shares are held in street name by your bank or broker, you should contact your broker to change your vote.
 
Q: Do I have dissenter’s rights or appraisal rights?
 
A: Holders of shares of BPW common stock will not be entitled to any appraisal rights under the DGCL in connection with the merger.
 
Q: Why is BPW proposing the pre-closing amendment to the BPW certificate of incorporation?
 
A: BPW’s certificate of incorporation provides that BPW’s corporate existence will terminate on February 26, 2010. If the pre-closing certificate amendment proposal is not approved, BPW’s corporate existence may cease before BPW and Talbots have had sufficient time to satisfy the conditions to the completion of the merger, in which case the merger would not be completed. BPW is proposing the pre-closing certificate amendment to reduce the likelihood that BPW’s corporate existence will terminate prior to the completion of the merger and the transactions contemplated by the merger agreement.
 
Q: Why is BPW proposing the post-closing amendment to the BPW certificate of incorporation?
 
A: BPW’s certificate of incorporation requires BPW, in connection with the merger proposal, to submit to its stockholders a proposal to amend its certificate of incorporation to provide for BPW’s perpetual existence. Approval of the post-closing certificate amendment proposal would result in the amendment and restatement of BPW’s certificate of incorporation to provide for BPW’s perpetual existence. Approval of the post-closing certificate amendment proposal would also result in the elimination of provisions in BPW’s certificate of incorporation relating to its operation as a blank check company, as reflected in the amended and restated certificate of incorporation attached to this document as Appendix C.


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Q: How do I exercise my conversion rights?
 
A: If you are a holder of shares of BPW common stock issued in its initial public offering, you have the right to vote against either the pre-closing certificate amendment proposal or the merger proposal or both and to receive a cash payment for your BPW shares if the proposal against which you voted is approved by BPW stockholders (and the merger is completed, if you voted against the merger proposal) and you otherwise properly exercise your conversion rights.
 
To exercise your conversion rights, you must:
 
• demand that BPW convert your shares into cash by marking the appropriate space on the proxy card and submitting it no later than 5:00 p.m., New York City time, on February 23, 2010,
 
• deliver your stock certificates, or deliver your shares electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, to Mellon Investor Services LLC no later than 5:00 p.m., New York City time, on February 23, 2010,
 
• vote against the pre-closing certificate amendment proposal or the merger proposal or both,
 
• continue to hold your shares of BPW common stock through the date of the BPW special meeting (or the completion of the merger, if you voted against the merger proposal), and
 
• provide, or have your bank or broker provide, Mellon Investor Services LLC with the necessary stock powers, written instructions that you want to convert your shares, and a written certificate addressed to Mellon Investor Services LLC stating that you were the owner of such shares as of the record date, you have owned such shares since the record date and you will continue to own such shares through the date of the BPW special meeting (or the completion of the merger, if you voted against the merger proposal), no later than 5:00 p.m., New York City Time, on February 23, 2010.
 
If you do not follow these instructions, your shares will not be converted. In addition, even if you follow these instructions, your shares will not be converted unless you voted against one of the proposals described above and BPW stockholders approved that proposal (and the merger is completed, if you voted against the merger proposal). Any demand for conversion, once made, may be withdrawn at any time until 5:00 p.m., New York City time, on February 23, 2010 by submitting a new proxy card that does not include a marking in the appropriate space thereon.
 
If you properly exercise your conversion rights in connection with the pre-closing certificate amendment proposal only, your shares will be converted into an amount of cash equal to your pro rata share of the cash then in BPW’s trust account, subject to certain adjustments as described in this document. BPW will pay you this cash promptly following approval of the pre-closing certificate amendment proposal. If you properly exercise your conversion rights in connection with the merger proposal only, or both the merger proposal and the pre-closing certificate amendment proposal, your shares will be converted into an amount of cash equal to your pro rata share of the cash then in BPW’s trust account, subject to certain adjustments as described in this document. BPW will pay you this cash promptly following completion of the merger.
 
Q: What happens if I exercise my conversion rights in connection with a particular proposal but that proposal is not approved at the BPW special meeting?
 
A: If you exercise your conversion rights solely in connection with the pre-closing certificate amendment proposal and that proposal is not approved at the BPW special meeting, then your shares will not be converted.
 
If you exercise your conversion rights solely in connection with the merger proposal and that proposal is not approved at the BPW special meeting, then your shares will not be converted.
 
If you exercise your conversion rights with respect to both the pre-closing certificate amendment proposal and the merger proposal, then your shares will be converted unless neither proposal is approved at the BPW special meeting. If both proposals are approved, then your shares will be converted according to the procedures that apply to conversion in connection with the pre-closing certificate amendment proposal.
 
Q: Will the exercise of conversion rights have any impact on whether or not the merger is completed?
 
A: BPW’s certificate of incorporation prohibits BPW from completing the merger if holders of 35% or more of the outstanding shares of BPW common stock issued in BPW’s initial public offering vote, on a cumulative basis,


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against either the pre-closing certificate amendment proposal or the merger proposal, or both, and properly exercise their rights to convert their shares of BPW common stock to cash. Additionally, under the terms of the merger agreement, the merger will not be completed if more than 35% of the outstanding shares of BPW common stock issued in BPW’s initial public offering exercise their conversion rights.
 
Q: Is the merger expected to be treated as a taxable transaction for United States federal income tax purposes?
 
A: If you are a BPW stockholder, the merger is generally expected to be treated as a taxable transaction to you, and you are generally expected to recognize gain or loss for United States federal income tax purposes in an amount equal to the difference, if any, between (i) the sum of the fair market value of the Talbots common stock received in the merger plus the amount of any cash received instead of fractional shares of Talbots common stock and (ii) your adjusted tax basis in the shares of BPW common stock exchanged in the merger.
 
The United States federal income tax consequences described above may not apply to all holders of BPW common stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you, including the applicability and effect of state, local, and non-United States tax laws. BPW stockholders are also urged to read the discussion in the section titled “Material United States Federal Income Tax Consequences of the Merger” beginning on page 87 of this document.
 
Q: What arrangements have been entered into with the sponsors of BPW in connection with the proposed merger?
 
A: PWPA and BNYH are the sponsors of BPW and collectively hold 5,921,660 shares of BPW common stock, all of which were acquired prior to BPW’s initial public offering, and warrants to acquire 14,372,089 shares of BPW common stock as of the record date for the BPW special meeting of stockholders. In connection with the entry into the merger agreement, PWPA and BNYH entered into an agreement, which we call the BNYH agreement, pursuant to which PWPA will acquire BNYH upon the completion of the merger. PWPA and BNYH have also entered into the BPW sponsors’ agreement with BPW and Talbots under which PWPA, on behalf of itself and BNYH, has agreed to, among other things:
 
• surrender 1,776,498 shares of BPW common stock at the same time as the completion of the merger for no consideration,
 
• in connection with the merger proposal and the pre-closing certificate amendment proposal, vote all of the shares of BPW common stock that it acquired prior to BPW’s initial public offering, which we refer to as founders’ shares, in accordance with the majority of votes cast by the public stockholders of BPW, and to vote any other shares of BPW common stock in favor of such proposals,
 
• exchange, at the completion of the merger, warrants to purchase shares of BPW common stock for shares of Talbots common stock, at an exchange ratio of one warrant to purchase shares of BPW common stock for one-tenth of the stock consideration received for each share of BPW common stock based on the floating exchange ratio in the merger, and
 
• subject to exceptions described below, restrict the transfer of all shares of Talbots common stock held by it for 180 days after completion of the merger.
 
Except for the 1,776,498 shares of BPW common stock held by the sponsors that will be surrendered for no consideration, all shares of BPW common stock held by the sponsors will be exchanged for shares of Talbots common stock based on the floating exchange ratio in the merger.
 
In connection with BPW’s initial public offering, BPW entered into letter agreements with each of PWPA and BNYH upon the completion of BPW’s initial public offering pursuant to which they agreed that none of PWPA, BNYH, nor any of their respective affiliates would be entitled to receive any fees or other compensation of any kind in connection with BPW’s initial business combination (other than reimbursement of out-of-pocket expenses). Perella Weinberg Partners LP, or Perella Weinberg, an affiliate of PWPA, was engaged by Talbots in February 2009 to advise on refinancing Talbots’ existing indebtedness and on related strategic alternatives in general. For services rendered with respect to strategic alternatives between February 2009 and September 2009 Talbots paid Perella Weinberg compensation of $2,500,000. In September 2009, following AEON’s notice to


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Talbots that AEON desired to divest its debt and equity interests in Talbots assuming AEON could identify and structure an appropriate transaction, Perella Weinberg was separately engaged by the Talbots audit committee to assist in exploring strategic alternatives for Talbots. The total compensation payable by Talbots to Perella Weinberg as a result of the BPW transaction, including the related financing transaction with General Electric Capital Corporation, or GE Capital, is approximately $9,000,000 for services with respect to strategic alternatives. Such compensation is contingent upon the closing of the applicable transactions or any similar transactions engaged in by Talbots. The fee arrangements between Talbots and Perella Weinberg apply equally to any similar transactions engaged in by Talbots whether or not involving BPW. BPW is not a party to these engagements and will not pay any fees to Perella Weinberg in connection with the merger or the related transactions. BPW and BNYH have acknowledged Talbots’ engagement of Perella Weinberg and consented to the payment of such fees in the BPW sponsors’ agreement.
 
For further information, please see the section of this document entitled “The Merger Proposal — Interests of Certain BPW Directors and Officers in the Merger.”
 
Q: What arrangements have been entered into with Talbots management in connection with the proposed merger?
 
A: Following entry into the merger agreement, Talbots management and BPW began discussions concerning possible 2009 annual incentive and retention arrangements for management. Based on these discussions and the agreement of BPW, Talbots management intends to propose a 2009 annual incentive and retention program for certain key employees, including executive officers. The proposed 2009 annual incentive and retention arrangements are subject to review and approval by the applicable Talbots board committee. A portion of the 2009 annual incentive awards for these key employees is proposed to be made contingent on the completion of the merger, and a separate portion of the 2009 annual incentive program would be based on achieving certain 2009 operating financial results (and not contingent on the closing of the merger). In addition, the key employees would receive a special grant of restricted stock units. The aggregate anticipated 2009 annual bonus and retention payments to Talbots executive officers that would be proposed to be made contingent on the completion of the merger is $5,000,000, one-third of which would be expected to be awarded in cash and two-thirds of which would be awarded in the form of a grant of special restricted stock units. Approximately $4,000,000 of such payments are currently proposed to be made to Talbots named executive officers, with the specific allocations yet to be determined.
 
For further information, please see the section of this document entitled “The Merger Proposal — Interests of Certain Talbots Directors and Officers in the Merger.”
 
Q: Who can help answer my questions?
 
A: If you have any questions about the merger or if you need additional copies of this document, you should contact:
 
Morrow & Co., LLC
470 West Avenue
Stamford, CT 06902
Telephone: (800) 662 -5200 or (203) 658-9400


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SUMMARY
 
The following is a summary which highlights selected information contained in this document. It may not contain all of the information that is important to you. We urge you to carefully read this entire document and the other documents to which we refer in order to fully understand the merger and related transactions, including “Where You Can Find More Information” on page 104 and “Risk Factors” on page 30.
 
The Merger Agreement (See page 62)
 
A copy of the merger agreement is attached as Appendix A to this document. Talbots and BPW encourage you to read the entire merger agreement carefully because it is the principal document governing the merger.
 
Structure of the Merger (See page 62)
 
Subject to the terms and conditions of the merger agreement and in accordance with the DGCL, at the effective time of the merger, Merger Sub will be merged with and into BPW, with BPW surviving the merger and becoming a wholly owned subsidiary of Talbots. The effect of the merger will be that BPW will be acquired by Talbots and shares of BPW common stock will no longer be publicly traded.
 
Reasons for the Merger (See pages 47 and 56)
 
BPW has been in search of a business combination partner since its initial public offering in February 2008. BPW’s board of directors believes that the merger with Talbots presents a unique opportunity for BPW because of, among other factors, its attractive valuation, strong management team and turnaround business plan, in addition to the terms and conditions of the merger agreement and related transaction documents and the results of BPW’s legal, technology, accounting and other due diligence review of Talbots.
 
The Talbots board of directors, acting solely through the members of the Talbots audit committee after each of Trudy F. Sullivan and the Talbots directors nominated by AEON recused themselves from the vote, concluded that the merger agreement, the merger, the stock issuance in connection therewith, the AEON agreement, the GE Capital commitment letter and the other transaction documents, and the transactions contemplated thereby or undertaken in connection therewith are advisable and in the best interests of Talbots and its public stockholders because, among other factors, the transactions provide Talbots with access to a large pool of capital that will, among other things, provide a complete exit for AEON, permit Talbots to strengthen its balance sheet, reduce its outstanding indebtedness by approximately $330 million and eliminate negative stockholder equity prior to the April 17, 2010 maturity of the AEON debt and no alternative financings were available to Talbots in the current economic environment and within the time constraints imposed by the December 31, 2009 maturity of certain debt.
 
Consideration to be received in the Merger (See page 62)
 
Upon completion of the merger, each share of BPW common stock outstanding immediately prior to completion of the merger (other than shares of BPW common stock held by BPW common stockholders that have validly exercised their conversion rights described in this document) will automatically be converted into the right to receive a number of shares of Talbots common stock equal to the quotient (rounded to the nearest ten-thousandth) obtained by dividing $11.25 by the average Talbots closing price, subject to a maximum of 1.3235 shares of Talbots common stock and a minimum of 0.9000 shares of Talbots common stock for each share of BPW common stock.
 
Based on the closing price of Talbots common stock on the NYSE on December 8, 2009, the date on which the merger was publicly announced, the exchange ratio represented $10.89 in value for each share of BPW common stock. Based on the closing price of Talbots common stock on the NYSE on January 25, 2010, the latest practicable date before the date of this document, the exchange ratio represented $11.25 in value for each share of BPW common stock. Talbots will not issue any fractional shares of Talbots common stock in the merger. Holders of BPW common stock who would otherwise be entitled to a fractional share of Talbots common stock will receive a cash payment in lieu of fractional shares. Other than with respect to shares of common stock held by AEON, Talbots’ majority stockholder, which will be purchased by Talbots at the completion of the merger for an aggregate of one


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million warrants to purchase shares of Talbots common stock on the terms and conditions described below, shares of Talbots common stock outstanding before the merger is completed will remain outstanding and will not be exchanged, converted or otherwise changed in the merger.
 
The Pre-closing Certificate Amendment Proposal (See page 42)
 
BPW’s certificate of incorporation provides that BPW’s corporate existence will terminate on February 26, 2010, unless this date is extended by a vote of BPW stockholders. BPW is proposing the pre-closing certificate amendment to extend BPW’s corporate existence by two months to reduce the likelihood that BPW’s corporate existence will terminate prior to the completion of the merger.
 
The Post-closing Certificate Amendment Proposal (See page 42)
 
BPW’s certificate of incorporation requires BPW, in connection with the merger proposal, to submit to its stockholders a proposal to amend its certificate of incorporation to provide for BPW’s perpetual existence. Approval of the post-closing certificate amendment proposal would result in the amendment and restatement of BPW’s certificate of incorporation to provide for BPW’s perpetual existence. Approval of the post-closing certificate amendment proposal would also result in the elimination of provisions in BPW’s certificate of incorporation relating to its operation as a blank check company, as reflected in the amended and restated certificate of incorporation attached to this document as Appendix C.
 
Material United States Federal Income Tax Consequences of the Merger (See page 88)
 
If you are a BPW stockholder, the merger is generally expected to be treated as a taxable transaction to you, and you are generally expected to recognize gain or loss for United States federal income tax purposes in an amount equal to the difference, if any, between (i) the sum of the fair market value of the Talbots common stock received in the merger plus the amount of any cash received instead of fractional shares of Talbots common stock and (ii) your adjusted tax basis in the shares of BPW common stock exchanged in the merger.
 
The United States federal income tax consequences described above may not apply to all holders of BPW common stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you, including the applicability and effect of state, local and non-United States tax laws.
 
Accounting Treatment (See page 87)
 
Talbots prepares its financial statements in accordance with accounting principles generally accepted in the United States of America, which are referred to as GAAP. The merger will be accounted for using the acquisition method of accounting. As discussed under “Accounting Treatment” on page 86, based upon the terms of the exchange and other factors, such as the composition of the combined company’s board and senior management, Talbots is considered to be the acquirer of BPW for accounting purposes. This means that Talbots will allocate the purchase price to the fair value of assets acquired and liabilities assumed at the acquisition date. Acquisition-related costs, which include advisory, legal, accounting, valuation, and other professional or consulting fees, will be expensed in the period incurred. The costs to issue equity securities will be recognized against the proceeds. Deferred financing fees will be amortized over the term of the new financing.
 
Opinion of Financo Securities, LLC (See page 48)
 
At a meeting of BPW’s board of directors on December 8, 2009, Financo Securities, LLC, which we refer to as Financo, rendered its opinion to the board of directors that, as of the date of that opinion, and based upon and subject to the various assumptions, methodologies, limitations and considerations described in such opinion, the merger consideration to be paid to the public holders of BPW common stock in the merger is fair to the public holders of BPW common stock from a financial point of view. See “The Merger Proposal — Opinion Rendered by Financo to the BPW Board of Directors” for a summary of such opinion and a summary of the material financial analyses performed by Financo in connection with rendering its opinion. The full text of the written opinion of Financo


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which sets forth the assumptions made, matters considered and limits on the review undertaken, is attached as Appendix E to this document. BPW’s stockholders are urged to read the opinion in its entirety.
 
See “The Merger Proposal — Opinion Rendered by Financo to the BPW Board of Directors.”
 
Interests of Certain BPW Directors and Officers in the Merger (See page 58)
 
When you consider the recommendations of BPW’s board of directors in favor of approval of the merger proposal, you should keep in mind that the directors and officers of BPW have interests in the merger as individuals that are different from, or in addition to, your interests as a stockholder. The BPW board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement and the transactions it contemplates.
 
  •  If BPW does not complete the merger or another business combination by February 26, 2010, or by April 26, 2010 if the pre-closing certificate amendment proposal is approved, BPW will be required to commence proceedings to dissolve and liquidate. In such event, the 5,921,660 shares of BPW common stock and warrants to purchase 14,372,089 shares of BPW common stock held by the sponsors and the 254,811 shares of BPW common stock and warrants to purchase 404,382 shares of BPW common stock held by the non-sponsor founders will be worthless because the sponsors and the non-sponsor founders have waived any rights to receive any liquidation proceeds with respect to these securities (except for shares of BPW common stock acquired after BPW’s initial public offering in the open market, for which the BPW sponsors, the non-sponsor founders and BPW’s other officers and directors will be entitled to receive liquidation proceeds). None of BPW’s directors other than the non-sponsor founders, and none of BPW’s officers, directly own any shares of BPW common stock or warrants to purchase shares of BPW common stock. In connection with the merger and the warrant exchange offer, all of the warrants to purchase 14,372,089 shares of BPW common stock held by the sponsors, and all of the warrants to purchase 404,382 shares of BPW common stock held by the non-sponsor founders will be exchanged for shares of Talbots common stock in the warrant exchange offer. In connection with the merger, each of the sponsors has agreed to surrender 888,249 shares of BPW common stock for no consideration, and each of the non-sponsor founders has agreed to surrender 25,481 shares of BPW common stock for no consideration. The remaining 4,145,162 shares held collectively by the sponsors and the remaining 178,368 held collectively by the non-sponsor founders after such surrender will be exchanged for shares of Talbots common stock based on the floating exchange ratio in the merger.
 
  •  PWPA and BNYH are the sponsors of BPW and have entered into the BNYH agreement, pursuant to which PWPA will acquire BNYH upon the completion of the merger. PWPA and BNYH have also entered into the BPW sponsors’ agreement with BPW and Talbots under which, subject to the terms and conditions of that agreement, PWPA, on behalf of itself and BNYH, has agreed to, among other things:
 
  •  in connection with the merger proposal and the pre-closing certificate amendment proposal, vote all of its shares of BPW common stock acquired prior to BPW’s initial public offering in accordance with the majority of the votes cast by the holders of shares of common stock issued in BPW’s initial public offering, and vote any shares of BPW common stock acquired by it in the open market in favor of the merger proposal and the pre-closing certificate amendment proposal, and
 
  •  vote all its shares of BPW common stock in favor of the post-closing certificate amendment proposal and the adjournment proposal.
 
  •  The non-sponsor founders have entered into an agreement with BPW and Talbots, pursuant to which they have agreed to surrender 76,443 shares of BPW common stock at or prior to completion of the merger for no consideration, and to exchange, at the completion of the merger, warrants to purchase shares of BPW common stock for shares of Talbots common stock on the same terms as the sponsors, discussed above.
 
  •  In connection with BPW’s initial public offering, BPW entered into agreements with each of PWPA and BNYH pursuant to which PWPA and BNYH agreed that they would not be entitled to receive any fees or other compensation of any kind in connection with BPW’s initial business combination (other than reimbursement of out-of-pocket expenses). Perella Weinberg, an affiliate of PWPA, was engaged by


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  Talbots in February 2009 to advise on refinancing Talbots’ existing indebtedness and on related strategic alternatives in general. For services rendered with respect to strategic alternatives between February 2009 and September 2009 Talbots paid Perella Weinberg compensation of $2,500,000. In September 2009, following AEON’s notice to Talbots that AEON desired to divest its debt and equity interests in Talbots assuming AEON could identify and structure an appropriate transaction, Perella Weinberg was separately engaged by the Talbots audit committee to assist in exploring strategic alternatives for Talbots. The total compensation payable by Talbots to Perella Weinberg as a result of the BPW transaction, including the related GE Capital credit facility, is approximately $9,000,000 for services with respect to strategic alternatives. Such compensation is contingent upon the closing of the applicable transactions or any similar transactions engaged in by Talbots. The fee arrangements between Talbots and Perella Weinberg apply equally to any similar transactions engaged in by Talbots whether or not involving BPW. BPW is not a party to these engagements and will not pay any fees to Perella Weinberg in connection with the merger or the related transactions. BPW and BNYH have acknowledged Talbots’ engagement of Perella Weinberg and consented to the payment of such fees in the BPW sponsors’ agreement. Joseph R. Perella, the Vice Chairman of the BPW board of directors, and Gary Barancik, the Chief Executive Officer of BPW, are partners of Perella Weinberg. Some of BPW’s other officers are also partners or employees of Perella Weinberg.
 
  •  The sponsors, entities in which certain directors and officers of BPW hold a financial interest, and the non-sponsor founders together acquired 6,176,471 shares of BPW common stock and warrants to purchase 14,776,471 shares of BPW common stock prior to or in connection with BPW’s initial public offering. BPW’s directors and officers will likely benefit from the completion of the merger even if the merger causes the market value of BPW common stock to decrease. Even though approximately 30% of the shares held by the sponsors and the non-sponsor founders will be surrendered without any consideration and any BPW warrants held by the sponsors and the non-sponsor founders will be exchanged for shares of Talbots common stock pursuant to a warrant exchange offer, the likely benefit to BPW’s directors and officers may influence their motivation for promoting the merger and/or soliciting proxies for the approval of the merger proposal.
 
  •  In addition, the exercise of BPW’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the merger may result in a conflict of interest when determining whether such changes or waivers are appropriate and in the best interests of BPW’s stockholders.
 
Interests of Certain Talbots Directors and Officers in the Merger (See page 60)
 
When you consider the merger proposal, you should also keep in mind that the directors and officers of Talbots have interests in the merger, including in certain cases as individuals, that are different from, or in addition to, your interests as a stockholder of BPW.
 
Following entry into the merger agreement, Talbots management and BPW began discussions concerning possible 2009 annual incentive and retention arrangements for management. Based on these discussions and the agreement of BPW, Talbots management intends to propose a 2009 annual incentive and retention program for certain key employees, including executive officers. The proposed 2009 annual incentive and retention arrangements are subject to review and approval by the applicable Talbots board committee. A portion of the 2009 annual incentive awards for these key employees is proposed to be made contingent on the completion of the merger, and a separate portion of the 2009 annual incentive program would be based on achieving certain 2009 operating financial results (and not contingent on the closing of the merger). In addition, the key employees would receive a special grant of restricted stock units. The aggregate anticipated 2009 annual bonus and retention payments to Talbots executive officers that would be proposed to be made contingent on the completion of the merger is $5,000,000, one-third of which would be expected to be awarded in cash and two-thirds of which would be awarded in the form of a grant of special restricted stock units. Approximately $4,000,000 of such payments are currently proposed to be made to Talbots named executive officers, with the specific allocations yet to be determined.


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Board of Directors of Talbots Following Completion of the Merger (See page 57)
 
Upon completion of the merger, the board of directors of Talbots will consist of seven members, comprised of:
 
  •  the President and Chief Executive Officer of Talbots as of the completion of the merger,
 
  •  three additional members of the Talbots board of directors immediately prior to the completion of the merger, each of whom will qualify as an “independent director” under the rules of the NYSE, and
 
  •  three persons to be mutually agreed upon by BPW and the audit committee of the Talbots board of directors prior to the completion of the merger.
 
Regulatory Approvals Required for the Merger (See page 58)
 
Talbots and BPW have agreed to cooperate and use reasonable best efforts to obtain all regulatory approvals required to complete the transactions contemplated by the merger agreement. The parties have determined that the merger transaction is not reportable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, referred to in this document as the HSR Act. Thus, the merger transaction is not subject to the termination or expiration of any waiting period under the HSR Act.
 
Conditions That Must Be Satisfied or Waived for the Merger to Occur (See page 62)
 
We currently expect to complete the merger by the first quarter of 2010. However, as more fully described in this document and in the merger agreement, each party’s obligation to complete the merger depends on a number of conditions being satisfied or, where legally permissible, waived, including the following:
 
  •  the effectiveness of the registration statement for the issuance of shares of Talbots common stock in the merger,
 
  •  the approval by the BPW stockholders of the merger proposal, the pre-closing certificate amendment proposal and the post-closing certificate amendment proposal,
 
  •  the exercise of conversion rights by holders of less than 35% of the outstanding shares of BPW common stock issued in BPW’s initial public offering,
 
  •  the completion of the warrant exchange offer (which may be completed at the same time as the merger is completed),
 
  •  the absence of any legal restraint or prohibition on the completion of the merger,
 
  •  the expiration or termination of any applicable waiting periods under the HSR Act,
 
  •  the making of all government filings and receipt of all consents, other than those that the failure to make or obtain would not have a material adverse effect on the financial condition of BPW or prevent or materially impair the ability of BPW to complete the merger before April 17, 2010 or would have a “Talbots material adverse effect,” as we explain the meaning of that term in the section of this document entitled “Summary of the Merger Agreement”, and
 
  •  Talbots having obtained and borrowed under debt financing in an amount sufficient to repay in full all indebtedness owed to AEON and third parties and to have, after such repayment, cash on hand or available to be borrowed in an amount sufficient to fund ordinary course working capital. Talbots has received a debt commitment letter, dated as of December 7, 2009, from GE Capital to provide, subject to the conditions set forth in the debt commitment letter, a $200 million revolving credit facility under which Talbots and certain of its subsidiaries would be the borrowers (the available amount on the date of the completion of the merger is limited to $160 million at closing).
 
The obligation of Talbots to close the merger is subject to the following additional conditions:
 
  •  the accuracy of the representations and warranties of BPW, subject to a materiality standard described in the section of this document entitled “Summary of the Merger Agreement”,


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  •  the performance by BPW in all material respects of its obligations under the merger agreement,
 
  •  the BPW sponsors’ agreement being in full force and effect,
 
  •  BPW having provided irrevocable instructions to Mellon Bank, N.A. to disburse the BPW trust account to pay in full amounts outstanding under the AEON facilities and support letters, as well as to pay to BPW stockholders that have validly exercised their conversion rights, and
 
  •  participation in the warrant exchange offer by holders of at least 90% of the BPW warrants issued in BPW’s initial public offering.
 
The obligation of BPW to close the merger is subject to the following additional conditions:
 
  •  the accuracy of the representations and warranties of Talbots, subject to a materiality standard described in the section of this document entitled “Summary of the Merger Agreement”,
 
  •  the performance by Talbots in all material respects of its obligations under the merger agreement, and
 
  •  the AEON agreement being in full force and effect.
 
Termination of the Merger Agreement (See page 66)
 
The merger agreement may be terminated without completing the merger, whether before or after the meeting of the BPW stockholders, as follows:
 
  •  by written consent of BPW and Talbots,
 
  •  by either Talbots or BPW, if:
 
  •  the merger has not been completed by April 17, 2010,
 
  •  if a governmental entity has enjoined or prohibited the merger,
 
  •  if the BPW stockholders do not approve the merger proposal, the pre-closing certificate amendment proposal and the post-closing certificate amendment proposal, or
 
  •  the conditions to closing regarding the exercise of conversion rights by BPW stockholders and participation by holders of BPW warrants in the warrant exchange offer are not satisfied within the applicable time periods,
 
  •  by Talbots, if:
 
  •  BPW enters into an alternative transaction agreement, withdraws or modifies its recommendation to BPW stockholders, fails to call and conduct the special meeting of BPW stockholders or breaches its obligation under the merger agreement not to solicit alternative transaction proposals,
 
  •  BPW materially breaches the merger agreement and is unable to cure within 30 days of receiving written notice from Talbots (or by April 17, 2010, if earlier), or
 
  •  prior to approval by BPW stockholders of the merger proposal, the pre-closing certificate amendment proposal and post-closing certificate amendment proposal, if the volume weighted average price per share of Talbots common stock on the NYSE for any 15 consecutive trading days after December 8, 2009 and prior to the BPW special meeting is less than $7.556, and
 
  •  by BPW, if Talbots materially breaches the merger agreement and is unable to cure within 30 days of receiving written notice from BPW (or by April 17, 2010, if earlier).
 
Expenses and Termination Fees (See pages 67 and 76)
 
Generally, all fees and expenses incurred in connection with the merger agreement and the transactions contemplated by the merger agreement will be paid by the party incurring those expenses, except that Talbots and BPW will each pay one-half of the costs and expenses incurred in connection with the filing, printing and mailing of this document and all filings pursuant to the HSR Act. Following termination of the merger agreement under


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specified circumstances, Talbots or BPW may be required to pay the other a termination fee of $10 million plus the other party’s reasonably incurred transaction expenses up to a maximum of $3 million.
 
The Rights of BPW Stockholders Will Be Governed by the Talbots Governing Documents after the Merger (See page 90)
 
The rights of BPW stockholders will change as a result of the merger due to differences between the governing documents of Talbots and BPW. BPW stockholders will become Talbots stockholders and their legal rights as stockholders will, following completion of the merger, be governed by the Talbots amended and restated certificate of incorporation and the Talbots amended and restated bylaws.
 
No Appraisal Rights (See page 58)
 
Under Delaware law, neither the holders of BPW common stock nor the holders of Talbots common stock are entitled to appraisal rights in connection with the merger.
 
Agreements with an Entity Affiliated with Talbots (See page 83)
 
Talbots’ majority stockholder, AEON, has entered into an agreement with Talbots and BPW, which we refer to as the AEON agreement, under which AEON has agreed, among other things, that at the same time as the merger is completed, shares of Talbots common stock held by AEON will be purchased by Talbots for an aggregate of one million warrants to purchase shares of Talbots common stock on terms and conditions substantially the same as the warrant exchange offer, discussed below. The exercise price of these warrants will be the closing price of Talbots common stock on the date of the completion of the merger. At the same time as the merger is completed, all outstanding indebtedness owed by Talbots to AEON and under Talbots’ third party credit facilities will be paid in full by Talbots, and Talbots will terminate each commitment to extend credit provided for under any of these agreements. As of the date of this document, AEON held approximately 54.4% of the outstanding shares of Talbots common stock.
 
The Warrant Exchange Offer (See page 80)
 
As of the record date for the BPW special meeting of stockholders, there were outstanding warrants held by the public warrantholders of BPW to acquire a total of 35,000,000 shares of BPW common stock at an exercise price of $7.50 per share. The exercise of these warrants is conditioned upon the completion by BPW of a specified business combination transaction (of which the proposed merger with Talbots would be one) on or prior to February 26, 2010. In the merger agreement, Talbots and BPW agreed that Talbots would conduct an exchange offer, to be commenced following the BPW special meeting of stockholders (assuming receipt of the requisite approvals of BPW stockholders at that meeting), for the warrants held by the public warrantholders of BPW.
 
In the warrant exchange offer, holders of BPW warrants may elect to exchange their outstanding BPW warrants for either:
 
  •  new warrants to purchase shares of Talbots common stock, which new warrants will have an exercise price equal to the product of 1.30 and the average Talbots closing price, and which will expire and thereafter represent solely the right to receive $0.01 per warrant if the trading price of shares of Talbots common stock exceeds the product of 1.75 and the average Talbots closing price for any 20 trading days within a 30-trading-day period, subject to a cap on the number of new Talbots warrants that will be issued in the warrant exchange offer, or
 
  •  shares of Talbots common stock at an exchange ratio of one warrant to purchase shares of BPW common stock for one-tenth of the stock consideration received for each share of BPW common stock based on the floating exchange ratio in the merger.
 
The completion of the warrant exchange offer is expected to be conditioned, among other things, on the participation in the warrant exchange offer of holders of at least 90% of the BPW warrants that were issued in BPW’s initial public offering. If the warrant exchange offer is completed, the BPW warrants of public warrantholders that did not participate in the warrant exchange offer will, in accordance with the terms of the warrant


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agreement, be converted into warrants to purchase the number of shares of Talbots common stock as such warrantholder would have received in the merger had the warrants been converted to shares of BPW common stock immediately prior to the completion of the merger.
 
The warrant exchange offer will be structured to provide that 50% of the BPW warrants held by public warrantholders will be exchanged for new warrants to purchase shares of Talbots common stock, and that the balance of BPW warrants held by public warrantholders participating in the warrant exchange offer would be exchanged for shares of Talbots common stock.
 
The warrant exchange offer is expected to be completed at or immediately prior to the completion of the merger, if the conditions to the warrant exchange offer are satisfied. The completion of the merger is conditioned upon the completion of the warrant exchange offer on the terms and conditions set forth in the merger agreement and described in this document. As discussed above, PWPA, on behalf of itself and BNYH (its then wholly owned subsidiary) has agreed to exchange all of its BPW warrants for shares of Talbots common stock in the warrant exchange offer. The non-sponsor founders have entered into an agreement with BPW and Talbots pursuant to which the non-sponsor founders have agreed to exchange, at the completion of the merger, warrants to purchase shares of BPW common stock for shares of Talbots common stock on the same terms as the sponsors.
 
The BPW Special Meeting (See page 35)
 
The BPW special meeting will be held at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, NY 10019, on February 24, 2010 at 10:00 a.m., local time. At the BPW special meeting, BPW stockholders will be asked to:
 
  •  approve an amendment to BPW’s Amended and Restated Certificate of Incorporation, which we refer to as the BPW certificate of incorporation, to extend BPW’s corporate existence by two months, to twenty-six months in total from the date of its initial public offering. We refer to this proposal as the “pre-closing certificate amendment proposal;”
 
  •  approve and adopt the Agreement and Plan of Merger, dated as of December 8, 2009, by and among The Talbots, Inc., Tailor Acquisition, Inc. and BPW Acquisition Corp., as such agreement may be amended from time to time, and the transactions that it contemplates. We refer to this proposal as the “merger proposal;”
 
  •  approve the amendment and restatement, effective upon the completion of the merger, of BPW’s certificate of incorporation to the certificate of incorporation set forth on Appendix C of this document, which amended and restated certificate of incorporation will provide for the perpetual existence of BPW and will eliminate provisions of the BPW certificate of incorporation that related to BPW’s operation as a blank check company. We refer to this proposal as the “post-closing certificate amendment proposal;” and
 
  •  approve the adjournment of the special meeting, including, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the foregoing proposal. We refer to this proposal as the “adjournment proposal.”
 
The BPW board of directors has fixed the close of business on January 15, 2010 as the record date for the BPW special meeting. Only BPW stockholders of record at that time are entitled to notice of, and to vote at, the BPW special meeting, or any adjournment or postponement of the BPW special meeting. As of the record date, there were 41,176,471 shares of BPW common stock outstanding and entitled to vote at the BPW special meeting.
 
Each share of BPW common stock outstanding on the record date entitles the holder to one vote on each matter to be voted upon by stockholders at the special meeting. Approval of the pre-closing certificate amendment proposal and the post-closing certificate amendment proposal requires the affirmative vote of a majority of the outstanding shares of BPW common stock. Approval of the merger proposal requires the affirmative vote of a majority of the outstanding shares of BPW common stock, provided that a majority of shares of BPW common stock issued in BPW’s initial public offering and present and entitled to vote at the special meeting are voted in favor of the merger


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proposal. In addition, BPW’s certificate of incorporation prohibits BPW from completing the merger if holders of 35% or more of the outstanding shares of BPW common stock issued in BPW’s initial public offering vote, on a cumulative basis, against either the pre-closing certificate amendment proposal or the merger proposal, or both, and properly exercise their rights to convert their shares of BPW common stock to cash. Approval of the adjournment proposal requires the affirmative vote of a majority of the outstanding shares of BPW common stock that are represented at the special meeting and entitled to vote thereon. Failing to vote or abstaining from voting with respect to any proposal other than the adjournment proposal will have the same effect on that proposal as a vote against that proposal. However, you must also take additional steps if you wish to exercise your conversion rights, as described in this document.
 
As of the record date for the BPW special meeting, directors and executive officers of BPW and their affiliates have the right to vote 6,176,471 shares of BPW common stock, or approximately 15% of the outstanding BPW common stock entitled to vote at the BPW special meeting.
 
The BPW board of directors believes that the pre-closing certificate amendment, the merger and the post-closing certificate amendment are in the best interests of BPW and its stockholders and has unanimously approved and adopted the merger agreement and the transactions it contemplates. For a discussion of the factors considered by the BPW board of directors in reaching its decision to approve the merger agreement and the transactions it contemplates, see “The Merger Proposal — BPW’s Reasons for the Merger; Recommendation of the BPW Board of Directors.” The BPW board of directors unanimously recommends that the BPW stockholders vote “FOR” each of the pre-closing certificate amendment proposal, the merger proposal, the post-closing certificate amendment proposal and the adjournment proposal.
 
The Companies
 
The Talbots, Inc. (See page 41)
 
The Talbots, Inc. is a leading specialty retailer and direct marketer of women’s apparel, shoes and accessories. At the end of first quarter 2009, Talbots operated 586 Talbots brand stores in 47 states, the District of Columbia, and Canada. As of January 31, 2009, Talbots operated its business in two segments: retail stores and direct marketing. Talbots’ retail stores are located in 47 states, the District of Columbia and Canada under the Talbots brand name. As of January 31, 2009, Talbots operated a total of 587 stores under the Talbots brand name. Talbots’ direct marketing segment includes Talbots’ catalog and Internet channels. Since 1948, Talbots has used its direct marketing business to offer customers convenience in ordering Talbots brand merchandise. As of January 31, 2009, Talbots had approximately 12,100 Talbots brand employees of whom approximately 2,900 were full-time salaried employees, approximately 1,300 were full-time hourly employees and approximately 7,900 were part-time hourly employees.
 
The mailing address of Talbots’ principal executive offices is One Talbots Drive, Hingham, Massachusetts 02043 and its telephone number is (781) 749-7600.
 
BPW Acquisition Corp. (See page 41)
 
BPW is a blank check company that was organized under the laws of the State of Delaware on October 12, 2007. BPW was formed to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, with one or more operating businesses, which we refer to as an initial business combination or a business combination. In accordance with BPW’s certificate of incorporation, if BPW is unable to complete a business combination by February 26, 2010 (or obtain the approval of an extension by BPW stockholders), its corporate existence will automatically terminate and it will dissolve and liquidate and promptly distribute to its stockholders holding shares issued in its initial public offering the amount then in its trust account. In the event of its liquidation, all warrants to purchase BPW common stock, which we refer to as the BPW warrants, will expire worthless.


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The BPW common stock is currently listed on the NYSE Amex under the symbol “BPW.” Following completion of the merger, the BPW common stock will cease trading on the NYSE Amex and BPW will file the appropriate forms with the Securities and Exchange Commission to suspend its reporting obligations under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act.
 
The mailing address of BPW’s principal executive office is 750 Washington Street, Stamford, Connecticut 06901 and its telephone number is (203) 653-5800.
 
Merger Sub (See page 41)
 
Tailor Acquisition, Inc., a Delaware corporation, is a direct, wholly owned subsidiary of Talbots. Merger Sub was formed by Talbots to complete the merger. In the merger, Merger Sub will merge with and into BPW and Merger Sub will cease to exist.
 
The mailing address of Merger Sub’s principal executive office is One Talbots Drive, Hingham, Massachusetts 02043 and its telephone number is (781) 749-7600.
 
Litigation (See page 60)
 
Talbots, the Talbots board of directors, AEON, BPW, Perella Weinberg and three Perella Weinberg partners are named as defendants in a lawsuit brought by an alleged Talbots stockholder asserting claims for, inter alia, breach of fiduciary duties on the part of the director defendants and AEON, aiding and abetting breaches of fiduciary duties, breach of duty arising out of an alleged confidential agency relationship between Talbots and its stockholders, on the one hand, and Perella Weinberg, the individual Perella Weinberg defendants and BPW, on the other hand, and violations of Talbots’ corporate by-laws and sections 141(c), 228 and 251 of the DGCL in connection with the merger agreement between Talbots and BPW and related warrant exchange, debt repayment, stock repurchase and GE Capital credit facility. The complaint seeks injunctive relief, an unspecified amount of damages, disgorgement of benefits purportedly received by defendants in connection with the above transactions, and an award of attorneys’ fees and expenses.
 
Talbots and the Talbots board of directors believe the claims asserted against them in the complaint are entirely without merit and intend to defend against them vigorously.


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SELECTED HISTORICAL FINANCIAL DATA OF TALBOTS
 
Set forth below are highlights from Talbots’ consolidated financial data as of and for the periods indicated. The selected historical consolidated financial data presented below for each of the five fiscal years through the period ended January 31, 2009, are derived from the selected financial data included in the Talbots’ Annual Report on Form 10-K for the year ended January 31, 2009. Talbots’ consolidated financial data for the nine months ended October 31, 2009 and November 1, 2008 are derived from Talbots’ unaudited interim financial statements, which have been incorporated in this document by reference.
 
You should read this information in conjunction with Talbots’ consolidated financial statements and the related notes to those statements included in Talbots’ Annual Report on Form 10-K for the year ended January 31, 2009 and Talbots’ Quarterly Report on Form 10-Q for the nine-month period ended October 31, 2009 filed with the Securities and Exchange Commission, which are incorporated by reference into this document and from which this information is derived. See “Where You Can Find More Information” on page 104.
 
Interim results are not necessarily indicative of results for the full fiscal year and historical results are not necessarily indicative of results to be expected in any future period.
 
                                                         
    9 Months Ended   Year Ended
    October 31,
  November 1,
  January 31,
  February 2,
  February 3,
  January 28,
  January 29,
    2009
  2008
  2009
  2008
  2007
  2006
  2005
    (39 Weeks)   (39 Weeks)   (52 Weeks)   (52 Weeks)   (53 Weeks)   (52 Weeks)   (52 Weeks)
    (In thousands, except per share data)
 
Statement of Operations Information:
                                                       
Net sales from continuing operations
  $ 919,707     $ 1,167,258     $ 1,495,170     $ 1,708,115     $ 1,772,306     $ 1,703,014     $ 1,595,206  
Operating (loss) income from continuing operations
    (13,209 )     2,373       (98,389 )     35,204       114,596     $ 169,367     $ 166,170  
Net (loss) income from continuing operations
    (23,835 )(a)     (8,208 )(a)     (139,521 )(a)(d)     43 (a)     56,876       166,202       110,981  
Net (loss) income
  $ (33,501 )   $ (194,126 )(b)   $ (555,659 )(b)(d)   $ (188,841 )(b)   $ 31,576       93,151       95,366  
Per share data:
                                                       
Basic
                                                       
(Loss) income per share from continuing operations
  $ (0.44 )   $ (0.15 )   $ (2.61 )   $     $ 1.08     $ 1.97     $ 2.02  
Net (loss) income per share
  $ (0.62 )   $ (3.62 )   $ (10.40 )   $ (3.56 )   $ 0.60     $ 1.76     $ 1.73  
Diluted
                                                       
(Loss) income per share from continuing operations
  $ (0.44 )   $ (0.15 )   $ (2.61 )   $     $ 1.06     $ 1.93     $ 1.97  
Net (loss) income per share
  $ (0.62 )   $ (3.62 )   $ (10.40 )   $ (3.56 )   $ 0.59     $ 1.72     $ 1.70  
Weighted average number of shares of common stock outstanding
                                                       
Basic
    53,768       53,411       53,436       53,006       52,651       52,882       54,969  
Diluted
    53,768       53,411       53,436       53,006       53,485       54,103       56,252  
Cash dividends per share(c)
  $     $ 0.39     $ 0.52     $ 0.52     $ 0.51     $ 0.47     $ 0.43  
Balance Sheet Information:
                                                       
Working capital (deficiency)
  $ (3,946 )   $ 228,347     $ (13,680 )   $ 208,803     $ 262,609     $ 376,204     $ 324,759  
Total assets
    839,703       1,299,681       971,293       1,502,979       1,748,688       1,146,144       1,062,130  
Total long-term debt, including current portion(e)
    350,000       328,542       328,377       389,027       469,643       100,000       100,000  
Stockholders’ (deficiency) equity
  $ (190,561 )   $ 237,173     $ (178,097 )   $ 454,779     $ 643,311     $ 626,968     $ 588,588  
 
 
(a) During 2009, 2008 and 2007, Talbots recorded charges of $9.7 million, $17.8 million and $3.7 million relating to its restructuring activities, which are discussed in Note 5, Restructuring Charges, to its consolidated financial statements on Form 10-Q and Form 10-K respectively.
 
(b) During 2008 and 2007, Talbots recorded impairment charges relating to the J. Jill brand of $318.4 million and $149.6 million, respectively, which are included in discontinued operations ($185.9 million for the 39 weeks ending November 1, 2008).
 
(c) In February 2009, the Talbots Board of Directors approved the indefinite suspension of its quarterly dividends.
 
(d) In the fourth quarter of 2008, Talbots recorded a valuation allowance of $61.0 million on substantially all of its deferred tax assets which is included in net loss from continuing operations. Talbots also recorded a valuation allowance of $129.4 million which is included in discontinued operations.
 
(e) Total long-term debt excludes notes payable to banks of $141.1 million and $106.5 million at October 31, 2009 and November 1, 2008, respectively, $148.5 million at January 31, 2009 and $45.0 million at February 3, 2007.


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SELECTED HISTORICAL FINANCIAL DATA OF BPW
 
BPW is providing the following selected historical financial information to assist you in your analysis of the financial aspects of the merger. The following selected historical financial data should be read in conjunction with BPW’s “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and its financial statements and the related notes to those statements which have been incorporated in this document by reference.
 
The statement of operations data for the year ended December 31, 2008 and the period from October 12, 2007 (inception) through December 31, 2007 and the balance sheet data as of December 31, 2008 and 2007 have been derived from BPW’s audited financial statements which have been incorporated in this document by reference. The statement of operations data for the nine months ended September 30, 2009 and from October 12, 2007 (inception) to September 30, 2009, and the balance sheet data as of September 30, 2009 have been derived from BPW’s unaudited interim financial statements which have been incorporated in this document by reference. See “Where You Can Find More Information” on page 104.
 
Interim results are not necessarily indicative of results for the full fiscal year and historical results are not necessarily indicative of results to be expected in any future period.
 
                         
    September 30,
  December 31,
  December 31,
    2009   2008   2007
 
Balance Sheet Data
                       
Working capital (deficiency)
  $ 31,915     $ (337,628 )   $ (471,958 )
Investment in Trust Account
    349,898,760       350,530,373        
Total assets
    350,285,396       350,769,031       695,906  
Value of common stock subject to possible redemption
    122,009,990       122,009,990        
Stockholders’ Equity
  $ 218,106,685     $ 218,285,755       24,906  
 
                                 
            For the Period
  From
            October 12,
  October 12,
    9 Months Ended
  Year Ended
  2007 (inception)
  2007 (inception)
    September 30,
  December 31,
  to December 31,
  to September 30,
    2009   2008   2007   2009
Statement of Operations Data
                               
Formation, operating and other costs
  $ 602,541     $ 469,442     $ 1,138     $ 1,073,121  
Net income (loss)
  $ (179,070 )   $ 1,929,908     $ (94 )   $ 1,750,744  
Net income (loss) per common share, excluding shares subject to possible redemption:
                               
Basic
  $ (0.01 )   $ 0.07     $ (0.00 )   $ 0.07  
Diluted
  $ (0.01 )   $ 0.06     $ (0.00 )   $ 0.06  


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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
 
The following unaudited pro forma condensed combined balance sheet as of October 31, 2009 and the unaudited pro forma condensed combined statements of operations for the year ended January 31, 2009 and the thirty-nine weeks ended October 31, 2009 are based on the separate historical consolidated financial statements of Talbots and BPW after giving effect to the merger.
 
The unaudited pro forma condensed combined balance sheet as of October 31, 2009 combines the balance sheet of Talbots as of October 31, 2009 with the balance sheet of BPW as of September 30, 2009. The unaudited pro forma condensed combined statements of operations for the year ended January 31, 2009 includes Talbots’ results of operations for the year ended January 31, 2009 and BPW’s results of operations for the year ended December 31, 2008. The unaudited pro forma condensed combined statements of operations for the thirty-nine weeks ended October 31, 2009 includes Talbots’ results of operations for the thirty-nine weeks ended October 31, 2009 with BPW’s results of operations for the nine months ended September 30, 2009.
 
The unaudited pro forma condensed combined balance sheet as of October 31, 2009 assumes the merger and related events had been consummated on October 31, 2009. The unaudited pro forma condensed combined statements of operations for the year ended January 31, 2009 and the thirty-nine weeks ended October 31, 2009 give pro forma effect to the merger and related events as if they had been consummated on February 3, 2008, the beginning of Talbots 2008 fiscal year.
 
The merger will be accounted for as an acquisition by Talbots and Talbots was determined to be the accounting acquirer — see the section entitled “Accounting Treatment” for more information. In summary, Talbots has concluded that Talbots is the accounting acquirer based on its evaluation of the facts and circumstances of the acquisition. The purpose of the merger was to assist Talbots with the refinancing and recapitalization of its business and Talbots initiated the transaction. Talbots is the larger of the two entities and is the operating company within the combining companies. Talbots’ continuing board members will continue to hold a majority of the seats on the Talbots board of directors and BPW stockholders will not have any continuing board appointment rights after the initial consent to 3 additional board members appointed to serve after the merger. Talbots’ senior management will be continuing as senior management of the combined company. In addition, the terms of the exchange provide BPW stockholders with a premium (subject to a formula related to Talbots’ common stock price over a defined period) over the market value of shares of BPW common stock prior to the merger announcement. Although a larger portion of the voting rights in the combined entity will be held by former BPW stockholders, this was not considered determinative, as all other important elements considered in determining which party has control, including board of directors representation and management continuity were not aligned with this voting interest. Additionally, the BPW stockholders are expected to represent a diverse group of stockholders at completion of the merger and we are not aware of any voting or other agreements that suggest that they can act as one party.
 
The completion of the merger is subject to various closing conditions, including, among others, (i) approval by the BPW stockholders of the merger proposal, the pre-closing certificate amendment proposal and the post-closing certificate amendment proposal, (ii) the accuracy of the representations and warranties of BPW and Talbots, subject to materiality standards described in the section of this document entitled “Summary of the Merger Agreement” and the performance by BPW and Talbots in all material respects of their respective obligations under the merger agreement and (iii) the effectiveness of the registration statement for the issuance of shares of Talbots common stock in the merger.
 
In addition, the merger is conditioned upon (i) the exercise of conversion rights by holders of less than 35% of the outstanding shares of BPW common stock issued in BPW’s initial public offering, (ii) the completion of the warrant exchange offer (which may be completed at the same time as the merger is completed), and (iii) Talbots having obtained and borrowed under debt financing in an amount sufficient to repay in full all indebtedness owed to AEON and third parties and to have, after such repayment, cash on hand or available to be borrowed in an amount sufficient to fund ordinary course working capital.
 
The unaudited pro forma condensed combined financial statements assume that (i) the merger proposal is approved by 100% of the BPW stockholders; (ii) none of the BPW stockholders exercise conversion rights with respect to their shares of BPW common stock; (iii) all of the funds held in the trust account are available for the


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payment of transaction obligations and costs; and (iv) all other merger-related transactions (i.e., the transactions contemplated by the AEON agreement and Talbots having obtained the debt financing as described above) are consummated.
 
If the merger is approved by the BPW stockholders, but less than 100% of the those stockholders holding shares of BPW common stock issued in the initial public offering vote in favor of the merger, Talbots will be required to redeem the shares held by those stockholders for cash. The cash redemption payments would range from a minimum of $0 (with approval of 100% of the stockholders holding shares of BPW common stock issued in the BPW initial public offering) to a maximum of $122.0 million (with approval of 65% of the stockholders holding shares of BPW common stock issued in the BPW initial public offering). If stockholders holding approximately 82.5%, or the midpoint of the range between the minimum and the maximum, of BPW common stock issued in the initial public offering vote in favor of the merger, the cash redemption payments would approximate $61.0 million.
 
There are a number of factors that may affect the liquidity position of Talbots following the consummation of the merger, assuming the merger is consummated. Under circumstances where Talbots has the right under the merger agreement not to consummate the merger, Talbots would make such determination taking into account various relevant factors as of that time, such as Talbots’ stock price, the expected consequences of not consummating the merger, the availability and terms of third party financing, the status of the credit markets, general economic conditions, the results of operations and cash on hand, upcoming debt maturities and other obligations, and other material variables. Depending on such factors, Talbots may determine to consummate the transaction under circumstances where Talbots would have to devote a substantial amount of its cash from operations to meet its obligations and there is no assurance that such cash on hand together with other available sources of funding would be sufficient to meet its obligations for any minimum period of operation following the closing. For more information, see “The Debt Commitment Letter.”
 
We present the unaudited pro forma condensed combined financial statements for informational purposes only. The unaudited pro forma condensed combined financial statements are not necessarily indicative of what our financial position or results of operations actually would have been had we completed the merger as of the dates indicated. In addition, the unaudited pro forma condensed combined financial statements do not purport to project the future financial position or operating results of the combined company. You should read this information together with the following:
 
  •  the accompanying notes to the unaudited pro forma condensed combined financial statements;
 
  •  the separate historical unaudited financial statements of Talbots as of and for the thirty-nine weeks ended October 31, 2009 included in Talbots Quarterly Report on Form 10-Q for the quarterly period ended October 31, 2009, which are incorporated by reference into this document;
 
  •  the separate historical audited financial statements of Talbots as of and for the fiscal year ended January 31, 2009 included in Talbots Annual Report on Form 10-K for the fiscal year ended January 31, 2009, which are incorporated by reference into this document;
 
  •  the separate historical unaudited financial statements of BPW as of and for the nine months ended September 30, 2009 included in BPW’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009, which are incorporated by reference into this document; and
 
  •  the separate historical audited financial statements of BPW as of and for the year ended December 31, 2008 included in BPW’s Annual Report on Form 10-K for the year ended December 31, 2008, which are incorporated by reference into this document.


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THE TALBOTS, INC. AND SUBSIDIARIES
 
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
OCTOBER 31, 2009
 
                                         
          BPW
                   
    The Talbots, Inc.
    Acquisition Corp.
    Pro Forma
          Pro Forma
 
    (Historical)     (Historical)     Adjustments     Note 2     Combined  
    (In thousands)  
 
ASSETS
Current Assets:
                                       
Cash and cash equivalents
  $ 72,005     $ 79     $ 349,899       A     $ 40,743  
                      (493,940 )     E          
                      (29,600 )     F          
                      (2,000 )     J          
                      (8,000 )     I          
                      160,000       H          
                      (7,700 )     C          
Customer accounts receivable — net
    182,725                           182,725  
Merchandise inventories
    165,892                           165,892  
Deferred catalog costs
    7,751                           7,751  
Due from affiliates
    1,789                           1,789  
Prepaid and other current assets
    49,579       112                     49,691  
                                         
Total current assets
    479,741       191       (31,341 )             448,591  
Property and equipment — net
    233,653                             233,653  
Goodwill
    35,513                             35,513  
Trademarks
    75,884                             75,884  
Other assets
                                       
Investment in Trust Account
          349,899       (349,899 )     A        
Deferred income taxes
          196       (196 )     G        
Other
    14,912             (2,867 )     E       20,045  
                      8,000       I          
                                         
Total Assets
  $ 839,703     $ 350,286     $ (376,303 )           $ 813,686  
                                         
 
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current Liabilities:
                                       
Accounts payable
  $ 103,407     $ 159     $             $ 103,566  
Accrued liabilities
    150,674             (2,840 )     E       147,834  
Notes payable to banks
    141,100             (141,100 )     E        
Current portion of long-term debt
    80,000             (80,000 )     E        
Current portion of related party debt
    8,506             (8,506 )     E        
                                         
Total current liabilities
    483,687       159       (232,446 )             251,400  
Long-term debt less current portion
    20,000             (20,000 )     E       160,000  
                      160,000       H          
Related party debt less current portion
    241,494             (241,494 )     E        
Deferred rent under lease commitments
    124,126                           124,126  
Deferred income taxes
    28,456                           28,456  
Deferred underwriters’ fee
          10,010       (10,010 )     C        
Other liabilities
    132,501                             132,501  
Common stock subject to possible redemption
          122,010       (122,010 )     B        
Stockholders’ (Deficit) Equity:
                                       
Common stock
    815       4       (299 )     E       1,079  
                      (4 )     B          
                    563       D          
Additional paid-in capital
    497,311       216,352       (2,568 )     E       834,411  
                      (2,000 )     J          
                      (216,352 )     B          
                      339,554       D          
                      2,310       D          
                      (196 )     D          
Retained (deficit) earnings
    (52,779 )     1,751       (29,600 )     F       (82,379 )
                      (1,751 )     B          
Accumulated other comprehensive loss
    (50,028 )                         (50,028 )
Treasury stock, at cost
    (585,880 )                         (585,880 )
                                         
Total stockholders’ (deficit) equity
    (190,561 )     218,107       89,657               117,203  
                                         
Total Liabilities and Stockholders’ (Deficit) Equity
  $ 839,703     $ 350,286     $ (376,303 )           $ 813,686  
                                         


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THE TALBOTS, INC. AND SUBSIDIARIES
 
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THIRTY-NINE WEEKS ENDED OCTOBER 31, 2009
 
                                         
          BPW
                   
    The Talbots, Inc.
    Acquisition Corp.
    Pro Forma
          Pro Forma
 
    (Historical)     (Historical)     Adjustments     Note 2     Combined  
    (In thousands, except per share data)  
 
Net Sales
  $ 919,707     $     $             $ 919,707  
Costs and Expenses
                                       
Cost of sales, buying and occupancy
    616,986                           616,986  
Selling, general and administrative
    304,919       603                     305,522  
Restructuring charges
    9,660                           9,660  
Impairment of store assets
    1,351                           1,351  
Merger expenses
                      K        
                                         
Operating Loss from Continuing Operations
    (13,209 )     (603 )                   (13,812 )
Interest
                                       
Interest expense
    21,836             6,571       L       9,043  
                      (19,364 )     L          
Interest income
    253       330       (330 )     M       253  
                                         
Interest Expense — net
    21,583       (330 )     (12,463 )             8,790  
                                         
Loss Before Taxes from Continuing Operations
    (34,792 )     (273 )     12,463               (22,602 )
Income Tax Benefit
    (10,957 )     (94 )     94       N       (10,957 )
                                         
Loss from Continuing Operations
  $ (23,835 )   $ (179 )   $ 12,369             $ (11,645 )
                                         
Loss from Continuing Operations Per Share:
                                       
Basic
  $ (0.44 )                           $ (0.15 )
                                         
Diluted
  $ (0.44 )                           $ (0.15 )
                                         
Weighted Average Number of Shares of Common Stock Outstanding:
                                       
Basic
    53,768               26,395       O       80,163  
Diluted
    53,768               26,395       O       80,163  


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THE TALBOTS, INC. AND SUBSIDIARIES
 
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 2009
 
                                         
          BPW
                   
    The Talbots, Inc.
    Acquisition Corp.
    Pro Forma
          Pro Forma
 
    (Historical)     (Historical)     Adjustments     Note 2     Combined  
    (In thousands, except per share data)  
 
Net Sales
  $ 1,495,170     $     $             $ 1,495,170  
Costs and Expenses
                                       
Cost of sales, buying and occupancy
    1,049,785                           1,049,785  
Selling, general and administrative
    523,136       469                     523,605  
Restructuring charges
    17,793                           17,793  
Impairment of store assets
    2,845                           2,845  
Merger expenses
                      K        
                                         
Operating Loss from Continuing Operations
    (98,389 )     (469 )                   (98,858 )
Interest
                                       
Interest expense
    20,589             12,378       L       15,145  
                      (17,822 )     L          
Interest and dividend income
    299       3,393       (3,393 )     M       299  
                                         
Interest Expense — net
    20,290       (3,393 )     (2,051 )             14,846  
                                         
(Loss) Income Before Taxes from Continuing Operations
    (118,679 )     2,924       2,051               (113,704 )
Income Tax Expense
    20,842       994       (994 )     N       20,842  
                                         
(Loss) Income from Continuing Operations
  $ (139,521 )   $ 1,930     $ 3,045             $ (134,546 )
                                         
Loss from Continuing Operations Per Share:
                                       
Basic
  $ (2.61 )                           $ (1.69 )
                                         
Diluted
  $ (2.61 )                           $ (1.69 )
                                         
Weighted Average Number of Shares of Common Stock Outstanding:
                                       
Basic
    53,436               26,395       O       79,831  
Diluted
    53,436               26,395       O       79,831  


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NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
 
1.   Basis of Pro Forma Presentation
 
On December 8, 2009, Talbots and BPW entered into the merger agreement, pursuant to which BPW will merge with and into a wholly owned subsidiary of Talbots, with BPW continuing as the surviving corporation and a wholly-owned subsidiary of Talbots after the merger. The transaction is to be accounted for using the acquisition method of accounting — see the section entitled “Accounting Treatment” for more information. For purposes of these unaudited pro forma condensed combined financial statements, Talbots has assumed that (i) the merger is approved by 100% of BPW’s stockholders and the total purchase consideration in the merger is equal to the fair value of BPW’s net assets acquired in the merger, or $342.2 million after adjusting the deferred underwriting fees to their fair value of $7.7 million and (ii) the total transaction costs and payments related to the merger, financing and acquisition to be paid by Talbots or BPW will approximate $47.3 million, of which approximately $29.6 million are estimated to be expensed as transaction costs, $2.0 million are estimated to be charged against additional paid-in capital as costs of raising equity, $8.0 are estimated to be capitalized as debt issuance costs and $7.7 million relates to the payment of BPW’s deferred underwriting liabilities. The pro forma adjustments to the unaudited pro forma condensed combined financial statements reflect Talbots management’s estimates based on information available as of the time this proxy statement was prepared and are subject to revision as actual costs become known.
 
Under the terms of the merger agreement, the shares of BPW common stock held by BPW stockholders that do not exercise their conversion rights will be converted into the right to receive the number of shares of Talbots common stock equal to the quotient (rounded to the nearest ten-thousandth) obtained by dividing:
 
  •  $11.25 by the volume weighted average price per share of Talbots common stock (calculated to the nearest one-hundredth of one cent) on the NYSE for the 15 consecutive trading days immediately preceding the fifth trading day prior to the date of the special meeting of BPW stockholders, provided, that:
 
  •  the resulting exchange ratio will not be less than 0.9000 shares of Talbots common stock or greater than 1.3235 shares of Talbots common stock.
 
In addition, the BPW warrantholders hold an aggregate of 49.8 million warrants to purchase shares of BPW common stock, of which 14.8 million are held by the sponsors and the non-sponsor founders and 35.0 million are held by public warrantholders. In the warrant exchange offer, the 14.8 million warrants held by the sponsors and non-sponsor founders and 50% of the warrants held by the public warrantholders (including for these purposes warrants held by the public warrantholders that are not exchanged in the warrant exchange offer) will be converted into shares of Talbots common stock at an exchange ratio of one warrant to purchase shares of BPW common stock for one tenth of the stock consideration received for each share of BPW common stock based on the floating exchange ratio in the merger. The remaining 50% of the warrants held by the public warrantholders will be exchanged for new warrants to purchase Talbots common stock, which new warrants will have an exercise price equal to the product of 1.30 and the average Talbots closing price. The warrants will be immediately exercisable, have a stated term of 5 years from the completion of the merger, and will expire and thereafter represent solely the right to receive $0.01 per warrant if the trading price of shares of Talbots common stock exceeds the product of 1.75 and the average Talbots closing price for any 20 trading days within a 30-trading-day period. The number of new Talbots warrants will be determined by multiplying the remaining 50% of the warrants held by the public BPW warrantholders by the floating exchange ratio in the merger.
 
The number of shares of Talbots common stock to be issued to BPW stockholders will change based on changes in the Talbots common stock price through application of the exchange ratio. Depending upon the calculated exchange ratio, Talbots will issue a minimum of 38.3 million shares of common stock and 15.8 million warrants (e.g., if the Talbots share price is $12.50 or more per share) and a maximum of 56.3 million shares of common stock and 23.2 million warrants to the BPW shareholders (e.g., if the Talbots share price is $8.50 or less per share). Changes in the fair value of the assets acquired and liabilities assumed are not expected to change in a way that affects merger consideration given.


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In conjunction with the merger, Talbots will utilize net cash proceeds from the BPW trust account, borrowings under the debt financing described above and other available cash balances to fund the repayment in full of all amounts due or outstanding in respect of (i) all financing agreements between AEON and Talbots, (ii) the Support Letter (Financial), dated as of April 9, 2009, from AEON to Talbots, and the Letter of Support, dated as of April 9, 2009, from AEON to Talbots and (iii) all Third Party Credit Facilities (as defined in the AEON agreement in Appendix D to this document), and to pay related fees and expenses. Under the AEON agreement, AEON has also agreed to sell to Talbots all of the shares of Talbots common stock owned by AEON for an aggregate of one million warrants to purchase shares of Talbots common stock on terms and conditions substantially the same as the warrant exchange offer; provided, that the exercise price of such warrants will be the closing price of Talbots common stock on the date of the completion of the merger (or, if not available on such date, the closing price on the business day immediately preceding such date).
 
The unaudited pro forma condensed combined financial statements have been prepared assuming (i) the average Talbots closing price equals its recent closing market price of $7.96 per share on December 18, 2009; (ii) the BPW common stock and BPW warrants to be converted into shares of Talbots common stock and new warrants to purchase shares of Talbots common stock are converted at an exchange ratio based on the $7.96 per share price of Talbots common stock; and (iii) the new warrants to be issued to AEON under the AEON agreement have an assumed exercise price of $7.96 per share.
 
BPW, which is a special purpose acquisition company, is merging with and into a wholly owned subsidiary of Talbots, and Talbots was determined to be the acquirer for accounting purposes. The accounting for the transaction will be similar to that of a capital infusion as the only significant pre-combination asset of BPW is the cash and cash equivalents, which are already recognized by BPW at fair value, obtained from BPW’s investors. No intangibles or goodwill will arise through the accounting for the transaction. The accounting is the equivalent of Talbots issuing shares of common stock for the net monetary assets of BPW. Accordingly, Talbots will record the equity issued in exchange for BPW based on the value of the net monetary assets received as of the closing date. For purposes of these unaudited pro forma condensed combined financial statements, the estimated purchase price paid by Talbots has been allocated to BPW’s asset and liabilities based on their fair values as of September 30, 2009 as follows (in thousands):
 
         
    $ Amount  
 
Cash and cash equivalents
  $ 79  
Prepaid expenses
    112  
Investment in trust account
    349,899  
         
Total assets acquired at fair value
    350,090  
Less liabilities assumed:
       
Accounts payable and accrued liabilities
    159  
Deferred underwriter’s fee
    7,700  
         
Purchase price
  $ 342,231  
         
 
2.   Pro Forma Adjustments
 
Adjustments included in the column under the heading “Pro Forma Adjustments” in the unaudited pro forma condensed combined financial statements correspond to the following descriptions:
 
Notes to the Unaudited Pro Forma Condensed Combined Balance Sheet
 
(A) To record the release of BPW’s restricted cash equivalents held in a trust account and transfer to cash and cash equivalents. This pro forma presentation assumes that no stockholder of BPW exercises their conversion rights, which would convert their common shares for a pro rata share of the cash then held in the trust account, including their pro rata portion of the deferred underwriters’ fee and other adjustments, prior to the effectiveness of the merger. The holders of up to 35% (minus one share) of the outstanding BPW common stock could properly exercise this conversion right and the merger could still be approved by the BPW stockholders.


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(B) To remove the historical equity accounts of BPW and common stock subject to possible redemption.
 
(C) To record the payment of $7.7 million and adjustment of $2.3 million (see pro forma adjustment (D) below) to additional paid-in capital related to deferred underwriters’ fees related to BPW’s initial public offering which is payable upon completion of the merger at a lower amount than the amount accrued in the historical BPW balance sheet.
 
(D) To record the issuance of Talbots common stocks and warrants to BPW stockholders and warrantholders as a result of the merger and warrant exchange offer. The exchange ratio in the merger was assumed to be based on 1.325 shares of Talbots common stock for each share of BPW common stock. Adjustments also assumed the exchange of 50% of the outstanding public BPW warrants for Talbots common stock, and the exchange of 50% of the outstanding public BPW warrants for new warrants to purchase Talbots common stock. The terms of the new Talbots warrants were accounted for based on an agreed term sheet, which does not indicate any further adjustments to the number of shares of Talbots common stock underlying the new Talbots warrants, and indicates that new Talbots warrants will be immediately exercisable upon completion of the merger, and will settle only in shares of Talbots common stock.
 
Based on the assumptions in the paragraph above and the approval by 100% of BPW’s stockholders, approximately 56.3 million shares of Talbots’ common stock with a par value of $0.01 per share would be issued in the merger. As described above, the estimated purchase price is equal to the net monetary assets of BPW, or $342.2 million. Accordingly, the 56.3 million shares of Talbots’ common stock would be estimated at $342.2, with $0.6 million recorded as common stock and $341.6 recorded as an increase in paid-in capital.
 
(E) To record the payment to AEON for its existing debt arrangements with Talbots, deferred financing costs, accrued interest, third party borrowings, and repurchase of Talbots common stock held by AEON.
 
(F) To record the cash paid for merger transaction costs.
 
(G) To record a valuation allowance on the deferred tax assets of BPW (see pro forma adjustment (D) above).
 
(H) To record the borrowing by Talbots in immediately available funds under the revolving credit facility contemplated by the GE Capital commitment letter.
 
(I) To record the payment of related financing costs associated the revolving credit facility contemplated by the GE Capital commitment letter.
 
(J) To record the cash paid for registering and issuing new securities.
 
Notes to the Unaudited Condensed Combined Statement of Operations
 
(K) In connection with the merger, Talbots anticipates incurring non recurring merger expenses of $29.6 million (see pro forma adjustment (F) above), which are not reflected in the pro forma adjustments in the statement of operations.
 
(L) To reverse interest expense and amortization of deferred financing cost related to the AEON related party term loan and third party debt eliminated upon the completion of the merger and related transactions. To reflect interest expense and amortization of deferred financing cost related to the new credit facility based on the initial borrowing under this facility upon the merger. Interest expense under the new credit facility will be at a floating rate based on LIBOR or the prime rate at the Company’s option. The pro forma interest expense is based on the prime rate option of 3.25% and 6.12%, respectively, in 2009 and 2008. A one-eighth (1/8) fluctuation in the interest rate will result in an increase or decrease of $200,000 in annual interest expense based on the assumed borrowing of $160.0 million at closing.
 
(M) To reverse the effect of interest income due associated with the BPW assets used to repay debt obligations upon completion of the merger.
 
(N) To provide a valuation allowance on deferred tax benefit for the period.
 
(O) To adjust the weighted average shares outstanding for the 56,316,483 shares issued to BPW’s common stockholders (assuming 100% of BPW’s stockholders approve the merger), net of the 29,921,829 shares repurchased from AEON. As a result of the loss from continuing operations, the 23.2 million warrants to purchase shares


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of Talbots common stock assumed to be issued in the merger did not impact the loss from continuing operations per share, as these securities would be antidilutive for all periods presented.
 
3.   Subsequent Event
 
On December 28, 2009, Talbots executed an Amended and Restated Secured Revolving Loan Agreement with AEON, Co., Ltd., the Company’s indirect majority shareholder (“AEON”), which amends and restates the $150 million secured revolving loan agreement with AEON dated April 10, 2009. Pursuant to the agreement, the principal amount of the earlier $150 million secured credit facility has been increased to $250 million (“Amended Facility”).
 
On December 29, 2009, Talbots borrowed $245 million under the Amended Facility which was used to repay all of the Company’s outstanding third party bank indebtedness, related interest, and other costs and expenses.
 
The Amended Facility has a scheduled maturity date of the earlier to occur of (i) April 16, 2010 or (ii) the consummation of the merger with BPW, the repurchase of AEON’S equity interest in the Talbots and repayment of all outstanding debt owed to AEON, provided that the merger transaction together with any concurrent financing result in sufficient net cash proceeds to enable the Talbots to make full repayment of its AEON debt.
 
Interest on the loan made pursuant to the Amended Facility remains at a variable rate equal to LIBOR plus 6.00%. LIBOR refers to the one-month London interbank offer rate expressed as a percentage rate per annum. Interest on the loan will be payable monthly in arrears.


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COMPARATIVE MARKET VALUE OF SECURITIES
 
Talbots common stock is quoted on the NYSE under the symbol “TLB.” BPW common stock is quoted on the NYSE Amex under the symbol “BPW.” The following table shows the closing prices of Talbots common stock and BPW common stock as reported on December 7, 2009, the last trading day prior to public announcement of the merger, on December 8, 2009, the date of the public announcement of the merger, and on January 25, 2010, the last practicable date prior to the date of this document. This table also shows the implied value of the merger consideration proposed for each share of BPW common stock, which was calculated by multiplying the closing price of Talbots common stock on the relevant date by the exchange ratio.
 
                         
    Closing Price of
  Closing Price of
  Implied Value of Merger
    Talbots Common Stock   BPW Common Stock   Consideration
 
As of December 7, 2009
  $ 7.21     $ 9.85     $ 9.54  
As of December 8, 2009
  $ 8.23     $ 10.32     $ 10.89  
As of January 25, 2010
  $ 11.05     $ 10.69     $ 11.25  
 
The market price of Talbots common stock and BPW common stock will fluctuate prior to the special meeting and before the merger is completed, which will affect the implied value of the merger consideration to BPW stockholders. You should obtain current market quotations for the shares.


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COMPARATIVE PER SHARE DATA
 
The following table shows, for the nine months ended September 30, 2009 and the year ended December 31, 2008, selected per share information for BPW common stock on a historical and pro forma equivalent basis, and for the thirty-nine weeks ended October 31, 2009 and the year ended January 31, 2009, selected per share information for Talbots common stock on a historical and pro forma combined basis. Except for the historical information as of and for the year ended December 31, 2008, in the case of BPW, and as of and for the year ended January 31, 2009, in the case of Talbots, the information in the table is derived from unaudited information. You should read the data with the historical consolidated financial statements and related notes of Talbots and the historical financial statements and related notes of BPW contained in their respective Annual Reports on Form 10-K for the year ended January 31, 2009, in the case of Talbots, and December 31, 2008, in the case of BPW, which have been incorporated in this document by reference, as well as the unaudited pro forma condensed combined financial statements and related notes contained in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 19. The following data is not necessarily indicative of future operations of the combined company.
 
The pro forma equivalent data for BPW are calculated by multiplying the pro forma combined (loss) income from continuing operations per share, pro forma dividends declared per share and pro forma book value by the exchange ratio so that the per share amounts are equated to the respective values for one share of BPW common stock. Based on the recent closing market price of Talbots common stock on December 18, 2009, the assumed exchange ratio in the merger is 1.3235 shares of Talbots common stock for one (1) share of BPW common stock. The pro forma combined statement of operations data assumes the merger and related events were consummated on February 3, 2008, the beginning of Talbots’ 2008 fiscal year. The pro forma combined balance sheet data assumes the merger was consummated on the respective balance sheet date.
 
                                 
    BPW   Talbots
        Pro Forma
      Pro Forma
    Historical   Equivalent   Historical   Combined
 
(Loss) Income from Continuing Operations Per Share
                               
Basic
                               
Nine Months Ended September 30, 2009
  $ (0.01 )                        
Year Ended December 31, 2008
  $ 0.07                          
Thirty-Nine Weeks Ended October 31, 2009
          $ (0.20 )   $ (0.44 )   $ (0.15 )
Year Ended January 31, 2009
          $ (2.24 )   $ (2.61 )   $ (1.69 )
Diluted
                               
Nine Months Ended September 30, 2009
  $ (0.01 )                        
Year Ended December 31, 2008
  $ 0.06                          
Thirty-Nine Weeks Ended October 31, 2009
          $ (0.20 )   $ (0.44 )   $ (0.15 )
Year Ended January 31, 2009
          $ (2.24 )   $ (2.61 )   $ (1.69 )
Cash Dividends Declared Per Share
                               
Nine Months Ended September 30, 2009
    None                          
Year Ended December 31, 2008
    None                          
Thirty-Nine Weeks Ended October 31, 2009
                    None          
Year Ended January 31, 2009
          $ 0.48     $ 0.52     $ 0.36  
Book Value Per Share
                               
September 30, 2009
  $ 5.30                          
December 31, 2008
  $ 5.30                          
October 31, 2009
          $ 1.90     $ (3.46 )   $ 1.44  
January 31, 2009
          $ 2.10     $ (3.22 )   $ 1.59  


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RISK FACTORS
 
In addition to the other information included in and incorporated by reference into this document, including the risk factors and other information set forth in the Quarterly Report on Form 10-Q of Talbots for the quarterly period ended October 31, 2009, filed with the SEC on December 10, 2009, the Annual Report on Form 10-K of Talbots for the fiscal year ended January 31, 2009, filed with the Securities and Exchange Commission on April 16, 2009, and the Annual Report on Form 10-K of BPW for the fiscal year ended December 31, 2008, filed with the Securities and Exchange Commission on March 30, 2009, and the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements,” you should carefully consider the following risk factors before deciding whether to vote for the approval and adoption of the merger agreement and the transactions it contemplates, in the case of BPW stockholders. For further discussion of these and other risk factors, please see Talbots’ and BPW’s periodic reports and other documents incorporated by reference into this document. See “Where You Can Find More Information”, beginning on page 104.
 
Members of BPW’s and Talbots’ management and certain directors of BPW and Talbots have interests in the merger that are different from, or in addition to, your interests.
 
Executive officers of BPW negotiated the terms of the merger agreement with Talbots, and the BPW board of directors approved the merger, and recommended that its stockholders vote to approve and adopt the merger agreement and the merger. In considering the information contained in this document, you should be aware that some members of BPW’s management and certain members of its board of directors have economic interests in the merger that are different from, or in addition to, the interests of BPW, including that Talbots has agreed to pay in the aggregate advisory fees of approximately $9,000,000 to Perella Weinberg, an affiliate of PWPA, under existing engagement letters between Perella Weinberg and Talbots for financial advisory and financing related services to Talbots and the Talbots audit committee, all of which is contingent upon the completion of the merger and the related financing, or any similar transactions engaged in by Talbots. BPW is not a party to these engagements and will not pay any fees to Perella Weinberg in connection with the merger or the related transactions. As a result, such fees were not described in the prospectus issued by BPW in connection with its initial public offering. Consequently, it is possible that a BPW stockholder who purchased BPW units in the initial public offering and who still holds its BPW units at the time of the merger, without seeking to convert their BPW common stock into a pro rata portion of the trust account, could attempt to seek rescission of its purchase of the BPW units that such BPW stockholder acquired in the initial public offering or otherwise seek damages. You should also be aware that some members of Talbots’ management and certain members of its board of directors have economic interests in the merger different from, or in addition to, your interests as a stockholder of BPW. Please see “The Merger Proposal — Interests of Certain BPW Directors and Officers in the Merger” and “The Merger Proposal — Interests of Certain Talbots Directors and Officers in the Merger.”
 
If BPW stockholders do not approve the pre-closing certificate amendment proposal, there may not be sufficient time to complete the merger before BPW’s corporate existence terminates.
 
BPW’s certificate of incorporation provides that BPW’s corporate existence will terminate on February 26, 2010. The pre-closing certificate amendment proposal is a proposal to amend BPW’s certificate of incorporation so that BPW’s corporate existence will terminate on April 26, 2010 (or up to August 26, 2010 if further extended by a BPW stockholder vote), rather than February 26, 2010. BPW is proposing the pre-closing certificate amendment to reduce the likelihood that BPW’s corporate existence will terminate prior to the completion of the merger and the transactions contemplated by the merger agreement. If the pre-closing certificate amendment proposal is not approved, BPW’s corporate existence may cease before BPW and Talbots have had sufficient time to satisfy the conditions to the completion of the merger agreement, in which case the merger would not be completed.


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The completion of the merger is subject to a number of conditions that are outside the control of Talbots and BPW, including a financing condition.
 
The completion of the merger is subject to a number of conditions as described in the section of this document entitled “The Merger Agreement — Conditions to Completion of the Merger.” These conditions include, but are not limited to:
 
  •  receipt of financing in such principal amount that, together with the net proceeds of amounts in BPW’s trust account and other available cash, it will have all necessary funds to consummate the transactions contemplated by the merger agreement, including the repayment in full of all amounts due or outstanding in respect of (i) all financing agreements between AEON and Talbots, (ii) the Support Letter (Financial), dated as of April 9, 2009, from AEON to Talbots, and the Letter of Support, dated as of April 9, 2009, from AEON to Talbots and (iii) all Third Party Credit Facilities (as defined in the AEON agreement in Appendix D to this document), to pay related fees and expenses and to have, immediately following the consummation of the transactions contemplated by the merger agreement, cash on hand or available to be borrowed under one or more bank credit facilities in an amount sufficient to fund ordinary course working capital and other general corporate purposes. For more information, see “The Debt Commitment Letter”,
 
  •  the completion of the warrant exchange offer, which will not be completed unless holders of at least 90% of the BPW warrants participate in the exchange offer and the other conditions to the warrant exchange offer are satisfied. For more information, see “The Warrant Exchange Offer”, and
 
  •  the continued effectiveness, and performance of the parties under, the AEON agreement and the BPW sponsors’ agreement. Notwithstanding certain contractual rights of BPW and Talbots under these agreements, neither BPW nor Talbots controls AEON or the BPW sponsors. For more information, see “The AEON Repurchase, Repayment and Voting Agreement” and “The BPW Sponsors’ Agreement.”
 
The completion of the merger is also subject to a number of other conditions, including the receipt of approval from BPW’s stockholders, certain governmental approvals and the absence of a material adverse effect upon Talbots.
 
If the total number of shares of BPW common stock for which conversion rights have been exercised exceeds 35% of the shares of BPW common stock issued in its initial public offering, the merger will not be completed.
 
BPW’s certificate of incorporation prohibits BPW from completing the merger if holders of 35% or more of the outstanding shares of BPW common stock issued in BPW’s initial public offering vote, on a cumulative basis, against either the pre-closing certificate amendment proposal or the merger proposal, or both, and properly exercise their rights to convert their shares of BPW common stock to cash. Additionally, under the terms of the merger agreement, it is a condition to the parties’ obligation to complete the merger that holders of no more than 35% of the outstanding shares of BPW common stock issued in BPW’s initial public offering exercise their conversion rights.
 
Failure to complete the merger may result in the liquidation of BPW and adversely affect Talbots.
 
BPW’s certificate of incorporation requires BPW to complete the merger, or another business combination, by February 26, 2010 (unless extended by stockholder vote, including by approval of the pre-closing certificate amendment proposal). If BPW fails to complete the merger or another business combination during this time period, BPW’s corporate existence will automatically cease, except for the purposes of winding up BPW’s affairs and liquidating. If BPW liquidates before completing the merger or another business combination, we expect that the per share liquidation distribution would be approximately $9.96 because of the expenses of BPW’s initial public offering, BPW’s general and administrative expenses and the costs incurred in seeking the merger or another business combination. In addition, BPW and Talbots may suffer other adverse consequences if the merger is not completed, including that the business of each party may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus on the merger, without realizing any of the anticipated benefits of the merger.


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The merger agreement limits Talbots’ and BPW’s ability to pursue alternatives to the merger.
 
Under the merger agreement, Talbots must complete the merger if the conditions of the merger agreement are satisfied, and Talbots is not permitted to terminate the merger agreement to pursue an alternative proposal from a third party or to enter into any agreement relating thereto, even if such proposal or agreement is more attractive to Talbots stockholders than the merger. Talbots’ majority stockholder, AEON, has voted in favor of issuing Talbots common stock to BPW stockholders in the merger, and no other approval is required from Talbots stockholders in connection with the merger.
 
The merger agreement also restricts BPW’s ability to pursue alternatives to the merger. For a description of these restrictions, please see the section of this document entitled “The Merger Agreement — BPW’s Agreement Not to Solicit Other Offers.” These restrictions could prevent BPW from engaging in a transaction that may be more beneficial to the stockholders of BPW and the BPW warrantholders than the merger.
 
The shares of Talbots common stock to be received by BPW stockholders as a result of the merger will have different rights from the shares of BPW common stock.
 
Upon the completion of the merger, BPW stockholders will become Talbots stockholders and their rights as stockholders will be governed by the organizational documents of Talbots. The rights associated with BPW common stock are different from the rights associated with Talbots common stock. Please see “Comparison of Rights of Talbots and BPW Stockholders.”
 
The opinion obtained by BPW from Financo will not reflect changes in circumstances prior to the merger.
 
The BPW board of directors has obtained a fairness opinion, dated as of December 8, 2009, from Financo Securities, LLC, or Financo. BPW has not obtained nor will obtain an additional updated fairness opinion prior to completion of the merger. Changes in the operations and prospects of Talbots or BPW, respectively, general market and economic conditions and other factors that may be beyond the control of BPW and Talbots, and on which the fairness opinion was based, may alter the value of Talbots or BPW or the price of shares of Talbots common stock or BPW common stock by the time the merger is completed. The fairness opinion does not speak to any date other than the date of such opinion, and as such, the opinion will not address whether the merger consideration to be paid to the public holders of BPW common stock in the merger is fair to the public holders of BPW common stock from a financial point of view at any date after the date of such opinion, including at the time the merger is completed. For a description of the opinion that the BPW board of directors received from Financo, see “The Merger Proposal — Opinion Rendered by Financo to the BPW Board of Directors”.
 
The GE Capital credit facility combined with cash flows from operations may not be sufficient to support operations.
 
As a specialty retailer dependent upon consumer discretionary spending, Talbots has been adversely affected by recent economic conditions, which have substantially impacted sales, margins, cash flows, liquidity, results of operations and financial condition. While the funding received through the completion of the merger and related credit facility with GE Capital are expected to eliminate approaching debt maturities and assist in the recapitalization of the Company, it does not provide assurance that the current economic environment will improve in the near future or that Talbots will generate positive cash flows from operations. The GE Capital credit facility allows for a maximum borrowing of $200 million, $40 million of which is not available until after the completion of the merger. Going forward, the Company’s ability to operate profitably and to generate positive cash flows is dependent upon many factors, including improvement in economic conditions and consumer spending and Talbots’ ability to successfully execute their long term financial plan and strategic initiatives. In the event cash flows are not sufficient to support operations, it is uncertain whether the credit facility will be able to provide levels of cash in the amounts or at the time needed. As such, the merger and refinancing does not provide assurance that Talbots’ cash flows from operations will be sufficient to support itself without additional financing or credit availability. There can be no assurance that these alternatives, if needed, would be successfully implemented, in which case it could materially adversely affect the company, its liquidity and results of operations.


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There is no assurance that Talbots will have any agreed minimum level of cash upon consummation of the merger.
 
BPW’s certificate of incorporation prohibits BPW from completing the merger if holders of 35% or more of the outstanding shares of BPW common stock issued in BPW’s initial public offering properly exercise their rights to convert their shares of BPW common stock to cash. However, if holders of less than 35% of the outstanding shares of BPW common stock issued in BPW’s initial public offering properly exercise their rights to convert their shares of BPW common stock to cash and the merger is consummated, there is no assurance that the net proceeds of the contemplated financings, together with the net proceeds of amounts in BPW’s trust account and other available cash, will be sufficient to consummate the transactions contemplated by the merger agreement, to pay related fees and expenses and to have cash on hand or available to be borrowed under one or more bank credit facilities in an amount sufficient to fund ordinary course working capital and other general corporate purposes for any minimum period following the consummation of the transactions contemplated by the merger agreement. For more information, see “The Debt Commitment Letter.”


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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This document contains or incorporates by reference certain forward-looking statements, including statements about the financial condition, results of operations, earnings outlook and prospects of Talbots and BPW and the benefits of the merger between Talbots and BPW, which are subject to numerous assumptions, risks and uncertainties. These forward-looking statements are found at various places throughout this document, including in the section entitled “Risk Factors” beginning on page 30. You can find many of these statements by looking for words such as “plan,” “believe,” “expect,” “intent,” “anticipate,” “estimate,” “project”, “potential,” “possible” or other similar expressions. Actual results could differ materially from those contained or implied by such statements for a variety of factors, including:
 
  •  any changes in economic conditions,
 
  •  competitive pressures on product pricing and services,
 
  •  the effect of governmental regulations, including the possibility that there are unexpected delays in obtaining regulatory approvals,
 
  •  the failure to obtain approval of BPW’s stockholders,
 
  •  the effect of litigation on the companies or the completion of the merger, and/or
 
  •  other risks discussed and identified in public filings with the Securities and Exchange Commission made by BPW or Talbots.
 
All forward-looking statements included in this document are based on information available at the time of this document. Neither BPW nor Talbots assumes any obligation to update any forward-looking statement.
 
For additional information about factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements, please see the reports that BPW and Talbots have filed with the Securities and Exchange Commission as described in “Where You Can Find More Information” beginning on page 104.


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THE BPW SPECIAL MEETING
 
This document is being furnished to BPW stockholders by BPW’s board of directors in connection with the solicitation of proxies from the holders of BPW common stock for use at the special meeting of BPW stockholders and any adjournments or postponements of the special meeting. This document also is being furnished to BPW stockholders as a prospectus of Talbots in connection with the issuance of Talbots of shares of Talbots common stock to BPW stockholders in the merger.
 
Together with this document, we are also sending you a notice of the BPW special meeting and a form of proxy that is solicited by the BPW board of directors. The BPW special meeting will be held at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, NY 10019, on February 24, 2010 at 10:00 a.m., local time.
 
Matters to Be Considered
 
The purpose of the BPW special meeting is to consider and vote on:
 
  •  a proposal to approve an amendment to BPW’s Amended and Restated Certificate of Incorporation, which we refer to as the BPW certificate of incorporation, to extend BPW’s corporate existence by two months, to twenty-six months in total from the date of its initial public offering. We refer to this proposal as the “pre-closing certificate amendment proposal;”
 
  •  a proposal to approve and adopt the Agreement and Plan of Merger, dated as of December 8, 2009, by and among The Talbots, Inc., Tailor Acquisition, Inc. and BPW Acquisition Corp., as such agreement may be amended from time to time, and the transactions that it contemplates. We refer to this proposal as the “merger proposal;”
 
  •  a proposal to approve the amendment and restatement, effective upon the completion of the merger, of BPW’s certificate of incorporation to the certificate of incorporation set forth on Appendix C of this document, which amended and restated certificate of incorporation will provide for the perpetual existence of BPW and will eliminate provisions of the BPW certificate of incorporation that related to BPW’s operation as a blank check company. We refer to this proposal as the “post-closing certificate amendment proposal;” and
 
  •  a proposal to approve the adjournment of the special meeting, including, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the foregoing proposal. We refer to this proposal as the “adjournment proposal.”
 
Proxies
 
Each copy of this document mailed to holders of BPW common stock is accompanied by a form of proxy with instructions for voting by mail. If you hold stock in your name as a stockholder of record and are voting by mail, you should complete and return the proxy card accompanying this document to ensure that your vote is counted at the special meeting, or at any adjournment or postponement of the special meeting, regardless of whether you plan to attend the special meeting. If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker to vote in accordance with the instructions you have received from your bank or broker.
 
If you hold your stock in your name as a stockholder of record, you may revoke any proxy at any time before it is voted by signing and returning a proxy card with a later date, delivering a written revocation letter to BPW’s Secretary, or by attending the special meeting in person, notifying the Secretary that you are revoking your proxy, and voting by ballot at the special meeting.
 
Any stockholder entitled to vote in person at the special meeting may vote in person regardless of whether a proxy has been previously given, but the mere presence (without notifying the Secretary) of a stockholder at the


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special meeting will not constitute revocation of a previously given proxy. Written notices of revocation and other communications about revoking your proxy should be addressed to:
 
BPW Acquisition Corp.
750 Washington Blvd.
Stamford, Connecticut 06901
(203) 653-5800
Attn: Richard J. Jensen
Senior Vice President and Secretary
 
If your shares are held in “street name” by a bank or broker, you should follow the instructions of your bank or broker regarding the revocation of proxies.
 
All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with the instructions you provide on the proxy card. If you return your signed proxy card without indicating how to vote on any particular proposal, the BPW common stock represented by your proxy will be voted on that proposal consistent with the recommendation of the BPW board of directors. According to the BPW amended and restated bylaws, only business within the purpose or purposes described in the notice of special meeting may be conducted at the meeting.
 
YOU MUST AFFIRMATIVELY VOTE AGAINST THE PRE-CLOSING CERTIFICATE AMENDMENT PROPOSAL OR THE MERGER PROPOSAL AND DEMAND THAT BPW CONVERT YOUR SHARES INTO CASH NO LATER THAN THE BUSINESS DAY IMMEDIATELY PRECEDING THE DATE OF THE SPECIAL MEETING TO EXERCISE YOUR CONVERSION RIGHTS. IN ORDER TO CONVERT YOUR SHARES, YOU MUST ELECT TO HAVE THOSE SHARES CONVERTED TO CASH ON THE PROXY CARD AT THE SAME TIME YOU VOTE AGAINST THE PRE-CLOSING CERTIFICATE AMENDMENT PROPOSAL OR THE MERGER PROPOSAL, AND PRIOR TO THE SPECIAL MEETING EITHER DELIVER YOUR STOCK CERTIFICATES TO BPW’S TRANSFER AGENT OR DELIVER YOUR SHARES ELECTRONICALLY TO BPW’S TRANSFER AGENT USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT/WITHDRAWAL AT CUSTODIAN) SYSTEM. YOU MUST ALSO PROVIDE, OR HAVE YOUR BANK OR BROKER PROVIDE, MELLON INVESTOR SERVICES LLC WITH THE NECESSARY STOCK POWERS, WRITTEN INSTRUCTIONS THAT YOU WANT TO CONVERT YOUR SHARES, AND A WRITTEN CERTIFICATE ADDRESSED TO MELLON INVESTOR SERVICES LLC STATING THAT YOU WERE THE OWNER OF SUCH SHARES AS OF THE RECORD DATE, YOU HAVE OWNED SUCH SHARES SINCE THE RECORD DATE AND YOU WILL CONTINUE TO OWN SUCH SHARES THROUGH THE DATE OF THE BPW SPECIAL MEETING (OR THE COMPLETION OF THE MERGER, IF YOU VOTED AGAINST THE MERGER PROPOSAL), NO LATER THAN 5:00 P.M., NEW YORK CITY TIME, ON FEBRUARY 23, 2010.
 
Solicitation of Proxies
 
In accordance with the merger agreement, the cost of proxy solicitation for the BPW special meeting will be borne by BPW. BPW has also made arrangements with Morrow & Co., LLC to assist it in soliciting proxies and have agreed to pay $15,000, plus reasonable expenses for these services. If necessary, individuals affiliated with BPW, who will not be specially compensated, may solicit proxies from BPW stockholders, either personally or by telephone, facsimile, letter or other electronic means. Any solicitation made and information provided in such a solicitation will be consistent with the written proxy statement and proxy card. BPW will also request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares held of record on January 15, 2010 and will provide customary reimbursement to such firms for the cost of forwarding these materials.
 
Talbots, BPW and their respective directors and executive officers, may be deemed to be participants in the solicitation of proxies. In addition, the underwriters of BPW’s initial public offering, including Citigroup Global Markets, Inc., or Citigroup, may provide assistance to Talbots, BPW and their respective directors and executive officers, and may be deemed to be participants in the solicitation of proxies. In connection with entering into the merger agreement, BPW entered into an agreement with Citigroup pursuant to which the deferred underwriting fees payable by BPW at the completion of the merger were reduced by approximately 50%. As a result, $7,700,000 of


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the underwriting commissions relating to BPW’s initial public offering are deferred pending completion of BPW’s initial business combination, and BPW stockholders are advised that the underwriters have a financial interest in the successful outcome of the proxy solicitation. In addition, BPW has engaged Citigroup as its capital markets adviser in connection with the merger whereby, pursuant to an engagement letter dated as of December 7, 2009 and in addition to any deferred underwriting commissions payable to Citigroup in connection with BPW’s initial public offering, BPW has agreed to pay to Citigroup an advisory fee of $2,500,000 promptly upon completion of the merger.
 
Record Date
 
The close of business on January 15, 2010 has been fixed as the record date for determining BPW stockholders entitled to receive notice of and to vote at the special meeting. At that time, 41,176,471 shares of BPW common stock were outstanding, held by fewer than ten holders of record.
 
Quorum
 
There must be a quorum in order to conduct voting at the special meeting. Under the amended and restated bylaws of BPW, holders of a majority of the shares outstanding and entitled to vote must be present in person or by proxy to constitute a quorum. All shares of BPW common stock represented at the meeting, including abstentions and broker non-votes, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted at the BPW special meeting.
 
Vote Required
 
Each share of BPW common stock outstanding on the record date and entitled to vote entitles the holder to one vote on each matter to be voted upon by stockholders at the special meeting. Approval of the pre-closing certificate amendment proposal and the post-closing certificate amendment proposal requires the affirmative vote of a majority of the outstanding shares of BPW common stock. Approval of the merger proposal requires the affirmative vote of a majority of the outstanding shares of BPW common stock, provided that a majority of shares of BPW common stock issued in BPW’s initial public offering and present and entitled to vote at the special meeting are voted in favor of the merger proposal. In addition, BPW’s certificate of incorporation prohibits BPW from completing the merger if holders of 35% or more of the outstanding shares of BPW common stock issued in BPW’s initial public offering vote, on a cumulative basis, against either the pre-closing certificate amendment proposal or the merger proposal, or both, and properly exercise their rights to convert their shares of BPW common stock to cash. Approval of the adjournment proposal requires the affirmative vote of a majority of the outstanding shares of BPW common stock that are represented at the special meeting and entitled to vote thereon. Failing to vote or abstaining from voting with respect to any proposal other than the adjournment proposal will have the same effect on that proposal as a vote against that proposal.
 
The BPW board of directors urges BPW stockholders to promptly vote by completing, dating and signing the accompanying proxy card and returning it promptly in the enclosed postage-paid envelope, or, if you hold your shares in “street name” through a bank or broker, by following the instructions of your bank or broker.
 
If you hold your stock in your name as a stockholder of record, you may complete, sign, date and mail your proxy card in the enclosed postage-paid return envelope as soon as possible or vote in person at the BPW special meeting. If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker to vote in accordance with the voting instruction form included with these materials and forwarded to you by your bank or broker. The voting instruction form provides instructions on voting by mail, telephone or on the Internet.
 
As of the record date, directors and executive officers of BPW had the right to vote approximately 6,176,471 shares of BPW common stock, or approximately 15% of the outstanding BPW common stock entitled to vote at the special meeting.
 
PWPA and BNYH are the sponsors of BPW and have entered into the BNYH agreement, pursuant to which PWPA will acquire BNYH upon the completion of the merger. PWPA and BNYH have also entered the BPW


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sponsors’ agreement with BPW and Talbots under which, subject to the terms and conditions of that agreement, PWPA, on behalf of itself and BNYH has agreed to, among other things:
 
  •  surrender an aggregate of 1,776,498 shares of BPW common stock at the same time as the completion of the merger for no consideration,
 
  •  in connection with the merger proposal and the pre-closing certificate amendment proposal, vote all of its shares of BPW common stock that it acquired prior to BPW’s initial public offering in accordance with the majority of the votes cast by the holders of shares of common stock issued in BPW’s initial public offering, and vote any shares of BPW common stock acquired by it in the open market in favor of the merger proposal and the pre-closing certificate amendment proposal and vote all its shares of BPW common stock in favor of the post-closing certificate amendment proposal and the adjournment proposal,
 
  •  exchange, at the completion of the merger, warrants to purchase BPW shares for Talbots common stock, at an exchange ratio of one warrant to purchase shares of BPW common stock for a number of shares of Talbots common stock equal to one-tenth of the quotient (rounded to the nearest ten-thousandth) obtained by dividing $11.25 by the average Talbots closing price, subject to a maximum of 0.13235 shares of Talbots common stock and a minimum of 0.0900 shares of Talbots common stock for each warrant, and
 
  •  subject to exceptions described below in this document, restrict the transfer of all shares of Talbots common stock held by it for 180 days after completion of the merger.
 
Except for the 1,776,498 shares of BPW common stock held by the sponsors that will be surrendered for no consideration, all shares of BPW common stock held by the sponsors will be exchanged for shares of Talbots common stock based on the floating exchange ratio in the merger.
 
The non-sponsor founders have entered into an agreement with BPW and Talbots, pursuant to which the non-sponsor founders have agreed to surrender 76,443 shares of BPW common stock at or prior to completion of the merger for no consideration, and to exchange, at the completion of the merger, warrants to purchase shares of BPW common stock for shares of Talbots common stock on the same terms as the sponsors, discussed above.
 
In connection with BPW’s initial public offering, BPW entered into letter agreements with each of PWPA and BNYH upon the completion of BPW’s initial public offering pursuant to which they agreed that none of PWPA, BNYH, nor any of their respective affiliates would be entitled to receive any fees or other compensation of any kind in connection with BPW’s initial business combination (other than reimbursement of out-of-pocket expenses). Perella Weinberg, an affiliate of PWPA, was engaged by Talbots in February 2009 to advise on refinancing Talbots’ existing indebtedness and on related strategic alternatives in general. For services rendered with respect to strategic alternatives between February 2009 and September 2009 Talbots paid Perella Weinberg compensation of $2,500,000. In September 2009, following AEON’s notice to Talbots that AEON desired to divest its debt and equity interests in Talbots assuming AEON could identify and structure an appropriate transaction, Perella Weinberg was separately engaged by the Talbots audit committee to assist in exploring strategic alternatives for Talbots. The total compensation payable by Talbots to Perella Weinberg as a result of the BPW transaction, including the related GE Capital credit facility, is approximately $9,000,000 for services with respect to strategic alternatives. Such compensation is contingent upon the closing of the applicable transactions or any similar transactions engaged in by Talbots. The fee arrangements between Talbots and Perella Weinberg apply equally to any similar transactions engaged in by Talbots whether or not involving BPW. BPW is not a party to these engagements and will not pay any fees to Perella Weinberg in connection with the merger or the related transactions. BPW and BNYH have acknowledged Talbots’ engagement of Perella Weinberg and consented to the payment of such fees in the BPW sponsors’ agreement.
 
Following entry into the merger agreement, Talbots management and BPW began discussions concerning possible 2009 annual incentive and retention arrangements for management. Based on these discussions and the agreement of BPW, Talbots management intends to propose a 2009 annual incentive and retention program for certain key employees, including executive officers. The proposed 2009 annual incentive and retention arrangements are subject to review and approval by the applicable Talbots board committee. A portion of the 2009 annual


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incentive awards for these key employees is proposed to be made contingent on the completion of the merger, and a separate portion of the 2009 annual incentive program would be based on achieving certain 2009 operating financial results (and not contingent on the closing of the merger). In addition, the key employees would receive a special grant of restricted stock units. The aggregate anticipated 2009 annual bonus and retention payments to Talbots executive officers that would be proposed to be made contingent on the completion of the merger is $5,000,000, one-third of which would be expected to be awarded in cash and two-thirds of which would be awarded in the form of a grant of special restricted stock units. Approximately $4,000,000 of such payments are currently proposed to be made to Talbots named executive officers, with the specific allocations yet to be determined.
 
Recommendation of the BPW Board of Directors
 
The BPW board of directors has approved and adopted the pre-closing certificate amendment, the post-closing certificate amendment and the merger agreement and the transactions it contemplates, including the merger. The BPW board of directors determined that the pre-closing certificate amendment, the post-closing certificate amendment and the merger agreement and the transactions it contemplates are in the best interests of BPW and its stockholders. The BPW board of directors unanimously recommends that the BPW stockholders vote “FOR” each of the pre-closing certificate amendment proposal, the merger proposal, the post-closing certificate amendment proposal and the adjournment proposal. For a more detailed discussion of the BPW board of directors’ recommendation, see “The Merger Proposal — BPW’s Reasons for the Merger; Recommendation of the BPW Board of Directors” on page 47.
 
Attending the Special Meeting
 
All holders of BPW common stock as of the record date, including stockholders of record and stockholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. Stockholders of record can vote in person at the special meeting. If you are not a stockholder of record, you must obtain a proxy executed in your favor from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meeting. If you plan to attend the special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership and you must bring a form of personal photo identification with you in order to be admitted to the special meeting. BPW reserves the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification.
 
Conversion Rights
 
If you are a holder of shares of BPW common stock issued in its initial public offering, you have the right to vote against either the pre-closing certificate amendment proposal or the merger proposal or both and to receive a cash payment for your BPW shares if the proposal against which you voted is approved by BPW stockholders (and the merger is completed, if you voted against the merger proposal) and you otherwise properly exercise your conversion rights.
 
To exercise your conversion rights, you must:
 
  •  demand that BPW convert your shares into cash by marking the appropriate space on the proxy card and submitting it no later than 5:00 p.m., New York City time on February 23, 2010,
 
  •  deliver your stock certificates, or deliver your shares electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, to Mellon Investor Services LLC no later than 5:00 p.m., New York City time on February 23, 2010,
 
  •  vote against the pre-closing certificate amendment proposal or the merger proposal or both,
 
  •  continue to hold your shares of BPW common stock through the date of the BPW special meeting (or the completion of the merger, if you voted against the merger proposal), and,
 
  •  provide, or have your bank or broker provide, Mellon Investor Services LLC with the necessary stock powers, written instructions that you want to convert your shares, and a written certificate addressed to


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  Mellon Investor Services LLC stating that you were the owner of such shares as of the record date, you have owned such shares since the record date and you will continue to own such shares through the date of the BPW special meeting (or the completion of the merger, if you voted against the merger proposal), no later than 5:00 p.m., New York City Time, on February 23, 2010.
 
If you do not follow these instructions, your shares will not be converted. In addition, even if you follow these instructions, your shares will not be converted unless you voted against one of the proposals described above and BPW stockholders approved that proposal (and the merger is completed, if you voted against the merger proposal). Any demand for conversion, once made, may be withdrawn at any time until 5:00 p.m., New York City time, on February 23, 2010 by submitting a new proxy card that does not include a marking in the appropriate space thereon.
 
If you properly exercise your conversion rights in connection with the pre-closing certificate amendment proposal only, your shares will be converted into an amount of cash equal to your pro rata share of the cash then in BPW’s trust account, subject to certain adjustments as described in this document. BPW will pay you this cash promptly following approval of the pre-closing certificate amendment proposal. If you properly exercise your conversion rights in connection with the merger proposal only, or both the merger proposal and the pre-closing certificate amendment proposal, your shares will be converted into an amount of cash equal to your pro rata share of the cash then in BPW’s trust account, subject to certain adjustments as described in this document. BPW will pay you this cash promptly following completion of the merger.


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INFORMATION ABOUT THE COMPANIES
 
The Talbots, Inc.
 
The Talbots, Inc. is a leading specialty retailer and direct marketer of women’s apparel, shoes and accessories. At the end of the first quarter of 2009, Talbots operated 586 Talbots brand stores in 47 states, the District of Columbia, and Canada. As of January 31, 2009, Talbots operated its business in two segments: retail stores and direct marketing. Talbots’ retail stores are located in 47 states, the District of Columbia and Canada under the Talbots brand name. As of January 31, 2009, Talbots operated a total of 587 stores under the Talbots brand name. Talbots direct marketing segment includes Talbots’ catalog and Internet channels. Since 1948, Talbots has used its direct marketing business to offer customers convenience in ordering Talbots brand merchandise. As of January 31, 2009, Talbots had approximately 12,100 Talbots brand employees of whom approximately 2,900 were full-time salaried employees, approximately 1,300 were full-time hourly employees, and approximately 7,900 were part-time hourly employees.
 
The mailing address of Talbots’ principal executive offices is One Talbots Drive, Hingham, Massachusetts 02043 and its telephone number is (781) 749-7600.
 
BPW Acquisition Corp.
 
BPW is a blank check company that was organized under the laws of the State of Delaware on October 12, 2007. BPW was formed to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, with one or more operating businesses, which we refer to as an initial business combination or a business combination.
 
BPW completed its initial public offering on February 26, 2008. Simultaneously with the initial public offering, BPW completed a private sale of warrants to purchase 8,600,000 shares of BPW common stock to BPW’s sponsors, which we refer to as the sponsors’ warrants. Approximately $348,650,000 million of the proceeds of the initial public offering and the sale of the sponsors warrants was placed in a trust account immediately following the initial public offering. If BPW completes a business combination, the amounts held in the trust account will be released to BPW. As of December 8, 2009, $349,406,151.01 million was held in the trust account. If the merger proposal is approved and the merger is completed, a portion of the funds held in the trust account will be used to pay BPW’s aggregate costs, fees and expenses in connection with the completion of an initial business combination (including deferred underwriting fees), tax obligations, and BPW stockholders who vote against the pre-closing certificate amendment proposal and/or against the merger proposal and properly exercise their conversion rights. In connection with entering into the merger agreement, BPW entered into an agreement with Citigroup pursuant to which the deferred underwriting fees payable by BPW at the completion of the merger were reduced by approximately 50%.
 
The BPW common stock is currently listed on the NYSE Amex under the symbol “BPW.” Following completion of the merger, the BPW common stock will cease trading on the NYSE Amex and BPW will file the appropriate forms with the Securities and Exchange Commission to suspend its reporting obligations under the Securities Exchange Act of 1934, as amended.
 
The mailing address of BPW’s principal executive office is 750 Washington Street, Stamford, Connecticut 06901 and its telephone number is (203) 653-5800.
 
Tailor Acquisition, Inc.
 
Tailor Acquisition, Inc., or Merger Sub, a Delaware corporation, is a direct, wholly owned subsidiary of Talbots. Merger Sub was formed by Talbots to complete the merger. In the merger, Merger Sub will merge with and into BPW and Merger Sub will cease to exist.
 
The mailing address of Merger Sub’s principal executive office is One Talbots Drive, Hingham, Massachusetts 02043 and its telephone number is (781) 749-7600.


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THE CERTIFICATE AMENDMENT PROPOSALS
 
The Pre-closing Certificate Amendment Proposal
 
BPW’s certificate of incorporation provides that BPW’s corporate existence will terminate on February 26, 2010. The pre-closing certificate amendment proposal is a proposal to amend BPW’s certificate of incorporation so that BPW’s corporate existence will terminate on April 26, 2010 (or up to August 26, 2010 if further extended by a BPW stockholder vote), rather than February 26, 2010. The change to the date upon which BPW’s corporate existence will cease is the only change to the BPW certificate of incorporation that will be made if the pre-closing certificate amendment proposal is approved. BPW is proposing the pre-closing certificate amendment to reduce the likelihood that BPW’s corporate existence will terminate prior to the completion of the merger and the transactions contemplated by the merger agreement.
 
The pre-closing certificate amendment is attached as Appendix B to this document and is incorporated in this document by reference. You are encouraged to read the pre-closing certificate amendment in its entirety.
 
The BPW board of directors determined that the pre-closing certificate amendment is advisable and in the best interests of BPW and its stockholders, and unanimously recommends that the BPW stockholders vote “FOR” the pre-closing certificate amendment.
 
The Post-closing Certificate Amendment Proposal
 
BPW’s certificate of incorporation requires BPW, in connection with the merger proposal, to submit to its stockholders a proposal to amend its certificate of incorporation to provide for BPW’s perpetual existence. Approval of the post-closing certificate amendment proposal would result in the amendment and restatement of BPW’s certificate of incorporation to provide for BPW’s perpetual existence. Approval of the post-closing certificate amendment proposal would also result in the elimination of provisions in BPW’s certificate of incorporation relating to its operation as a blank check company, as reflected in the amended and restated certificate of incorporation attached to this document as Appendix C.
 
The post-closing certificate amendment is attached as Appendix C to this document and is incorporated in this document by reference. You are encouraged to read the post-closing certificate amendment in its entirety.
 
The BPW board of directors determined that the post-closing certificate amendment is advisable and in the best interests of BPW and its stockholders, and unanimously recommends that the BPW stockholders vote “FOR” the post-closing certificate amendment.


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THE MERGER PROPOSAL
 
Background of the Merger
 
BPW is a blank check company that was organized under the laws of the State of Delaware on October 12, 2007. BPW was formed to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more operating businesses. After the completion of BPW’s initial public offering on February 26, 2008, BPW commenced efforts to identify and evaluate potential acquisitions with the objective of completing a business combination. BPW evaluated a number of potential opportunities since that time. Many did not fit BPW’s screening criteria, while some were eliminated due to an insufficient enterprise value, different valuation expectations among the parties, fundamental business attributes or other reasons.
 
Beginning at the end of 2008, Talbots had been considering various options to improve the maturity schedule and terms of the outstanding indebtedness Talbots owed to AEON and to third parties. In connection with this, Perella Weinberg was retained by Talbots at the beginning of 2009 to evaluate various alternatives for refinancing the outstanding indebtedness that was coming due in the near term. As part of this review, Talbots began preliminary discussions with various financial institutions, including GE Capital, with respect to a potential asset based financing.
 
During the fall of 2009, the management of Talbots was focused specifically on addressing maturities coming due in December 2009, January 2010 and April 2010 and on its ability to make such payments or to otherwise refinance these loans on acceptable terms. In the course of various discussions with Talbots pertaining to these upcoming maturities during September, AEON and Talbots’ current third party lenders indicated an unwillingness to extend any such maturities past their due dates. Talbots and Perella Weinberg continued discussions with GE Capital following GE Capital’s expressing interest in providing financing to Talbots.
 
On September 26, 2009, AEON contacted Talbots to inform Talbots that AEON desired to divest its debt and equity interests in Talbots in advance of the April 2010 debt maturities, assuming AEON could identify and structure an appropriate transaction. AEON indicated that it was in preliminary discussions with a potential purchaser of AEON’s equity and debt and was seeking assistance from Talbots in executing a possible sale transaction. In response, the Talbots audit committee convened multiple times over the next several days to discuss the foregoing and to appoint Perella Weinberg, given its familiarity with Talbots, its debt structure and its discussions with GE Capital, as financial advisor to the audit committee and Dewey & LeBoeuf LLP, or Dewey & LeBoeuf, as its legal counsel. At an audit committee meeting on October 1, 2009, the audit committee instructed Perella Weinberg to seek and consider alternative strategic transactions and refinancing transactions which would address Talbots’ upcoming debt maturities and, to the extent possible, provide a means for AEON to divest its equity ownership of Talbots and to have its loans to Talbots repaid in full prior to the April 2010 debt maturities. During a number of subsequent conference calls with the Talbots audit committee, Perella Weinberg advised the audit committee that given the economic climate and market conditions in retail in particular, a business combination transaction, including an outright sale, or a traditional equity offering, would be difficult to effect on favorable terms.
 
On October 13, 2009, the Talbots audit committee met with members of Talbots’ senior management, Perella Weinberg and Dewey & LeBoeuf. At this meeting, Perella Weinberg reviewed with the Talbots audit committee the terms of a potential asset based financing being discussed with GE Capital. Perella Weinberg indicated that AEON had expressed its support of the GE Capital financing, subject to approval by AEON’s board of directors. At the same meeting, the Talbots audit committee discussed the possibility that a Talbots business combination with a special purpose acquisition company, or a SPAC, with sufficient cash in trust, could achieve both Talbots’ and AEON’s goals because it would provide the refinancing sought by the Company, the exit desired by AEON as well as the business combination that SPACs are formed to pursue. The Talbots audit committee discussed the possibility of a transaction with a SPAC and reviewed a list of potential SPACs that had sufficient cash in trust. Following discussion, the Talbots audit committee requested that Perella Weinberg contact the SPACs discussed to evaluate potential interest in a transaction with Talbots and invite written proposals. Following the Talbots audit committee meeting on October 13, 2009 and on October 14, 2009, Perella Weinberg made initial contact with four SPACs,


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including BPW, that had not announced a transaction and had sufficient cash in trust. Only BPW expressed an interest in potentially pursuing a potential transaction.
 
On October 17, 2009, the Talbots audit committee met to discuss the results of Perella Weinberg’s survey of SPACs, and instructed Perella Weinberg to continue exploratory discussions with BPW. Following the October 17 meeting of the Talbots audit committee, BPW and Perella Weinberg had preliminary discussions regarding the structure and the timing of submitting a proposal for a potential transaction, and on October 19, 2009, BPW sent Talbots a non-binding letter outlining certain aspects of a potential transaction. Subsequently, BPW and Talbots entered into a mutual confidentiality agreement and exchanged preliminary due diligence material.
 
On October 20, 2009, the Talbots audit committee met with its advisors and, at the invitation of the Talbots audit committee, certain members of Talbots’ senior management. At this meeting, Perella Weinberg reviewed with the Talbots audit committee the terms of the written proposal submitted by BPW. Given BPW’s affiliation with Perella Weinberg, the Talbots audit committee deemed it advisable to engage an independent financial advisor unaffiliated with BPW to provide financial advisory services, negotiate with BPW and explore whether other refinancing or strategic alternatives might be available. At an audit committee meeting on the next day, Perella Weinberg informed the Talbots audit committee that GE Capital had indicated that it was unwilling to proceed with an asset based financing in its current form.
 
On October 26, 2009, the Talbots audit committee engaged Barclays Capital Inc., which we refer to as Barclays, to serve as an independent financial advisor to the audit committee. Following Barclays’ engagement, Barclays, on behalf of the Talbots audit committee, conducted negotiations with BPW with respect to the financial and other significant terms of a potential transaction with BPW. Discussions between Talbots and its independent advisors and BPW and its advisors continued through the end of October. Barclays also undertook an analysis of possible alternatives to a transaction with BPW.
 
On November 5, 2009, executives of BPW and Talbots, together with their representatives, met at the New York offices of Barclays to conduct introductory due diligence on Talbots’ business and discuss the possibility of a transaction. Throughout November, BPW, Talbots and their respective advisors had numerous meetings and discussions regarding the structural, financial and other significant terms of the proposed transaction, including on November 8, November 11, and November 13, 2009, and BPW conducted a due diligence review of Talbots. During this time, AEON reiterated its intention to divest its equity interests in and be repaid in full for its loans to Talbots. In this regard, the Talbots audit committee and Barclays determined that, in addition to the potential transaction with BPW, a contemporaneous third party loan would be required to generate sufficient proceeds to concurrently consummate the merger, repay and refinance all outstanding indebtedness, owed both to AEON and to third party lenders, and to retire all of AEON’s equity interests in Talbots. Accordingly, the Talbots audit committee instructed Perella Weinberg and Barclays to attempt to resume discussions with GE Capital with regard to an asset based financing, which, to the extent GE Capital required it, could be conditioned upon the completion of the BPW transaction.
 
On November 18, BPW’s board of directors authorized its audit committee, composed entirely of independent directors, to retain a financial valuation firm in connection with the potential transaction with Talbots, and on November 20, BPW entered into an engagement agreement with Financo pursuant to which Financo would provide a fairness opinion to BPW.
 
Throughout the rest of the month of November, BPW, Talbots and their respective independent advisors continued to discuss a potential transaction. Also during this time, the BPW board of directors met regularly and received updates from BPW management on the progress of these preliminary discussions and BPW’s board of directors authorized BPW management to continue these discussions. Similarly, the Talbots audit committee met regularly and received updates from and provided guidance to its legal and independent financial advisors with respect to these preliminary discussions and resumed discussions with GE Capital.
 
Beginning on November 21, BPW and its counsel, Wachtell, Lipton, Rosen & Katz and Akin Gump Strauss Hauer & Feld LLP, and the Talbots audit committee and its counsel, Dewey & LeBoeuf, began discussions regarding documentation for a potential transaction, including a draft merger agreement and draft repurchase and support agreement with AEON. Also, representatives of Talbots and BPW regularly discussed a potential transaction, including at a meeting of BPW management with the Talbots audit committee and its independent


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advisors on November 22, and at a meeting of representatives of BPW and Financo with members of management of Talbots regarding business diligence and the potential transaction on December 1. Representatives of Talbots also discussed and met with representatives of AEON on several occasions to consider the proposed transaction and the terms on which AEON’s equity and debt in Talbots would be repurchased and retired in connection with the completion of the proposed transaction. A meeting of the Talbots board of directors was held on November 22 to discuss a potential transaction with BPW and alternatives. The meeting was also attended by certain members of management and advisors of Talbots, the legal and financial advisors of the Talbots audit committee and certain members of management and advisors of AEON. On that same day, the Talbots audit committee and its independent advisors met with a third party that had expressed preliminary interest in discussing a purchase of AEON’s interests.
 
In early December, representatives of BPW and Talbots continued discussions and preliminarily agreed to present to their respective boards a proposed transaction in which Talbots would acquire BPW in an all stock transaction through a merger of Talbots’ wholly owned subsidiary with and into BPW. Continuing extensive discussions between Talbots and AEON and their respective advisors, and between Talbots and BPW and their respective advisors, resulted in a proposed floating exchange ratio in which each BPW common share would be exchanged for between 0.9000 - 1.3235 shares of Talbots common stock, resulting in an implied value of $11.25 in Talbots stock per BPW common share so long as Talbots common stock trades between approximately $8.50 and $12.50 during a pricing period prior to the BPW special meeting. The parties also discussed the terms of a proposed warrant exchange offer in which all public BPW warrantholders would be asked to exchange their warrants for Talbots common stock or Talbots warrants on new terms (as described under the section of this document entitled “The Warrant Exchange Offer”), and an agreement by BPW’s sponsors and directors to surrender in connection with completing the merger a total of 1,852,941 of their shares of BPW common stock for no consideration, and to exchange warrants to purchase shares of BPW common stock for shares of Talbots common stock at an exchange ratio in which each warrant to purchase shares of BPW common stock would receive one-tenth of the stock consideration received for each share of BPW common stock based on the floating exchange ratio in the merger. In addition, AEON indicated its willingness to consider a transaction in which it would exchange its entire equity stake in Talbots for a nominal amount, and would be repaid in full on all of the outstanding indebtedness of Talbots it held as of the closing of the merger. In connection with considering these terms, each company and its respective advisors continued to review and exchange drafts of definitive documentation, including the merger agreement, the AEON agreement and the BPW sponsors agreement.
 
On December 3, 2009, at a meeting of the Talbots audit committee, Barclays advised the Talbots audit committee that Barclays did not believe that any refinancing or strategic alternatives, other than the proposed merger with BPW and the related GE Capital financing, could be entered into and announced in advance of the December 2009 debt maturities. The potential lack of funds to pay such maturities and the inability to obtain waivers from any lenders or substitute financing without an announced transaction would have required Talbots to seek to borrow under a $150 million working capital facility entered into with AEON and to document and borrow under a new facility with AEON pursuant to a commitment by AEON delivered on April 9, 2009. The Talbots audit committee directed its advisors to continue negotiations with both BPW and GE Capital.
 
Over the next several days, Barclays and Dewey & LeBoeuf continued to negotiate the terms and agreements with BPW’s advisors. During this period, BPW indicated that it was essential to BPW that AEON approve the transaction by written consent, in order to provide more certainty and to expedite the approval process. At the direction of the audit committee, Talbots’ advisors also continued to negotiate the terms of an asset based financing with GE Capital in order to have sufficient proceeds, together with BPW cash, to refinance all outstanding Talbots indebtedness and retire AEON’s equity by April 17, 2010, the date at which the AEON commitments would mature and amounts owing to AEON would become due.
 
On the evening of December 6, the BPW board of directors convened telephonically to discuss the transaction and the status of negotiations. At this meeting, BPW management reviewed with the board the proposed terms discussed with Talbots and AEON, and described the status of discussions on the merger agreement, the AEON agreement, the BPW sponsors agreement and the status of the GE Capital financing documents, as well as financial and other information regarding the transaction and Talbots. Financo discussed its analyses to date and indicated it would continue work on its fairness analysis for the audit committee of the BPW board of directors in advance of the parties reaching agreement on a definitive transaction. In addition, BPW’s management and advisors reviewed the


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status of due diligence with the board of directors. The BPW board of directors engaged in an extensive discussion regarding these matters and authorized BPW management to continue discussions with Talbots to reach agreement on a merger transaction.
 
In the afternoon of December 7, the Talbots audit committee met telephonically to review the status of the negotiations and the terms of the proposed transaction with BPW. Dewey & LeBoeuf reviewed the terms of the merger agreement, including the conditions to closing, as well as the AEON agreement and the BPW sponsors’ agreement, the GE Capital commitment letter and all other ancillary agreements, and the proposed actions to be taken by the Talbots audit committee and its legal duties in connection therewith, noting that the audit committee had formally met on more than 20 occasions as part of the process, and engaged in numerous other discussions outside of such formal meetings. Barclays then discussed the financial terms of the proposed transactions. After extensive discussion with the Talbots audit committee’s independent advisors regarding the terms of the merger agreement and related agreements and the transactions contemplated thereby, the Talbots audit committee unanimously determined that the merger agreement, the merger, the stock issuance in connection therewith and the other transactions contemplated thereby or being undertaken in connection therewith, including the GE Capital commitment letter and the repurchase agreement with AEON, were advisable, fair to and in the best interests of Talbots’ public stockholders and voted to approve the applicable agreements and transactions and to recommend to the board of directors that the board of directors affirm and ratify the audit committee’s approval and approve the merger agreement, the AEON agreement, the GE Capital commitment letter, all related documents, and the transactions contemplated thereby or undertaken in connection therewith. The Talbots audit committee also approved the applicable agreements and transactions for purposes of Section 203 of the DGCL and resolved to recommend that the board of directors affirm and ratify such approval.
 
The Talbots board of directors then convened multiple times on the evening of December 7 to discuss the status of negotiations and, after an update on the negotiations, determined to reconvene early in the morning New York time on December 8 to allow further time to review the latest changes to the transaction documents. During this time, the advisors to the Talbots audit committee also negotiated certain terms of the transaction with advisors to AEON. As planned, the Talbots board of directors reconvened in the morning on December 8. Present at the meeting were members of Talbots’ senior management, AEON and financial and legal advisors who advised on the legal and financial terms of the merger and the related transactions. At this meeting, the Talbots audit committee presented its recommendation that a transaction be agreed to on the terms presented to the Talbots board of directors and briefly reviewed the basis of its recommendation. The Talbots board of directors then discussed further the terms of the transaction. Following this, Trudy F. Sullivan, the President and Chief Executive Officer of Talbots, and the Talbots directors nominated by AEON, all recused themselves from the vote. The Talbots board of directors, acting solely through the members of the Talbots audit committee, resolved that the merger agreement, the merger, the stock issuance in connection therewith and the other transactions contemplated thereby or being undertaken in connection therewith, including the GE Capital commitment letter and the repurchase agreement with AEON, were advisable, fair to and in the best interests of Talbots public stockholders and voted to affirm and ratify the audit committee’s approval of the applicable documents and transactions and to approve the merger agreement, the merger, the stock issuance in connection therewith and the other transactions contemplated thereby or being undertaken in connection therewith, including the GE Capital commitment letter and the repurchase agreement with AEON. Further, the board of directors, acting solely through the members of the Talbots audit committee, voted to affirm and ratify the Talbots audit committee’s approval of, and to approve, the applicable agreements and the transactions for purposes of Section 203 of the DGCL.
 
On the evening of December 7, the BPW board of directors convened telephonically to review the status of negotiations, and reconvened in the morning of December 8. At this meeting BPW management reviewed the results of discussions and communicated to the BPW board of directors that preliminary agreement had been reached on the proposed terms for the merger. Financo then discussed the financial analyses it had performed regarding Talbots and the proposed transaction. Financo then orally delivered its opinion that, as of that date, and based upon and subject to specified factors, limitations and assumptions described to the board, the merger consideration to be paid to the public holders of BPW common stock in the merger is fair to the public holders of BPW common stock from a financial point of view. Wachtell Lipton described the terms of the merger agreement, including the conditions to closing, as well as the AEON agreement and the BPW sponsors’ agreement. Akin Gump


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then described the proposed actions to be taken by the BPW board of directors and its legal duties in connection therewith. The board of directors engaged in extensive discussion with management and its advisors regarding the terms of the merger agreement and related agreements and the transactions contemplated thereby. Following such discussion, the audit committee of the BPW board of directors, on the basis of the discussions and presentations at the meeting, then unanimously recommended that the full board of directors approve the transaction. After consideration by the board of directors, on motions duly made and seconded, the full board of directors unanimously resolved that the merger agreement is advisable, fair to and in the best interest of BPW stockholders and voted to approve and adopt the merger agreement and the merger and recommend that BPW stockholders adopt the merger agreement. In approving the merger agreement and related transactions, the BPW board of directors was aware that Perella Weinberg, an affiliate of its sponsor PWPA, had been engaged by Talbots to provide financial advisory services and would be paid certain fees upon completion of the merger as described under “Interest of Certain BPW Directors and Officers in the Merger.” The BPW board of directors also discussed that, due to the conditions to closing the merger, including receiving the necessary vote of BPW stockholders and conducting the BPW warrant exchange offer, and the time required to satisfy these conditions, it would be in the best interests of BPW and its stockholders to extend the term of BPW’s existence by two months, as contemplated by Section 9.5 of the BPW certificate of incorporation. As a result, the BPW board of directors approved the extension of the term of BPW’s existence by two months, to twenty-six months in total from the date of its initial public offering and resolved to recommend that its stockholders approve the pre-closing certificate amendment proposal.
 
Following the approval of each company’s board of directors, the parties executed the merger agreement and transaction documentation early on the morning of December 8, 2009. Also at this time AEON executed a written consent voting all of its shares of Talbots common stock, constituting approximately 54% of the shares of Talbots common stock issued and outstanding on such date, in favor of the issuance of Talbots common stock in the merger. Prior to the opening of the financial markets in New York City on December 8, 2009, the transactions contemplated by the merger agreement and the AEON agreement were announced in press releases by BPW and Talbots.
 
BPW’s Reasons for the Merger; Recommendation of the BPW Board of Directors
 
BPW has been in search of a business combination partner since its initial public offering in February 2008. BPW’s board of directors believes that the merger with Talbots presents a unique opportunity for BPW because of, among other factors, its attractive valuation, strong management team and turnaround business plan.
 
In arriving at its determination to approve the merger and its terms, BPW’s board of directors relied on an analysis and/or review of a number of factors, including, but not limited to:
 
  •  information with respect to the financial condition, results of operations and business of Talbots, on both a historical and prospective basis,
 
  •  its belief regarding Talbots’ attractive current stock valuation relative to its future prospects,
 
  •  the Talbots’ management team’s quality and strength as well as its turnaround plan for the Talbots business,
 
  •  the exchange ratio and other financial terms in the merger, including the agreement with AEON relating to retiring its debt and equity stakes in Talbots, and the belief of the BPW board of directors that the merger would result in more value per share of BPW common stock than the cash proceeds per share held in the trust account on behalf of the BPW stockholders,
 
  •  the fact that Talbots’ capital structure will be substantially deleveraged as a result of the transactions contemplated by the merger agreement and the AEON agreement, and that BPW stockholders could be able to benefit from this deleveraged structure and other improvements in Talbots’ business resulting from any future successes in executing on its turnaround plan by receiving Talbots common stock in the merger,
 
  •  the fairness opinion provided by Financo, which is more fully described below under “The Merger Proposal — Opinion Rendered by Financo to the BPW Board of Directors”,
 
  •  the fact that BPW’s sponsors agreed to surrender for no consideration an aggregate of 1,776,498 shares of BPW common stock, and BPW’s non-sponsor founders agreed to surrender for no consideration an aggregate of 76,443 shares of BPW common stock, or 30% of the total number of shares they received in connection with the initial public offering of BPW, upon completion of the merger, and


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  •  the fact that, in connection with entering into the merger, BPW negotiated an amendment to their existing underwriting agreement with Citigroup, such that the total deferred underwriting fees payable to Citigroup upon completion of the merger will be $7,700,000, rather than $15,400,000 as was contemplated by the original terms of the agreement entered into in connection with BPW’s initial public offering.
 
BPW’s board of directors believes that each of the above factors supported its determination and recommendation to approve the merger. In addition, BPW’s board of directors reviewed a number of additional factors in evaluating the merger with Talbots, including, but not limited to, the terms and conditions of the merger agreement and related transaction documents and the results of BPW’s legal, technology, accounting and other due diligence review of Talbots. BPW’s board of directors also considered the following potentially negative factors, among others, in its deliberations concerning the merger:
 
  •  the competitive nature of the industry in general,
 
  •  the possibility that the benefits anticipated from the merger might not be achieved or might not occur as rapidly or to the extent currently anticipated, and
 
  •  the fact that certain officers and directors of BPW may have interests in the merger that are different from, or are in addition to, the interests of BPW stockholders generally, including the matters described under “The Merger Proposal — Interests of Certain BPW Directors and Officers in the Merger” below.
 
The foregoing discussion of the information and factors considered by the BPW board of directors is not intended to be exhaustive, but includes the material factors considered by the BPW board of directors. In view of the variety of factors considered in connection with its evaluation of the merger agreement, the AEON agreement, the BPW sponsors’ agreement, and the other transactions contemplated by the merger agreement and other transaction documents, the BPW board of directors did not find it practicable to, and did not, quantify or otherwise assign specific weights to the factors considered in reaching its determination and recommendation. In addition, each of the members of the BPW board of directors may have given differing weights to different factors. On balance, the BPW board of directors believed that the positive factors discussed above outweighed the negative factors discussed above.
 
The BPW board of directors determined that the merger is in the best interests of BPW and its stockholders and has unanimously approved the merger agreement and the transactions it contemplates.
 
Opinion Rendered by Financo to the BPW Board of Directors
 
Financo was retained by BPW, acting through the audit committee (comprised solely of independent members) of the BPW board of directors, to render a fairness opinion to BPW in connection with the proposed merger. On December 8, 2009, Financo delivered a written opinion to the BPW board of directors stating that, as of such date, based upon and subject to the assumptions made, matters considered, and limitations on Financo’s review as set forth in Financo’s opinion, the merger consideration to be paid to the public holders of BPW common stock in the merger is fair to the public holders of BPW common stock from a financial point of view. The opinion was issued and approved by the fairness opinion committee of Financo.
 
Financo’s opinion was for the use and benefit of the BPW board of directors in its consideration of the transaction and does not constitute a recommendation as to how any holder of shares of BPW common stock should vote on the merger or any related matter.
 
The full text of Financo’s opinion, which sets forth the assumptions made, general procedures followed, matters considered and limits on the review undertaken, is included as Appendix E to this document. The summary of Financo’s opinion set forth below is qualified in its entirety by reference to the full text of the opinion. You are urged to read Financo’s opinion carefully and in its entirety.
 
In rendering its opinion, Financo reviewed and analyzed all the information it deemed necessary and appropriate, including:
 
  •  a draft merger agreement,
 
  •  a draft AEON agreement,


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  •  a draft BPW sponsors’ agreement,
 
  •  such publicly available information concerning Talbots and BPW which Financo believed to be relevant to its inquiry,
 
  •  financial and operating information with respect to the business, operations and prospects of Talbots furnished to Financo by BPW and Talbots and their respective advisors,
 
  •  a trading history of the shares of BPW common stock for the period ending December 7, 2009,
 
  •  the amounts held in the BPW trust account for the benefit of the public holders of BPW common stock,
 
  •  a trading history of the shares of Talbots common stock for the period ending December 7, 2009 and a comparison of that trading history with those public companies Financo deemed relevant and comparable,
 
  •  the valuation multiples for certain public companies that Financo deemed relevant and that are in lines of business similar to Talbots,
 
  •  a comparison of the proposed financial terms of the merger with the financial terms of certain other transactions that Financo deemed relevant,
 
  •  the projected free cash flows of Talbots in conducting a discounted cash flow analysis of Talbots, and
 
  •  such other financial studies, analyses and investigations as Financo deemed appropriate.
 
In addition, Financo had discussions with the management and staff of BPW and Talbots and their respective advisors concerning the business and operations, assets, present condition and future prospects of Talbots, and undertook such other studies, analyses and investigations as Financo deemed relevant and appropriate.
 
In rendering its opinion, Financo assumed and relied upon, without independent verification, the accuracy and completeness of all financial and other information (including the representations and warranties contained in the merger agreement) and data publicly available or provided to or otherwise reviewed by or discussed with Financo. Further, Financo has relied upon the assurances of the managements of each of Talbots and BPW and their respective advisors (other than Financo) that they were unaware of any facts that would make such information, data or material provided to or otherwise reviewed by or discussed with Financo incomplete or misleading. Financo did not subject such information, data or material to either (i) any independent review by Financo or a third party of any kind or (ii) an audit in accordance with generally accepted accounting attestation standards or the Statement on Standards for Prospective Financial Information issued by the American Institute of Certified Public Accountants.
 
In addition, Financo assumed and relied upon the reasonableness and accuracy of any of Talbots’ financial projections, forecasts and analyses provided to Financo by Talbots and BPW, and assumed that such projections, forecasts and analyses were reasonably prepared in good faith and on bases reflecting the best available judgments and estimates of Talbots’ or BPW’s respective managements. Accordingly, Financo did not express an opinion or any other form of assurance on, and assumed no responsibility for, the accuracy, completeness or correctness (or, in the case of projections, forecasts and analyses or the assumptions upon which they may be based, the achievability) of such information.
 
Talbots’ independent auditors have not compiled, examined, or performed any procedures with respect to the prospective financial information referred to below, nor have they expressed any opinion or any other form of assurance on such information or its achievability and assume no responsibility for such information.
 
Financo did not conduct a physical inspection of the properties and facilities of Talbots or BPW, and has not reviewed any of the books and records of Talbots or BPW. The preparation of Financo’s opinion did not include a detailed review of any of Talbots or BPW transactions, and the Financo opinion cannot be expected to identify errors, irregularities or illegal acts.
 
Financo’s opinion assumed that the transactions contemplated by the merger agreement, the sponsors’ agreement and the AEON agreement will be completed upon their respective terms without waiver or modification of any of the material terms or conditions as contained in the drafts of those documents referred to in the opinion,


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and that the final form of each of the merger agreement, the sponsors’ agreement and the AEON agreement were substantially similar in all material respects to the drafts of such documents reviewed by Financo.
 
Financo’s opinion was necessarily based upon market and other conditions and circumstances as they existed and could be evaluated as of the date of the opinion. Financo informed the BPW board of directors that subsequent changes and conditions may affect its opinion and that Financo did not have any obligation to update, revise or reaffirm its opinion. Financo’s opinion is limited to the opinion that, as of the date of the opinion, the merger consideration to be paid to the public holders of BPW common stock in the merger is fair to the public holders of BPW common stock from a financial point of view.
 
Financo’s opinion does not address the relative merits of the merger as compared to any other opportunity that might be available to BPW. Financo expressed no opinion as to the fairness of any consideration paid in connection with any other transactions or agreements contemplated under the merger agreement, including the warrant exchange offer and any consideration paid to the BPW sponsors. Financo did not provide advice concerning the structure of the merger, the specific amount of the merger consideration, or any other aspects of the merger, or provide any services other than the delivery of the opinion. Financo did not participate in negotiations with respect to the terms of the merger and related transactions and assumed without independent investigation that such terms were the most beneficial terms from BPW’s perspective that could under the circumstances be negotiated among the parties to such transactions, and Financo expressed no opinion as to whether any alternative transaction might have resulted in terms and conditions more favorable to BPW or its stockholders than those contemplated by the merger agreement. Furthermore, the opinion does not address the underlying business decision by BPW to engage in the merger.
 
In addition, Financo’s opinion does not address, the fairness, financial or otherwise, of (i) the amount or nature of any compensation or consideration to be paid to the sponsors of BPW, BPW’s officers, directors, or employees, or any class of such persons, whether relative to the compensation to be paid to or received by any other person or otherwise, or (ii) any other consideration to be paid to or received by the holders of any class of securities, creditors or other constituencies of the merger or the warrant exchange offer, other than the public holders of shares of BPW common stock.
 
Financo expressed no opinion as to the price at which shares of BPW common stock will trade at any time. Furthermore, Financo assumed that any opinions, counsel, or interpretations in matters that required legal, accounting, insurance, tax or other similar professional advice have been obtained from the appropriate professional sources, and Financo relied, with BPW’s consent, on the assessment by BPW and its advisers (other than Financo), as to all legal, regulatory, accounting, insurance, and tax matters with respect to BPW and the merger.
 
The following is a summary of the presentation Financo delivered to the BPW board of directors on December 8, 2009 with respect to the analyses performed by Financo in evaluating whether, as of December 8, 2008, the merger consideration to be paid to the public holders of BPW common stock in the merger is fair to the public holders of BPW common stock from a financial point of view.
 
The summary includes information presented in tabular format. In order to understand fully the financial analyses used by Talbots, these tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. The following quantitative information, to the extent it is based on market data, is, except as otherwise indicated, based on market data as it existed on or prior to December 4, 2009, and is not necessarily indicative of current or future market conditions.
 
Comparable Public Companies Analysis
 
Financo considered the trading and operating performance of public mall-based specialty retail companies that Financo deemed to be comparable to Talbots, based on performance metrics measured over the latest four fiscal quarters, referred to as LTM, as well as consensus research analysts’ estimates for the calendar years 2009 (“2009E”) and 2010 (“2010E”). Financo evaluated comparability in size, scope and scale as well as the industry sector in which the companies operate.
 
Financo selected the following publicly traded mall-based specialty apparel retailers that offer merchandise under their own brands, as Financo believed that these companies most accurately reflect the nature of Talbots’ business. Certain publicly traded specialty apparel retailers that offer merchandise under their own brands were not


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included as comparable companies, for reasons including, but not limited to, differences in pricing strategy, targeted customer profiles and location strategy.
 
  •  Abercrombie & Fitch Co.,
 
  •  Aéropostale, Inc.,
 
  •  AnnTaylor Stores Corporation,
 
  •  bebe stores, inc.,
 
  •  Cache, Inc.,
 
  •  Charming Shoppes, Inc.,
 
  •  Chico’s FAS, Inc.,
 
  •  Christopher & Banks Corporation,
 
  •  Coldwater Creek Inc.
 
  •  The Dress Barn, Inc.,
 
  •  The Gap, Inc.,
 
  •  Guess?, Inc.,
 
  •  J. Crew Group, Inc.,
 
  •  New York & Company, Inc., and
 
  •  The Wet Seal, Inc.
 
The financial information reviewed by Financo for these companies in the course of this analysis was based on historical financial information available as of December 4, 2009 and market data as of December 4, 2009. For each of the selected comparable companies and for Talbots, Financo derived and compared, among other things:
 
  •  the ratio of the company’s total enterprise value based on the company’s closing price per common share on December 4, 2009, referred to as TEV, to its LTM sales revenue, 2009E sales revenue and 2010E sales revenue, and
 
  •  the ratio of the company’s TEV on December 4, 2009, to 2009E EBITDA and 2010E EBITDA (For purposes of Financo’s analyses, “EBITDA” means earnings before interest, taxes, depreciation and amortization, as adjusted for one-time unusual charges and non-recurring items),
 
Financo did not derive valuation ranges based on the EBIT or EPS metrics or on LTM EBITDA because Talbots’ LTM and 2009E EBIT and EPS, as well as Talbots’ LTM EBITDA, were negative and Talbots’ 2010E EBIT and EPS levels were too small in magnitude to result in a meaningful valuation range. The following table sets forth the multiples for each comparable company:
 
                                         
    Common Share Price as a Multiple of:
    LTM of
               
    Sales
  2009E Sales
  2010E Sales
  2009E
  2010E
    Revenue   Revenue   Revenue   EBITDA   EBITDA
 
Talbots
    0.65 x     0.66 x     0.65 x     11.6 x     6.4 x
Abercrombie & Fitch Co. 
    0.88 x     0.89 x     0.82 x     7.3 x     5.5 x
Aéropostale, Inc. 
    0.80 x     0.77 x     0.71 x     4.1 x     3.8 x
AnnTaylor Stores Corporation
    0.43 x     0.43 x     0.43 x     7.3 x     5.3 x
bebe stores, inc. 
    0.27 x     0.30 x     0.30 x     7.2 x     4.4 x
Cache, Inc. 
    0.10 x     0.10 x     0.10 x     4.7 x     1.6 x
Charming Shoppes, Inc. 
    0.26 x     0.27 x     0.27 x     5.0 x     N/A  


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    Common Share Price as a Multiple of:
    LTM of
               
    Sales
  2009E Sales
  2010E Sales
  2009E
  2010E
    Revenue   Revenue   Revenue   EBITDA   EBITDA
 
Chico’s FAS, Inc. 
    1.27 x     1.24 x     1.16 x     10.5 x     7.2 x
Christopher & Banks Corporation
    0.28 x     0.29 x     0.29 x     17.1 x     6.4 x
Coldwater Creek Inc. 
    0.36 x     0.37 x     0.36 x     10.2 x     5.9 x
The Dress Barn, Inc. 
    0.79 x     0.76 x     0.73 x     6.7 x     N/A  
The Gap, Inc. 
    0.93 x     0.93 x     0.91 x     5.8 x     5.5 x
Guess?, Inc. 
    1.92 x     1.86 x     1.73 x     10.5 x     9.3 x
J. Crew Group, Inc. 
    1.99 x     1.88 x     1.73 x     12.6 x     10.8 x
New York & Company, Inc. 
    0.23 x     0.24 x     0.23 x     9.4 x     3.5 x
The Wet Seal, Inc. 
    0.32 x     0.32 x     0.31 x     5.2 x     4.0 x
High
    1.99 x     1.88 x     1.73 x     17.1 x     10.8 x
Median
    0.54 x     0.55 x     0.54 x     7.3 x     5.5 x
Average
    0.72 x     0.71 x     0.67 x     8.5 x     5.7 x
Low
    0.10 x     0.10 x     0.10 x     4.1 x     1.6 x
 
Based on the above information for the comparable companies, Financo applied a selected range of multiples to corresponding metrics of Talbots. The selected range of multiples used in the comparable company analysis differed from the statistical high and low multiples shown above in two ways. First, Financo identified characteristics of publicly traded companies that made them more or less comparable to Talbots with respect to each of the metrics, and which influenced the weighting of the multiples of each company in determining Financo’s concluded valuation ranges. Second, in order to determine the selected range of multiples for each metric, Financo made an adjustment to reflect Talbots’ credit card operations, which are unique to Talbots among the comparable companies. Financo valued the credit card operations of Talbots at the book value of Talbots’ credit card receivables as projected by management. After taking into account these factors, Financo used in its comparable company analysis the low/high range for each multiple identified in the column captioned “Selected Range of Multiples” below. Applying these multiples to the corresponding metrics of Talbots yielded the range of implied enterprise values of Talbots in the rightmost column below.
 
                 
        Implied Talbots Enterprise
Common Share Price as a Multiple of:
  Selected Range of Multiples   Valuation Range ($ million)
 
LTM of sales revenue
    0.59x – 0.81 x     737.3 – 1,011.8  
2009E sales revenue
    0.61x – 0.82 x     751.7 – 1,009.0  
2010E sales revenue
    0.58x – 0.77 x     722.5 –   958.6  
2009E EBITDA
    8.1x – 10.1 x     564.0 –   702.6  
2010E EBITDA
    6.3x – 9.7 x     789.5 – 1,213.4  
 
Based on the above analysis, Financo derived a range for the implied enterprise value of Talbots of between $564.0 — 1,213.4 million.
 
None of the comparable companies have characteristics identical to Talbots. An analysis of publicly traded comparable companies is not mathematical; rather it involves complex considerations and judgments concerning differences in financial and operating characteristics of the comparable companies and other factors that could affect the public trading of the comparable companies.
 
Precedent Transactions Analysis
 
In performing its analysis of precedent transactions, Financo analyzed mall-based, specialty apparel retail transactions that occurred (or were pending) in 2007, 2008 and 2009 prior to the issuance of its fairness opinion. Financo did not exclude any mall-based specialty apparel retail transactions from this analysis.

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Financo considered the following comparable transactions for its analysis:
 
         
Announcement Date
 
Acquiror
 
Target
 
August 24, 2009
  Advent International   Charlotte Russe
June 25, 2009
  The Dress Barn, Inc.   Tween Brands, Inc.
June 4, 2009
  Golden Gate Capital   Eddie Bauer Holdings
June 15, 2009
  Syms Corp.   Filene’s Basement
June 7, 2009
  Golden Gate Capital   J. Jill
August 4, 2008
  BH S&B Holdings LLC   Steve & Barry’s
February 22, 2008
  Graphite Capital Management   Kurt Geiger Limited
July 27, 2007
  Lee Equity Partners   Deb Shops, Inc.
July 9, 2007
  Sun Capital Partners   Limited Stores
May 15, 2007
  Golden Gate Capital   Express
April 12, 2007
  New Wave Group AB   Cutter & Buck, Inc.
March 20, 2007
  Apollo Management, L.P.   Claire’s Stores, Inc.
 
For each precedent transaction above, Financo derived and compared, among other things:
 
  •  the ratio of the TEV of the acquired company to the acquired company’s LTM sales revenue based on the latest publicly available financial statements of the acquired company prior to the announcement of the acquisition;
 
  •  the ratio of the TEV of the acquired company to the acquired company’s LTM EBITDA;
 
Financo did not derive valuation ranges based on the EBIT or EPS metrics or on LTM EBITDA because Talbots’ LTM and 2009E EBIT and EPS, as well as Talbots’ LTM EBITDA, were negative. With respect to the financial information for the companies involved in the precedent transactions analysis, Financo relied upon information from public filings and company press releases. The following table sets forth the results of these analyses of the precedent transactions above:
 
                 
    TEV to LTM
  TEV to 2009E
Transaction
  Sales Revenue   EBITDA
 
Advent International/Charlotte Russe
    0.38 x     6.7 x
Dress Barn/Tween Brands, Inc. 
    0.25 x     5.6 x
Golden Gate Capital/Eddie Bauer Holdings
    0.29 x     5.7 x
Syms Corp./Filene’s Basement
    0.15 x     not material  
Golden Gate Capital/J. Jill
    0.18 x     NA  
BH S&B Holdings LLC/Steve & Barry’s
    0.26 x     11.4 x
Graphite Capital Management/Kurt Geiger Limited
    0.71 x     NA  
Lee Equity Partners/Debt Shops, Inc. 
    0.81 x     7.9 x
Sun Capital Partners/Limited Stores
    0.29 x     NA  
Golden Gate Capital/Express
    0.46 x     NA  
New Wave Group AB/Cutter & Buck, Inc. 
    0.95 x     10.3 x
Apollo Management, L.P./Claire’s Stores, Inc. 
    1.99 x     9.5 x
High
    1.99 x     11.43 x
Median
    0.78 x     9.80 x
Average
    0.71 x     9.90 x
Low
    0.15 x     7.95 x


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Based on the information derived for each of the precedent transactions above, Financo applied a selected range of multiples to corresponding metrics of Talbots. The selected range of multiples used in the precedent transactions analysis differed from the statistical high and low multiples shown above in two ways. Financo identified characteristics of the various acquirees that made them more or less comparable to Talbots with respect to each of the metrics, and which influenced the weighting of the multiples of each transaction in determining Financo’s concluded valuation ranges. Second, in order to determine the selected range of multiples for each metric, Financo made an adjustment to reflect Talbots’ credit card operations, which are unique to Talbots among the acquirees in the set of precedent transactions. Financo valued the credit card operations of Talbots at the book value of Talbots’ credit card receivables as projected by management. After taking into account these factors, Financo used in its precedent transaction analysis the low/high range for each multiple identified in the column captioned “Selected Range of Multiples” below. Applying these multiples to the corresponding metrics of Talbots yielded the range of implied enterprise values of Talbots in the rightmost column below.
 
                 
        Implied Talbots Enterprise
    Selected Range of Multiples   Valuation Range ($ million)
 
TEV as a multiple of:
               
TEV to LTM sales revenue
    0.54x - 0.74 x     674.9 - 924.4  
TEV to 2009E EBITDA
    8.1x -10.5 x     564.0 - 730.3  
 
Based on the above analysis, Financo derived a range for the implied enterprise value of Talbots of between $564.0 — $924.4 million.
 
None of the target companies in the precedent transactions have characteristics identical to Talbots and no precedent transaction is identical to the merger. Accordingly, an analysis of precedent transactions is not mathematical; rather it involves complex considerations and judgments concerning differences in financial and operating characteristics of the target companies in the precedent transactions and other factors that could affect the respective acquisition values.
 
Discounted Cash Flow Analysis
 
Financo performed a discounted cash flow analysis to calculate a range of present values for Talbots, using a range of discount rates from 11.5% to 13.5% and EBITDA terminal multiples of 5.5x to 7.5x. In performing this analysis, Financo used management estimates provided by Talbots and also prepared an alternative case analysis based on estimates 25% lower than the estimates provided by Talbots. Financo also used the estimated balance sheet for Talbots as of January 10, 2010 provided by Talbots’ management. Financo’s discounted cash flow valuation analysis excludes financing fees and certain other transaction fees.
 
The internal management estimates provided by Talbots included net sales for the fiscal year ending January 29, 2011 of $1,242.7 million, which was consistent with publicly available consensus analyst estimates, and earnings for the fiscal year ending January 29, 2011 of $0.18 per share, which was higher than publicly available consensus analyst estimates. These financial estimates were prepared for internal budgeting and other purposes, and were not prepared with a view toward public disclosure or with a view toward complying with the published guidelines of the SEC, the Statement on Standards for Prospective Financial Information issued by the American Institute of Certified Public Accountants or generally accepted accounting principles. These financial estimates, as provided by Talbots at that time, were not intended as factual statements, do not reflect any results of operations for any period following the date of providing such internal estimates, and should not be relied upon as being necessarily indicative of future results, and readers of this document are cautioned not to place undue reliance on such internal financial estimates. These estimates are “forward-looking statements” and actual results may differ materially from them; see “Cautionary Note Regarding Forward-Looking Statements” on page 34.
 
Financo estimated a range of terminal values at the end of the forecast period by applying a range of terminal EBITDA multiples to EBITDA in the final year of the forecast period. Terminal value refers to an estimated valuation of the cash flows expected to be received after the last year in the forecast period. Financo utilized terminal EBITDA multiples of 5.5x to 7.5x, based on valuation metrics for Talbots and selected companies that exhibited similar business characteristics to Talbots’ operations. Financo utilized discount rates ranging from 11.5% to 13.5%, which range included Financo’s estimate of Talbot’s cost of equity capital derived by utilizing a


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cost of equity capital analysis based on the Capital Asset Pricing Model and financial and valuation metrics for Talbots and selected companies that exhibited similar business characteristics to certain of Talbots’ operations.
 
Based on these assumptions, Financo derived a reference range for the implied enterprise value of Talbots of $1,050 – $1,250 million based on management estimates and $788 – $938 million based on the alternative case.
 
Valuation Analysis
 
Financo concluded that the reference range of enterprise values for Talbots was $700 million to $900 million. Financo’s concluded reference range was determined based on the quantitative valuation analyses performed, but also relies on Financo’s experience and expertise in valuing business in the retail and merchandising sector. Financo identified common themes and conclusions among the various valuation techniques and selected a range that was inclusive of the conclusions of each analysis. The value of merger consideration to be paid to the holders of BPW common stock implied by such reference range of enterprise values was then derived by Financo. In order to so derive such range of values, Financo made several calculations, including subtracting from the implied enterprise value ranges the pro forma net debt expected to be outstanding at the closing of the merger and related transactions in order to obtain an implied equity value, then subtracting from such implied equity value the estimated value of the Talbots warrants to be exchanged for BPW warrants (using the appropriate exchange ratio for warrants to be issued to BPW warrantholders in the warrant exchange) at closing of the merger and related transactions to arrive at an implied common equity value, and then dividing such implied common equity value by the expected pro forma Talbots shares outstanding (using the appropriate exchange ratio for shares issuable to BPW shareholders in the merger) as of closing of the merger and related transactions on a diluted basis using the treasury stock method (including all Talbot’s restricted stock and employee stock options). The result of such calculations resulted in a range of derived values of merger consideration to be paid to the holders of BPW common stock of $8.60 to $11.25 per BPW share.
 
* * *
 
The preceding discussion is a summary of the material financial analyses furnished by Financo to the BPW board of directors, but it does not purport to be a complete description of the analyses performed by Financo or of the presentation it delivered to the BPW board of directors. The preparation of financial analyses and fairness opinions is a complex process involving subjective judgments and is not necessarily susceptible to partial analysis or summary description. Financo made no attempt to assign specific weights to particular analyses or factors considered, but rather made qualitative judgments as to the significance and relevance of all the analyses and factors considered and determined to give its fairness opinion as described above. Accordingly, Financo believes that its analyses, and the summary set forth above, must be considered as a whole, and that selecting portions of the analyses and of the factors considered by Financo, without considering all of the analyses and factors, could create a misleading or incomplete view of the processes underlying the analyses conducted by Financo and its opinion.
 
In its analyses, Financo both made and relied upon assumptions with respect to Talbots, BPW, industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of BPW and Talbots. Any estimates contained in Financo’s analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by these analyses. Estimates of values of companies do not purport to be appraisals or to necessarily reflect the prices at which companies may actually be sold. Because these estimates are inherently subject to uncertainty, none of Talbots, BPW, the Talbots board of directors, the BPW board of directors, Financo or any other person assumes responsibility if future results or actual values differ materially from the estimates.
 
Financo’s analyses were prepared solely as part of Financo’s analysis of whether, as of the date of the opinion, the merger consideration to be paid to the public holders of BPW common stock in the merger is fair to the public holders of BPW common stock from a financial point of view. The opinion of Financo was one of a number of factors taken into account by BPW’s board of directors in making its determination to approve the merger, including those described elsewhere in this document.


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Financo is an investment banking firm that, as part of its investment banking business, regularly is engaged in the evaluation of businesses and their securities in connection with mergers, acquisitions, corporate restructurings, private placement, and for other purposes. BPW determined to use the services of Financo because it is a recognized investment banking firm that has substantial experience in similar matters. Pursuant to its letter agreement with Financo, BPW has paid Financo fees of $350,000 in connection with rendering the fairness opinion. The payment of these fees is not contingent upon the successful completion of the transaction. Financo will not receive any other significant payment or compensation upon the successful completion of the transaction. BPW has also agreed to reimburse Financo for its reasonable direct out-of-pocket expenses incurred in connection with its engagement, including the reasonable fees and disbursements of its counsel, and to indemnify Financo against certain liabilities and expenses arising out of its engagement.
 
Talbots’ Reasons for the Merger; Recommendation of the Talbots Board of Directors
 
The Talbots board of directors, acting solely through the members of the Talbots audit committee after each of Trudy F. Sullivan and the Talbots directors nominated by AEON recused themselves from the vote, concluded that the merger agreement, the merger, the stock issuance in connection therewith, the AEON agreement, the GE Capital commitment letter and the other transaction documents, and the transactions contemplated thereby or undertaken in connection therewith are advisable and in the best interests of Talbots and its public stockholders and, accordingly, approved the merger agreement, the merger, the stock issuance in connection therewith, the AEON Agreement, the GE Capital commitment letter and the other transaction documents, and the transactions contemplated thereby or undertaken in connection therewith. In evaluating the transactions, the Talbots audit committee consulted with Talbots’ management and the audit committee’s independent financial and legal advisors, and considered the following material factors that the Talbots audit committee believes favor the transactions:
 
  •  the transactions provide Talbots with access to a large pool of capital that will, among other things, provide a complete exit for AEON, permit Talbots to strengthen its balance sheet, reduce its outstanding indebtedness by approximately $330 million and eliminate negative stockholder equity prior to the April 17, 2010 maturity of the AEON debt, consisting of approximately $242 million currently outstanding and any amounts subsequently borrowed pursuant to the $150 million secured revolving credit facility,
 
  •  the transactions and the resulting improvements in Talbots’ balance sheet will allow Talbots to seek and obtain financing, such as the GE Capital asset based financing, giving it sufficient liquidity with longer-dated maturity to enable Talbots to manage and grow its business, and is accomplished with a net increase in outstanding shares of Talbots common stock of only 8 million to a total of 26 million shares,
 
  •  no alternative financings were available to Talbots in the current economic environment and within the time constraints imposed by the December 31, 2009 maturity of certain debt,
 
  •  the transactions remove uncertainty with respect to the intentions of a majority stockholder and create a public company without a controlling stockholder,
 
  •  the elimination of Talbots’ majority stockholder enhances trading liquidity,
 
  •  the transactions would not preclude possible future business combination transactions,
 
  •  the Talbots audit committee’s belief that the floating exchange ratio added certainty to the proposed transactions without subjecting Talbots stockholders to the possibility of excessive dilution,
 
  •  the terms of the merger agreement, as described in “Description of the Merger Agreement” below; which the Talbots audit committee generally viewed as favorable to Talbots given, among other things, that:
 
  •  Talbots would be permitted to continue to pursue and complete certain financing transactions that would not impair or delay the ability of Talbots to complete the merger,
 
  •  the exchange ratio is subject to a maximum ceiling,
 
  •  Talbots may terminate the merger agreement if the volume weighted average price per share of Talbots common stock on the NYSE for any 15 consecutive trading days after December 8, 2009 and prior to the BPW special meeting is less than $7.556, and


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  •  that Talbots’ obligations to complete the merger are conditioned on Talbots obtaining sufficient proceeds to effect all transactions contemplated by the transaction documents, including the repayment of AEON’s loans at par,
 
  •  the terms of the AEON agreement, including the acquisition of all common stock held by AEON in exchange for one million warrants, and
 
  •  the current and prospective economic and competitive environment facing the apparel retail industry generally, and Talbots in particular.
 
In the course of its deliberations regarding the transactions, the Talbots audit committee also identified and considered the following potentially negative factors:
 
  •  the potential disruption to Talbots’ business that could result from the announcement of the transactions, including the diversion of management and employee attention, employee attrition and the effect on business and customer relationships,
 
  •  the restrictions on the conduct of Talbots’ business prior to the completion of the transactions, generally requiring Talbots to conduct its business only in the ordinary course, subject to specific limitations, which could impact Talbots’ ability to undertake business opportunities that may arise pending completion of the transactions that have not been expressly addressed in the merger agreement,
 
  •  the fact that, in the near future, conditions in the debt or equity capital markets could possibly permit Talbots to access capital on more favorable terms than at present or as provided for under the transactions,
 
  •  the effect of the public announcement of the transactions on Talbots’ stock price if Talbots stockholders or BPW stockholders do not view the merger positively,
 
  •  the possibility that the transactions might not be completed due to difficulties in satisfying the conditions to the merger or the occurrence of a material adverse effect on either company’s business,
 
  •  the risks and costs to Talbots if the transactions do not close, and the potential effect of the resulting public announcement of termination of the merger agreement on, among other things, the market price for Talbots common stock, its operating results, its ability to attract and retain key personnel and its ability to complete an alternative transaction,
 
  •  the fact that Talbots may be required, under certain circumstances, to pay BPW the termination fee of $10 million and/or BPW’s expenses up to $3 million, and
 
  •  the fact that, subject to compliance with certain obligations under the merger agreement, the BPW board of directors is permitted to change its recommendation to the BPW stockholders and the BPW stockholders may fail to approve the merger; in addition, the BPW board of directors may explore and respond to an alternative transaction proposed by a third party that it concludes constitutes, or could reasonably be expected to constitute, a superior proposal.
 
The foregoing discussion of the information and factors considered by the Talbots audit committee is not intended to be exhaustive, but includes the material factors considered by the Talbots audit committee. In view of the variety of factors considered in connection with its evaluation of the merger agreement, the AEON agreement, the BPW sponsors’ agreement, the issuance of shares in the merger and the other transactions contemplated by the merger agreement and other transaction documents, the Talbots audit committee did not find it practicable to, and did not, quantify or otherwise assign specific weights to the factors considered in reaching its determination and recommendation. In addition, each of the members of the Talbots audit committee may have given differing weights to different factors. On balance, the Talbots audit committee believed that the positive factors discussed above outweighed the negative factors discussed above.
 
Board of Directors and Management of Talbots Following Completion of the Merger
 
Upon completion of the merger, the board of directors of Talbots will consist of seven members, comprised of:
 
  •  the President and Chief Executive Officer of Talbots as of the completion of the merger,


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  •  three additional members of the Talbots board of directors immediately prior to the completion of the merger, each of whom will qualify as an “independent director” under the rules of the New York Stock Exchange, and
 
  •  three persons to be mutually agreed upon by BPW and the audit committee of the Talbots board of directors prior to the completion of the merger.
 
Upon completion of the merger, Gary M. Pfeiffer will serve as chairman of the Talbots board of directors and Trudy F. Sullivan will serve as President and Chief Executive Officer of Talbots.
 
Information about the current Talbots and BPW directors and executive officers can be found in the documents listed under the headings “Talbots SEC Filings” and “BPW SEC Filings” in the section entitled “Where You Can Find More Information” on page 104.
 
Ownership of Talbots Following the Merger
 
Based on the number of shares of BPW common stock outstanding as of January 21, 2010, and based on the price of Talbots common stock as of January 25, 2010, Talbots expects to issue in the merger approximately 30.9 to 43.3 million shares of Talbots common stock for the outstanding shares of BPW. Based on the number of shares of BPW common stock and the number of shares of Talbots common stock outstanding on the record date, immediately after completion of the merger, upon completion of the merger the former BPW stockholders will own approximately 55.2% to 63.3% of the then-outstanding shares of Talbots common stock.
 
Public Trading Markets
 
Talbots common stock is currently listed on the NYSE under the symbol “TLB.” BPW common stock is currently listed on the NYSE Amex under the symbol “BPW.” Upon completion of the merger, BPW common stock will be delisted from the NYSE Amex and deregistered under the Securities Exchange Act of 1934, as amended. The newly issued Talbots common stock issuable pursuant to the merger agreement will be listed on the NYSE.
 
Appraisal Rights
 
Appraisal rights are statutory rights that enable stockholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction. Under Delaware law, neither the holders of Talbots common stock, nor the holders of BPW common stock are entitled to appraisal rights in connection with the merger.
 
Regulatory Approvals Required for the Merger
 
Talbots and BPW have agreed to cooperate and use reasonable best efforts to obtain all regulatory approvals required to complete the transactions contemplated by the merger agreement. The parties have determined that the merger transaction is not reportable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, referred to in this document as the HSR Act. Thus, the merger transaction is not subject to the termination or expiration of any waiting period under the HSR Act.
 
Interests of Certain BPW Directors and Officers in the Merger
 
When you consider the recommendations of BPW’s board of directors in favor of approval of the merger proposal, you should keep in mind that the directors and officers of BPW have interests in the merger as individuals that are different from, or in addition to, your interests as a stockholder. The BPW board of directors was aware of these interests and considered them, amount other matters, in approving the merger agreement and the transactions it contemplates.
 
  •  If BPW does not complete the merger or another business combination by February 26, 2010, or by April 26, 2010 if the pre-closing certificate amendment proposal is approved, BPW will be required to commence proceedings to dissolve and liquidate. In such event, the 5,921,660 shares of BPW common stock and


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  warrants to purchase 14,372,089 shares of BPW common stock held by the sponsors and the 254,811 shares of BPW common stock and warrants to purchase 404,382 shares of BPW common stock held by the non-sponsor founders will be worthless because the sponsors and the non-sponsor founders have waived any rights to receive any liquidation proceeds with respect to these securities (except for shares of BPW common stock acquired after BPW’s initial public offering in the open market, for which the BPW sponsors, the non-sponsor founders and BPW’s other officers and directors will be entitled to receive liquidation proceeds). None of BPW’s directors other than the non-sponsor founders, and none of BPW’s officers, directly own any shares of BPW common stock or warrants to purchase shares of BPW common stock. In connection with the merger and the warrant exchange offer, all of the warrants to purchase 14,372,089 shares of BPW common stock held by the sponsors, and all of the warrants to purchase 404,382 shares of BPW common stock held by the non-sponsor founders will be exchanged for shares of Talbots common stock in the warrant exchange offer. In connection with the merger, each of the sponsors has agreed to surrender 888,249 shares of BPW common stock for no consideration, and each of the non-sponsor founders has agreed to surrender 25,481 shares of BPW common stock for no consideration. The remaining 4,145,162 shares held collectively by the sponsors and the remaining 178,368 held collectively by the non-sponsor founders after such surrender will be exchanged for shares of Talbots common stock based on the floating exchange ratio in the merger.
 
  •  PWPA and BNYH are the sponsors of BPW and have entered into the BNYH agreement, pursuant to which PWPA will acquire BNYH upon the completion of the merger. PWPA and BNYH have also entered into the BPW sponsors’ agreement with BPW and Talbots under which, subject to the terms and conditions of that agreement, PWPA, on behalf of itself and BNYH has agreed to, among other things:
 
  •  surrender an aggregate of 1,776,498 shares of BPW common at the same time as the completion of the merger for no consideration,
 
  •  in connection with the merger proposal and the pre-closing certificate amendment proposal, vote all of its shares of BPW common stock acquired prior to BPW’s initial public offering in accordance with the majority of the votes cast by the holders of shares of common stock issued in BPW’s initial public offering, and vote any shares of BPW common stock acquired by it in the open market in favor of the merger proposal and the pre-closing certificate amendment proposal,
 
  •  vote all its shares of BPW common stock in favor of the post-closing certificate amendment proposal and the adjournment proposal,
 
  •  exchange, at the completion of the merger, warrants to purchase BPW shares for Talbots common stock, at an exchange ratio of one warrant to purchase shares of BPW common stock for one-tenth of the stock consideration received for each share of BPW common stock based on the floating exchange ratio in the merger, and
 
  •  subject to exceptions described below in this document, restrict the transfer of all shares of Talbots common stock held by it for 180 days after completion of the merger.
 
  •  The non-sponsor founders have entered into an agreement with BPW and Talbots, pursuant to which they have agreed to surrender 76,443 shares of BPW common stock at or prior to completion of the merger for no consideration, and to exchange, at the completion of the merger, warrants to purchase shares of BPW common stock for shares of Talbots common stock on the same terms as the sponsors, discussed above.
 
  •  In connection with BPW’s initial public offering, BPW entered into agreements with each of PWPA and BNYH pursuant to which PWPA and BNYH agreed that they would not be entitled to receive any fees or other compensation of any kind in connection with BPW’s initial business combination (other than reimbursement of out-of-pocket expenses). Talbots has historically engaged Perella Weinberg, an affiliate of PWPA, for advisory services relating to financial matters, including in February 2009. Prior to the commencement of discussions between BPW and Talbots, Talbots had engaged Perella Weinberg to provide services in connection with Talbots refinancing its existing indebtedness and consideration of strategic alternatives such as the merger. Following commencement of discussions between BPW and Talbots, Perella Weinberg continued to advise Talbots with respect to the refinancing of Talbots’ indebtedness, including in


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  connection with its discussions with GE Capital regarding its debt commitment letter. BPW, BNYH and Talbots have agreed that to a payment by Talbots of an advisory fee to Perella Weinberg under existing engagement letters between Perella Weinberg and Talbots, to be made following the completion of the merger.
 
  •  The sponsors, entities in which certain directors and officers of BPW hold a financial interest, and the non-sponsor founders together acquired 6,176,471 shares of BPW common stock and warrants to purchase 14,776,471 shares of BPW common stock prior to or in connection with BPW’s initial public offering. BPW’s directors and officers will likely benefit from the completion of the merger even if the merger causes the market value of BPW common stock to decrease. Even though certain shares held by the sponsors and the non-sponsor founders will be surrendered without any consideration and any BPW warrants held by the sponsors and the non-sponsor founders will be exchanged for shares of Talbots common stock pursuant to a warrant exchange offer, the likely benefit to BPW’s directors and officers may influence their motivation for promoting the merger and/or soliciting proxies for the approval of the merger proposal.
 
  •  In addition, the exercise of BPW’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the merger may result in a conflict of interest when determining whether such changes or waivers are appropriate and in the best interests of BPW’s stockholders.
 
Interests of Certain Talbots Directors and Officers in the Merger
 
When you consider the merger proposal, you should also keep in mind that the directors and officers of Talbots have interests in the merger, including in certain cases as individuals, that are different from, or in addition to, your interests as a stockholder of BPW.
 
Following entry into the merger agreement, Talbots management and BPW began discussions concerning possible 2009 annual incentive and retention arrangements for management. Based on these discussions and the agreement of BPW, Talbots management intends to propose a 2009 annual incentive and retention program for certain key employees, including executive officers. The proposed 2009 annual incentive and retention arrangements are subject to review and approval by the applicable Talbots board committee. A portion of the 2009 annual incentive awards for these key employees is proposed to be made contingent on the completion of the merger and a separate portion of the 2009 annual incentive program would be based on achieving certain 2009 operating financial results (and not contingent on the closing of the merger). In addition, the key employees would receive a special grant of restricted stock units. The aggregate anticipated 2009 annual bonus and retention payments to Talbots executive officers that would be proposed to be made contingent on the completion of the merger is $5,000,000, one-third of which would be expected to be awarded in cash and two-thirds of which would be awarded in the form of a grant of special restricted stock units. Approximately $4,000,000 of such payments are currently proposed to be made to Talbots named executive officers, with the specific allocations yet to be determined. Under such arrangements it is contemplated that Talbots would (1) pay the cash portion at the closing of the merger, subject to continued employment through the closing of the merger, except that in the event of certain specified liquidity constraints it may choose to delay payment for an additional three months beyond the closing, and (2) grant the special restricted stock unit awards, which we refer to as the special RSUs, to these employees at the closing of the merger. As currently proposed, the special RSUs would vest on the first anniversary of the closing of the merger, subject to the employee’s continued employment through that date. The special RSUs would also vest upon a termination of employment prior to the first anniversary of the closing of the merger, under circumstances qualifying the applicable employee for severance, but would otherwise be forfeited upon a termination of employment prior to the first anniversary of closing of the merger.
 
Litigation
 
On January 12, 2010, a putative class and derivative action titled Campbell v. The Talbots, Inc. et al. (Docket No. C.A. 5199-MG) was filed in the Court of Chancery of the State of Delaware by an alleged common stockholder against Talbots, the Talbots board of directors, AEON, BPW, Perella Weinberg and three Perella Weinberg partners, asserting claims for, inter alia, breach of fiduciary duties on the part of the director defendants and AEON, aiding and abetting breaches of fiduciary duties, breach of duty arising out of an alleged confidential agency relationship


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between Talbots and its stockholders, on the one hand, and Perella Weinberg, the individual Perella Weinberg defendants and BPW, on the other hand, and violations of Talbots’ corporate by-laws and sections 141(c), 228 and 251 of the DGCL in connection with the merger agreement between Talbots and BPW and related warrant exchange, debt repayment, stock repurchase and GE Capital credit facility. Plaintiff concurrently filed a motion for expedited proceedings and a motion for a preliminary injunction seeking, among other things, declaratory relief and an injunction preventing defendants from consummating the merger, debt repayment, stock repurchase and GE Capital credit facility, including the merger and warrant exchange, the issuance of shares of Talbots common stock and warrants in connection with these transactions and the payment of any fee by Talbots to Perella Weinberg in connection with these transactions. The complaint also seeks an unspecified amount of damages, disgorgement of benefits purportedly received by defendants in connection with the above transactions, and an award of attorneys’ fees and expenses.
 
Talbots and the Talbots board of directors believe the claims asserted against them in the complaint are entirely without merit and intend to defend against them vigorously. The foregoing description of these lawsuits is qualified in its entirety by reference to the complaint, which is filed as Exhibit 99.07 to this document and is incorporated herein by reference.


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THE MERGER AGREEMENT
 
The following describes certain aspects of the merger, including material provisions of the merger agreement. The following description of the merger agreement is subject to, and qualified in its entirety by, reference to the merger agreement, which is attached to this document as Appendix A and is incorporated by reference into this document. We urge you to carefully read the merger agreement in its entirety.
 
Structure of the Merger
 
The merger agreement provides for the merger of Merger Sub with and into BPW, with BPW surviving the merger and becoming a wholly owned subsidiary of Talbots.
 
Merger Consideration
 
Subject to the payment of cash in lieu of fractional shares, each share of BPW common stock, other than shares of BPW common stock owned by Talbots, Merger Sub or BPW immediately before the completion of the merger, and shares of BPW common stock held by BPW stockholders that validly exercise their conversion rights, will be converted into the right to receive a number of shares of Talbots common stock equal to the quotient (rounded to the nearest ten-thousandth) obtained by dividing:
 
  •  $11.25 by
 
  •  the volume weighted average price per share of Talbots common stock (calculated to the nearest one-hundredth of one cent) on the NYSE for the 15 consecutive trading days immediately preceding the fifth trading day prior to the date of the special meeting of BPW stockholders,
 
provided, that:
 
  •  if the above quotient is greater than 1.3235, then each share of BPW common stock, other than shares of BPW common stock owned by Talbots, Merger Sub or BPW immediately before the completion of the merger, and shares of BPW common stock held by BPW stockholders that validly exercise their conversion rights, will receive 1.3235 shares of Talbots common stock, and
 
  •  if the above quotient is less than 0.9000, then each share of BPW common stock, other than shares of BPW common stock owned by Talbots, Merger Sub or BPW immediately before the completion of the merger, and shares of BPW common stock held by BPW stockholders that validly exercise their conversion rights, will receive 0.9000 shares of Talbots common stock.
 
No fractional shares of Talbots common stock will be issued in the merger. Each holder of shares of BPW common stock that would otherwise be entitled to a fractional share of Talbots common stock will receive a cash payment in lieu of such fractional share of Talbots common stock representing such holder’s proportionate interest, if any, in the proceeds from the sale of the number of shares of Talbots common stock equal to the excess of the aggregate number of shares of Talbots common stock to be delivered by Talbots to the exchange agent, over the aggregate number of whole shares of Talbots common stock to be distributed to the BPW stockholders.
 
Conditions to Completion of the Merger
 
The obligations of both BPW and Talbots to complete the merger are subject to the satisfaction of the following conditions:
 
  •  the effectiveness under the Securities Act of 1933, as amended, of the registration statement for the issuance of shares of Talbots common stock in the merger, and the absence of any stop order suspending its effectiveness or proceedings threatened for that purpose,
 
  •  the approval by the BPW stockholders of the merger proposal, the pre-closing certificate amendment proposal and the post-closing certificate amendment proposal,
 
  •  the exercise of conversion rights by holders of less than 35% of the outstanding shares of BPW common stock issued in BPW’s initial public offering,


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  •  the completion of the warrant exchange offer (which may be completed at the same time as the merger is completed),
 
  •  the absence of any legal restraint that prohibits, restrains or enjoins the completion of the merger, and the absence of a pending action instituted by a government entity that would reasonably be expected to result in a legal restraint that prohibits, retrains or enjoins the completion of the merger or provides a reasonable basis to conclude that BPW, Talbots or Merger Sub or any of their affiliates or officers or directors would be subject to the risk of criminal liability,
 
  •  the expiration or termination of any applicable waiting periods under the HSR Act,
 
  •  the making of all filings required to be made with governmental entities by BPW or Talbots and its subsidiaries prior to the completion of the merger, and the receipt of all consents, approvals and authorizations from governmental entities required to be obtained by BPW or Talbots and its subsidiaries prior to the completion of the merger, in each case except where the failure to make a filing or obtain a consent, approval or authorization would not reasonably be expected to have a material and adverse effect on the financial condition of BPW or prevent or materially impair the ability of BPW to consummate the merger before April 17, 2010, or have a “Talbots material adverse effect,” as we explain that term below, and
 
  •  Talbots having obtained and made borrowings under the revolving credit facility discussed below under the heading “The Debt Commitment Letter — Description of the GE Facility” in such amounts that, together with the net proceeds of the BPW trust account and other available cash, Talbots has all funds necessary to complete the merger and the transactions contemplated by the merger agreement, the AEON agreement and the BPW sponsors’ agreement, including the repayment in full of all amounts due or outstanding in respect of:
 
  •  indebtedness under the following agreements in which AEON is lender: the $200 million loan facility agreement, dated February 25, 2009, the $50 million term loan agreement, dated July 15, 2008 and amended on March 12, 2009, and the $150 million secured revolving loan agreement, dated April 10, 2009, each as amended from time to time, which we refer to as the AEON facilities,
 
  •  indebtedness under the following support agreements with AEON: the support letter (financial), dated as of April 9, 2009, and the letter of support, dated as of April 9, 2009, which we refer to as the support letters,
 
  •  indebtedness under the following agreements with third parties: the revolving credit agreement with Mizuho Corporate Bank Ltd., dated as of December 29, 2008, the revolving credit agreement with Mizuho Corporate Bank Ltd., dated as of January 28, 2004, the revolving credit agreement with Sumitomo Mitsui Banking Corporation, dated as of January 25, 1994, the revolving credit agreement with Sumitomo Mitsui Banking Corporation, dated as of December 30, 2008, the revolving credit agreement with The Norinchukin Bank, dated as of January 25, 1994, the revolving credit agreement with The Norinchukin Bank, dated as of January 2, 2009, the Revolving Credit Agreement with The Bank of Tokyo-Mitsubishi UFJ, Ltd., dated as of February 26, 2009, the credit agreement with The Bank of Tokyo-Mitsubishi UFJ, Ltd., dated as of March 28, 2007, the revolving loan credit agreement with Mizuho Bank, dated April 17, 2003 and the short term loan agreement with Norinchukin Bank, dated April 17, 2009, as well as related fees and expenses and to have, immediately following the completion of the merger and the transactions contemplated by the AEON agreement and the BPW sponsors’ agreement, cash on hand or available to be borrowed in an amount sufficient to fund ordinary course working capital and other general corporate purposes.
 
Talbots has received a debt commitment letter, dated as of December 7, 2009, from GE Capital to provide, subject to the conditions set forth in the debt commitment letter, a $200 million revolving credit facility under which Talbots and certain of its subsidiaries would be the borrowers. Availability under the GE facility would be determined pursuant to a borrowing base formula, based primarily upon on the borrowers’ levels of domestic finished goods inventory and domestic private label credit card receivables, subject to certain limitations. Proceeds of the GE facility would be available for working capital, capital expenditures and other corporate purposes and, subject to certain conditions, to refinance Talbots’ existing debt and pay transaction expenses related to the GE facility and the merger. On the date that the merger occurs and the GE facility is entered into, the amount of the GE


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facility that would be available would be limited to $160 million, subject to satisfaction of the conditions to the debt commitment letter and the borrowing base formula described above.
 
The obligation of Talbots and Merger Sub to complete the merger is subject to the satisfaction of the following additional conditions:
 
  •  the representations and warranties of BPW in the merger agreement being true and correct on and as of December 8, 2009 and on and as of the date on which the merger is completed (except for any representations and warranties made as of a specified date, which must be true and correct as of the specified date), except where the failure to be true and correct would not reasonably be expected to have, individually or in the aggregate, a material and adverse effect on the financial condition of BPW or to prevent or materially impair the ability of BPW to close the merger before April 17, 2010,
 
  •  the performance or compliance by BPW in all material respects with the obligations required by the merger agreement to be performed or complied with by BPW at or prior to the completion of the merger,
 
  •  the BPW sponsors’ agreement being in full force and effect and enforceable against the parties thereto, each of the transactions contemplated thereby to occur prior to the completion of the merger having occurred, and the conditions to the completion of the transactions contemplated by the BPW sponsors’ agreement having been satisfied or waived,
 
  •  BPW having provided irrevocable instructions to Mellon Bank, N.A. to disburse the BPW trust account to pay in full amounts outstanding under the AEON facilities and support letters, as well as to pay to BPW stockholders that have validly exercised their conversion rights, and
 
  •  BPW having secured the agreement of holders of BPW warrants issued in the BPW initial public offering to participate in the warrant exchange offer such that at least 90% of such BPW warrants issued in the BPW initial public offering are exchanged in the warrant exchange offer.
 
The obligation of BPW to complete the merger is subject to the satisfaction of the following additional conditions:
 
  •  the representations and warranties of Talbots being true and correct on and as of December 8, 2009 and on and as of the date on which the merger is completed (except for any representations and warranties made as of a specified date, which must be true and correct as of the specified date), except where the failure of such representations and warranties to be true and correct would not reasonably be expected to have, individually or in the aggregate, a “Talbots material adverse effect”, as we explain the term below,
 
  •  the performance or compliance by Talbots in all material respects with the obligations required by the merger agreement to be performed or complied with by Talbots at or prior to the completion of the merger, and
 
  •  the AEON agreement being in full force and effect and enforceable against the parties thereto, each of the transactions contemplated thereby to occur prior to the completion of the merger having occurred, and the conditions to the completion of the transactions contemplated by the AEON agreement having been satisfied or waived.
 
When we refer to a “Talbots material adverse effect,” we mean any change, event, development, condition, occurrence or effect that:
 
  •  prevents or materially impairs the ability of Talbots to complete the merger before April 17, 2010,
 
  •  has had a material and adverse effect on the business, financial condition or results of operations of Talbots and its subsidiaries, taken as a whole, provided that to the extent any such change, event, development, condition, occurrence or effect results from any of the following, it shall not constitute or be taken into account in determining whether there has been a Talbots material adverse effect:
 
  •  changes generally affecting the economy, financial, credit or securities markets; any outbreak or escalation of war or any act of terrorism; general conditions in the industries in which Talbots and its subsidiaries operate; and a change in law, rule or regulation, or GAAP or interpretations thereof; provided, that each of the foregoing effects will be taken into account to the extent of any disproportionate impact on Talbots and its subsidiaries relative to other companies operating in the same industries,


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  •  the execution and delivery of the merger agreement or the announcement of the transactions contemplated by the merger agreement,
 
  •  any change in market price or trading volume of Talbots common stock, provided that the facts giving rise to such change may be deemed to constitute or be taken into account in determining whether there has been a Talbots material adverse effect, or
 
  •  any failure of Talbots to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for any period, provided that the facts giving rise to such failure may be deemed to constitute or be taken into account in determining whether there has been a Talbots material adverse effect.
 
BPW’s Agreement Not to Solicit Other Offers
 
While the merger agreement is in effect, BPW has agreed that it will not, and that it will cause its representatives not to, directly or indirectly:
 
  •  solicit, encourage, initiate or participate in any negotiations, inquiries or discussions with respect to any “BPW acquisition proposal” or “business combination”, as we explain those terms below,
 
  •  disclose, in connection with a BPW acquisition proposal or business combination, any information or provide access to its properties, books or records, except as required by law or pursuant to a governmental request for information,
 
  •  enter into or execute any agreement relating to a BPW acquisition proposal or business combination, or
 
  •  fail to make, withdraw, qualify, amend or modify or publicly propose to withdraw, qualify, amend or modify the BPW board of directors’ recommendation to BPW stockholders to vote for the merger agreement proposal, pre-closing certificate amendment proposal and post-closing certificate amendment proposal, or make or authorize any public statement, recommendation or solicitation in support of any BPW acquisition proposal or business combination.
 
However, notwithstanding the restrictions described above, in response to a bona fide, unsolicited BPW acquisition proposal from a third party, the BPW board of directors may, prior to the special meeting of the BPW stockholders:
 
  •  provide the third party with nonpublic information, and
 
  •  participate in discussions and negotiations with the third party relating to the proposal, if and only to the extent that:
 
  •  the BPW board of directors, after having consulted with and considered the advice of outside counsel, has reasonably determined in good faith that failure to take such action would result in a violation of applicable law, and
 
  •  the third party has entered into a confidentiality agreement pertaining to nonpublic information regarding BPW containing terms in the aggregate no more favorable to the third party than those in the confidentiality agreement between Talbots and BPW (including the standstill provision).
 
BPW agreed to provide to Talbots any non-public information concerning BPW provided to a third party making a BPW acquisition proposal which was not previously provided to Talbots. BPW also agreed to notify Talbots as soon as practicable (but in any event within 24 hours) after receipt by BPW of any BPW acquisition proposal or an offer, inquiry or proposal relating to a business combination and certain related inquiries or requests, and to keep Talbots fully informed, on a current basis, of any material changes in the status of any such proposal, inquiry or contact. BPW also agreed to, and to cause its representatives to:
 
  •  immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any BPW acquisition proposal or business combination,


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  •  use reasonable best efforts to:
 
  •  cause all persons other than Talbots and its affiliates who have been furnished with confidential information regarding BPW in connection with the solicitation of or discussions regarding any BPW acquisition proposal or business combination within the 12 months prior to December 8, 2009 promptly to return or destroy such information, and
 
  •  enforce and not waive any provision or release any person, other than Talbots and its affiliates, from any confidentiality, standstill or similar agreement relating to a BPW acquisition proposal or business combination.
 
When we refer to a “BPW acquisition proposal,” we mean any proposal, offer or inquiry from a third party for or with respect to the acquisition, directly or indirectly, of beneficial ownership of assets, securities or ownership interests of or in BPW representing 20% or more of the assets of BPW, or of an equity interest representing a 20% or greater economic interest in BPW, pursuant to a merger, consolidation or other business combination, sale of shares of capital stock, sale of assets, share exchange, liquidation, dissolution, recapitalization, tender offer, exchange offer or similar transaction with respect to BPW.
 
When we refer to a “business combination,” we mean a business combination, whether through a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar type of transaction, with one or more businesses that have an aggregate “fair market value” of at least 80% of the amount held in the BPW trust account at the time of the signing of a definitive agreement (excluding certain deferred underwriting commissions) resulting in BPW acquiring controlling interests of such business(es) or assets.
 
Trust Account Waiver
 
The merger agreement contains a waiver by Talbots of any right, title, interest or claim it has or may have in the future in or to any monies in BPW’s trust account, and an agreement by Talbots not to seek recourse (directly or indirectly) against the trust account or any funds distributed from the trust account (other than with respect to certain limited amounts as described in the merger agreement (i) released to BPW from time to time in order to pay operating expenses and (ii) disbursed in connection with BPW completing a business combination) as a result of, or arising out of, any claims against BPW or otherwise arising from the merger agreement or otherwise. In connection with entering into the merger agreement, BPW executed and delivered to Mellon Bank, N.A. irrevocable instructions providing that if (i) BPW completes a business combination (as we explained the meaning of the term above) other than the merger and (ii) the out-of-pocket expenses and/or termination fee described under “— Termination Fee and Expenses — Payment of Termination Fee and Expenses by BPW” below, become due and payable by BPW and have not been previously paid, Mellon Bank, N.A. will deliver from the trust account (prior to any distribution to BPW) to Talbots any previously unpaid portion of the out-of-pocket expenses and/or termination fee so payable by BPW.
 
Termination of the Merger Agreement
 
The merger agreement may be terminated without completing the merger, whether before or after the meeting of the BPW stockholders, as follows:
 
  •  by mutual written consent of each of BPW and Talbots,
 
  •  by either Talbots or BPW, if the merger has not been completed by April 17, 2010, provided that neither party may terminate the merger agreement for this reason if that party’s failure to fulfill its obligations under the merger agreement was the cause of, or resulted in, the failure of the merger to be completed on or prior to April 17, 2010,
 
  •  by either Talbots or BPW, if a governmental entity has issued a final order, decree or injunction that makes the merger illegal or permanently prohibits the completion of the merger,


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  •  by either Talbots or BPW if:
 
  •  the BPW stockholders do not approve the merger proposal, the pre-closing certificate amendment proposal and the post-closing certificate amendment proposal at a duly held meeting of the BPW stockholders or at any adjournment thereof, or
 
  •  the conditions regarding the exercise of conversion rights by BPW stockholders and participation by holders of BPW warrants in the warrant exchange offer are not satisfied within the applicable time period,
 
provided that BPW may not terminate the merger agreement for this reason if BPW fails to timely call and conduct the special meeting of BPW stockholders or otherwise is in breach of its obligations under the merger agreement,
 
  •  by Talbots, if:
 
  •  BPW enters into an agreement relating to a BPW acquisition proposal or business combination in breach of its obligations under the merger agreement, or withdraws or fails to make its recommendation that BPW stockholders approve the merger proposal, the pre-closing certificate amendment proposal and the post-closing certificate amendment proposal,
 
  •  Talbots reasonably requests in writing that the BPW board of directors publicly reconfirm its recommendation that BPW stockholders approve the merger proposal, the pre-closing certificate amendment proposal and the post-closing certificate amendment proposal, and the BPW board of directors fails to do so within ten business days after its receipt of Talbots’ request,
 
  •  BPW fails to fulfill its obligation to timely call and conduct the special meeting of BPW stockholders, or
 
  •  BPW breaches its obligations described above under the caption “BPW’s Agreement Not to Solicit Other Offers” in any material respect,
 
  •  by BPW, upon a material breach of any covenant or agreement or any representation or warranty on the part of Talbots such that the conditions to BPW’s obligation to close the transaction would not be satisfied, provided that if such breach is capable of being cured by Talbots within 30 days of receiving notice from BPW of such breach (or April 17, 2010, if earlier), then BPW may not terminate the agreement on account of such breach if Talbots cures the breach during such period,
 
  •  by Talbots, upon a material breach of any covenant or agreement on the part of BPW such that the conditions to Talbots’ obligation to close the transaction would not be satisfied, provided that if such breach is capable of being cured by BPW within 30 days of receiving notice from Talbots of such breach (or April 17, 2010, if earlier), then Talbots may not terminate the agreement on account of such breach if BPW cures the breach during such period,
 
  •  by the Talbots board of directors prior to approval by BPW stockholders of the merger proposal, the pre-closing certificate amendment proposal and post-closing certificate amendment proposal, if the volume weighted average price per share of shares of Talbots common stock (calculated to the nearest one-hundredth of one cent) on the NYSE for any 15 consecutive trading days after December 8, 2009 and prior to the special meeting of BPW stockholders is less than $7.556.
 
Termination Fee and Expenses
 
Payment of Termination Fee and Expenses by Talbots
 
If the merger agreement is terminated by Talbots under the termination provision described above related to Talbots’ share price, then Talbots has agreed to pay the documented and reasonably incurred out-of-pocket expenses incurred by BPW in connection with the authorization, preparation, negotiation, execution and performance of the merger agreement, up to a maximum amount of $3 million within two business days after such termination.


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If the merger agreement is terminated by BPW in the event of an uncured material breach of Talbots (which must be a willful and material breach if it is a breach of Talbots’ representations and warranties as of the date of the merger agreement), and:
 
  •  a “company acquisition proposal”, as we explain such term below, is publicly proposed, publicly disclosed, or otherwise made known to the Talbots stockholders prior to, and not withdrawn at the time of, such termination, and
 
  •  concurrently with or within 12 months after such termination, Talbots enters into a definitive agreement with respect to any company acquisition proposal or a company acquisition proposal is completed,
 
then Talbots will pay the documented and reasonably incurred out-of-pocket expenses incurred by BPW in connection with the authorization, preparation, negotiation, execution and performance of the merger agreement, up to a maximum amount of $3 million, as well as a $10 million termination fee, by wire transfer of immediately available funds to an account designated by BPW, within two business days after the completion of the company acquisition proposal. Following termination of the merger agreement, Talbots’ payment of BPW’s transaction expenses and the termination fee are the sole and exclusive remedy of BPW against Talbots and any of its subsidiaries and their respective directors, officers, employees, agents, advisors or other representatives, except for liabilities or damages caused by the willful and material breach by Talbots of the merger agreement.
 
“Company acquisition proposal” means any proposal, offer or inquiry from a third party for or with respect to the acquisition of beneficial ownership of assets, securities or ownership interests of or in Talbots or any of its subsidiaries representing 20% or more of the consolidated assets of Talbots and its subsidiaries taken as a whole, or of an equity interest representing a 20% or greater economic interest in Talbots and its subsidiaries taken as whole, pursuant to a merger, consolidation or other business combination, sale of shares of capital stock, sale of assets, share exchange, liquidation, dissolution, recapitalization, tender offer, exchange offer or similar transaction with respect to either Talbots or any of its subsidiaries, provided that specified financing transactions will not be considered to be company acquisition proposals.
 
Payment of Termination Fee and Expenses by BPW
 
If the merger agreement is terminated:
 
  •  by Talbots or BPW because:
 
  •  the merger is not completed by April 17, 2010 (provided that the failure by Talbots to fulfill any obligation under the merger agreement was not the primary cause of the failure of the merger to be completed prior to April 17, 2010),
 
  •  the BPW stockholders do not approve the merger proposal, the pre-closing certificate amendment proposal and the post-closing certificate amendment proposal at a duly held meeting of the BPW stockholders or at any adjournment thereof, or
 
  •  the conditions regarding the exercise of conversion rights by BPW stockholders and participation by holders of BPW warrants in the warrant exchange offer are not satisfied within the applicable time period,
 
  •  or by Talbots because:
 
  •  BPW breaches its obligations described above under the caption “BPW’s Agreement Not to Solicit Other Offers” in any material respect, or
 
  •  of a material breach of any covenant or agreement on the part of BPW (which must be a willful and material breach if it is a breach of BPW’s representations and warranties as of the date of the merger agreement) such that the conditions to Talbots’ obligation to close the transaction would not be satisfied, and if the breach is capable of being cured by BPW, it is not cured by BPW within 30 days of receiving notice from Talbots of such breach (or April 17, 2010, if earlier)


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and
 
  •  any BPW acquisition proposal or business combination, as we explained the meaning of those terms above, is publicly proposed, publicly disclosed or otherwise made known to stockholders or warrantholders of BPW prior to, and not withdrawn at the time of, such termination, and
 
  •  concurrently with or within 12 months after such termination BPW enters into a definitive agreement with respect to any BPW acquisition proposal or business combination (other than the transactions contemplated by the merger agreement) or a BPW acquisition proposal is consummated,
 
then BPW shall pay the documented and reasonably incurred out-of-pocket expenses incurred by Talbots in connection with the authorization, preparation, negotiation, execution and performance of the merger agreement, up to a maximum amount of $3 million, and a $10 million termination fee by wire transfer of immediately available funds to an account designated by Talbots, within two business days after the completion of such BPW acquisition proposal or business combination.
 
In addition, if the merger agreement is terminated by Talbots because:
 
  •  BPW enters into an agreement relating to a BPW acquisition proposal or business combination in breach of its obligations under the merger agreement, or withdraws or fails to make its recommendation that BPW stockholders approve the merger proposal, the pre-closing certificate amendment proposal and the post-closing certificate amendment proposal,
 
  •  Talbots reasonably requests in writing that the BPW board of directors publicly reconfirm its recommendation that BPW stockholders approve the merger proposal, the pre-closing certificate amendment proposal and the post-closing certificate amendment proposal, and the BPW board of directors fails to do so within ten business days after its receipt of Talbots’ request, or
 
  •  BPW fails to fulfill its obligation to timely call and conduct the special meeting of BPW stockholders, then, subject to the trust account waiver agreed to by Talbots and described under “— Trust Account Waiver” above, BPW shall pay the documented and reasonably incurred out-of-pocket expenses incurred by Talbots in connection with the authorization, preparation, negotiation, execution and performance of the merger agreement, up to a maximum amount of $3 million, and a $10 million termination fee by wire transfer of immediately available funds to an account designated by Talbots, within two business after the termination of the merger agreement, with any portion unpaid at such time due to restrictions of BPW’s trust account being paid following the completion of a business combination, if any.
 
Following termination of the merger agreement, BPW’s payment of Talbots’ transaction expenses and the termination fee are the sole and exclusive remedy of Talbots against BPW and any of its subsidiaries and their respective directors, officers, employees, agents, advisors or other representatives, except for liabilities or damages caused by the willful and material breach by BPW of the merger agreement.
 
Closing and Effectiveness
 
The closing of the merger will occur at 10:00 a.m. New York time as soon as practicable, but in no event later than the third business day, after the last of all of the conditions to the respective obligations of Talbots and BPW set forth in the merger agreement have been satisfied or waived, or at such other time and date as BPW and Talbots agree. The merger will be effective immediately upon the filing of the certificate of merger with, and acceptance for record of such certificate of merger by, the Secretary of State of the State of Delaware in accordance with the DGCL, or at such other time as Talbots and BPW shall agree as specified in such filings in accordance with applicable law.
 
Upon the closing of the merger, the certificate of incorporation of BPW will be the certificate of incorporation set forth on Appendix C of this document, and the bylaws of BPW will be the bylaws of Merger Sub immediately prior to the closing of the merger.


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Distribution of Talbots Shares
 
The conversion of BPW common stock into the right to receive the merger consideration will occur automatically upon the completion of the merger. Promptly after the completion of the merger, the exchange agent will exchange certificates representing shares of BPW common stock for merger consideration to be received pursuant to the terms of the merger agreement. Prior to completion of the merger, Talbots will select a bank or trust company reasonably acceptable to BPW who will exchange certificates representing shares of BPW common stock for the merger consideration and perform other duties as explained in the merger agreement.
 
Letter of Transmittal
 
Promptly after the completion of the merger, the exchange agent will mail a letter of transmittal to each holder of a BPW common stock certificate at the effective time of the merger whose shares of BPW common stock are being converted to shares of Talbots common stock. This mailing will contain instructions on how to surrender BPW common stock certificates in exchange for shares of Talbots common stock and a cash payment in lieu of fractional shares. When you deliver your BPW stock certificates to the exchange agent along with a properly executed letter of transmittal and the other required documents, your BPW stock certificates will be cancelled and you will receive a certificate representing the number of whole shares of Talbots common stock and a cash payment in lieu of fractional shares of Talbots common stock that would otherwise have been issued to you as a result of the merger. Holders of BPW common stock should not submit their BPW stock certificates for exchange until they receive the letter of transmittal and transmittal instructions from the exchange agent. If a certificate for BPW common stock has been lost, stolen or destroyed, the exchange agent will issue the consideration properly payable under the merger agreement upon receipt of appropriate evidence as to the loss, theft or destruction and appropriate and customary indemnification. After the completion of the merger there will be no further transfers on the stock transfer books of BPW.
 
Withholding
 
The exchange agent or Talbots will be entitled to deduct and withhold from the whole shares of Talbots common stock, or cash in lieu of fractional shares, or dividends or distributions, otherwise payable pursuant to the merger agreement the amounts they are required to deduct and withhold under any federal, state, local or foreign law. If the exchange agent or Talbots withhold any amounts, these amounts will be treated for all purposes of the merger as having been paid to the stockholders from whom they were withheld.
 
Dividends and Distributions
 
Until BPW common stock certificates are surrendered for exchange, any dividends or other distributions declared after completion of the merger with respect to Talbots common stock into which shares of BPW common stock may have been converted will accrue, without interest, but will not be paid. Talbots will pay to former BPW stockholders any unpaid dividends or other distributions, without interest, only after they have duly surrendered their BPW stock certificates.
 
Representations and Warranties
 
The representations, warranties and covenants described below and included in the merger agreement were made by each of Talbots, Merger Sub and BPW to the other. These representations, warranties and covenants were made as of specific dates, may be subject to important qualifications and limitations agreed to by Talbots, Merger Sub and BPW in connection with negotiating the terms of the merger agreement, and may have been included in the merger agreement for the purpose of allocating risk between Talbots, Merger Sub and BPW rather than to establish matters as facts. The merger agreement is described in, and included as an appendix to, this document only to provide you with information regarding its terms and conditions. Accordingly, the representations, warranties, covenants and other provisions of the merger agreement should not be read alone, but instead should be read only in conjunction with the information provided elsewhere in this document and in the documents incorporated by reference into this document. See “Where You Can Find More Information” on page 104.


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The merger agreement contains customary representations and warranties of Talbots, BPW and Merger Sub relating to their respective businesses. The representations and warranties of the merger agreement do not survive the effective time of the merger.
 
Each of Talbots and Merger Sub has made representations and warranties regarding, among other things:
 
  •  organization and qualification,
 
  •  authorization, validity and effect of merger agreement,
 
  •  capitalization,
 
  •  subsidiaries,
 
  •  other interests,
 
  •  no conflict, required filings and consents,
 
  •  compliance with law,
 
  •  Securities and Exchange Commission documents,
 
  •  absence of certain changes,
 
  •  litigation,
 
  •  taxes,
 
  •  employee benefit plans,
 
  •  properties,
 
  •  contracts,
 
  •  labor relations,
 
  •  environmental matters,
 
  •  brokers,
 
  •  vote required,
 
  •  insurance,
 
  •  takeover provisions inapplicable,
 
  •  affiliate transactions,
 
  •  intellectual property,
 
  •  information statement, registration statement and other information,
 
  •  financial ability,
 
  •  acknowledgment with respect to BPW trust, and
 
  •  formation and business of Merger Sub.
 
BPW has made representations and warranties regarding, among other things:
 
  •  organization and qualification,
 
  •  authorization; validity and effect of merger agreement,
 
  •  capitalization,
 
  •  no conflict; required filings and consents,
 
  •  compliance,


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  •  Securities and Exchange Commission documents,
 
  •  absence of certain changes,
 
  •  litigation,
 
  •  title to property,
 
  •  contracts,
 
  •  intellectual property,
 
  •  employee benefits plans,
 
  •  labor matters,
 
  •  taxes,
 
  •  brokers,
 
  •  vote required,
 
  •  information statement, registration statement and other information,
 
  •  affiliate transactions, and
 
  •  the BPW trust account.
 
Certain representations of BPW are qualified by the occurrence of any change, event, development, condition, occurrence or effect that has had a material and adverse effect on the financial condition of BPW, or prevents or materially impairs the ability of BPW to consummate the merger before April 17, 2010. Certain representations of Talbots are qualified by “Talbots material adverse effect,” as we explain the meaning of such term above under the heading “Conditions to the Completion of the Merger.”
 
Conduct of Talbots and BPW Prior to Completion of the Merger
 
Each of Talbots and BPW has undertaken customary covenants that place restrictions on it and its subsidiaries until the merger is completed.
 
Conduct of Business of Talbots
 
During the period from December 8, 2009 to the earlier of the termination of the merger agreement or completion of the merger, Talbots will, other than as consented to in writing by BPW (including as specified in the disclosure schedules exchanged by the parties), as required by the merger agreement, the AEON agreement or the BPW sponsors’ agreement, or to the extent required by applicable law or a governmental entity of competent jurisdiction, carry on its business in the ordinary course in substantially the same manner as previously conducted in all material respects and use commercially reasonable efforts to preserve intact its present business organization and advantageous business relationships and keep available the services of its current officers and employees, and will not, and will not permit any of its subsidiaries to, do any of the following:
 
  •  adopt or propose any amendment to its organizational documents,
 
  •  other than certain grants in the ordinary course of business consistent with past practice:
 
  •  issue, pledge, sell, or grant any rights to Talbots common stock or other awards with respect to shares of Talbots common stock or make any other agreements with respect to, any of its shares of capital stock or any other of its securities,
 
  •  amend, waive or otherwise modify any of the terms of any option, warrant or stock option plan of Talbots or any of its subsidiaries, or authorize cash payments in exchange for any rights to shares of Talbots common stock granted under any of such plans, other than an increase in shares to be granted under Talbots equity incentive plans to the extent approved by its stockholders, or


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  •  adopt or implement any stockholder rights plan;
 
  •  declare, set aside or pay any dividend or make any other distribution or payment with respect to any shares of its stock or beneficial interests, except dividends, contributions or distributions made by or to Talbots by or from any subsidiary of Talbots;
 
  •  split, combine, subdivide, reclassify or redeem, purchase or otherwise acquire, or propose to redeem or purchase or otherwise acquire, any shares of its stock or beneficial interests, or any of its other securities;
 
  •  except pursuant to applicable law or the terms of an employee benefit plan as in effect on December 8, 2009:
 
  •  increase in any manner the compensation or benefits payable or to become payable to any of Talbots’ or its subsidiaries’ current or former directors, officers or employees, or pay any amounts or benefits to, or increase any amounts payable to, any such individual not required by any employee benefit plan, except for certain ordinary course increases in base salary, payment of annual bonuses and grants of equity compensation,
 
  •  become a party to, establish, adopt, enter into, materially amend, commence participation in, terminate or commit itself to the adoption of any collective bargaining agreement or employee benefit plan, except for the design of 2010 incentive programs,
 
  •  provide any funding for any rabbi trust or similar arrangement or in any other way secure the payment of compensation or benefits under any employee benefit plan,
 
  •  accelerate the vesting of or lapsing of restrictions with respect to any stock-based compensation or other long-term incentive compensation under any employee benefit plan, or
 
  •  materially change any actuarial or other assumptions used to calculate funding obligations with respect to any employee benefit plan or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP or applicable law;
 
  •  lease, license, transfer, exchange or swap, mortgage (including securitizations), or otherwise dispose of any material portion of its properties or assets, subject to certain exceptions, or adopt or effect a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization;
 
  •  except as required under any material contract as in effect on December 8, 2009 or as expressly contemplated by the AEON agreement or BPW sponsors’ agreement, or, to the extent in the ordinary course of business consistent with past practice, related to any vendor financing arrangement or existing proprietary charge card arrangements in amounts that do not exceed $5 million in the aggregate, and except for completing and pursuing certain financing transactions that would not impair or delay the ability of Talbots to complete the merger:
 
  •  incur or assume any indebtedness,
 
  •  assume, guarantee, endorse or otherwise become liable or responsible for the obligations of any other person,
 
  •  make any acquisition of any other person or business or make or acquire any loans, advances or capital contributions to, or investments in, any other person, or
 
  •  enter into any “keep well” or other agreement to maintain the financial condition of another entity,
 
  •  make, alter, revoke or rescind any material express or deemed election relating to taxes, settle or compromise any material legal action, amend in any material respect any material tax return except in each case as required by law, file any income tax return that claims a deduction for or otherwise uses a net operating loss, or except as may be required by, or in order to conform to, applicable law, or make any change to any of its material methods of reporting income or deductions (including any change to its methods or basis of write-offs of accounts receivable) for federal income tax purposes from those employed in the preparation of its federal income tax return for the taxable year ended December 31, 2008,
 
  •  fail to maintain its existing material insurance coverage of all types in effect or, in the event any such coverage shall be terminated or lapse, to the extent available at reasonable cost, procure substantially similar


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  substitute insurance policies which in all material respects are in at least such amounts and against such risks as are currently covered by such policies,
 
  •  make any material change to its methods of accounting as in effect on October 31, 2009 except as required by GAAP or the Securities and Exchange Commission or applicable law, or take any action, other than usual actions in the ordinary course of business and consistent with past practice, with respect to accounting policies, unless required by GAAP or the Securities and Exchange Commission or applicable law,
 
  •  enter into or materially amend, terminate or extend any material contract, or waive, release, assign or fail to enforce any material rights or claims under any material contract, if such material contract or any such action or failure to act would reasonably be expected to impair the ability of Talbots to perform its obligations under the merger agreement, AEON agreement or BPW sponsors’ agreement or prevent or delay the completion of the merger or any of the related transactions,
 
  •  take, or agree to commit to take, any action that is intended to result in any of the conditions to the closing of the merger not being satisfied,
 
  •  except as allowed under the AEON agreement or BPW sponsors’ agreement, engage in any transaction with, or enter into any agreement, arrangement, or understanding with, any affiliate which involves the transfer of material consideration or has a material financial impact on Talbots, subject to certain exceptions,
 
  •  pay or commit to pay any expenses or make or commit to make any capital expenditures in excess of $2,500,000 individually, or $12,500,000 in the aggregate, other than capital expenditures for the ordinary course repair or maintenance of capital assets,
 
  •  initiate, compromise or settle any litigation or arbitration proceedings involving payments by Talbots or its subsidiaries (i) in excess of $1 million per litigation or arbitration, or $3 million in the aggregate, subject to certain exceptions, or (ii) relating to the merger agreement, the AEON agreement or the BPW sponsors’ agreement;
 
  •  create any subsidiary or acquire any capital stock, membership interest, partnership interest, joint venture interest or other interest in any person that could reasonably be expected to adversely affect the transactions contemplated hereby, or
 
  •  enter into an agreement, contract, commitment or arrangement to do any of the foregoing, or to authorize, publicly recommend, publicly propose or publicly announce an intention to do any of the foregoing.
 
Conduct of Business of BPW
 
During the period from December 8, 2009 to the earlier of the termination of the merger agreement or completion of the merger, BPW will, other than as consented to in writing by Talbots, as required by the merger agreement, the AEON agreement or the BPW sponsors’ agreement, or to the extent required by applicable law or a governmental entity of competent jurisdiction, carry on its business in the ordinary course in substantially the same manner as previously conducted in all material respects and use commercially reasonable efforts to preserve intact its present business organization and advantageous business relationships and keep available the services of its current officers and employees, and will not do any of the following:
 
  •  adopt or propose any amendment to its organization documents, other than the pre-closing certificate amendment or the post-closing certificate amendment,
 
  •  create any subsidiary or acquire any capital stock, membership interest, partnership interest, joint venture interest or other interest in any person,


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  •  except as required to consummate the warrant exchange offer and the transactions related thereto and to comply with its obligations under the merger agreement, the AEON agreement and the BPW sponsors’ agreement:
 
  •  issue, pledge or sell, or propose or authorize the issuance, pledge or sale of, or grant any options or other awards with respect to shares of BPW common stock or make any other agreements with respect to, any of its shares of capital stock or any other of its securities,
 
  •  amend, waive or otherwise modify any of the terms of any warrant or stock option plan of BPW, or authorize cash payments in exchange for any warrant or stock option granted under any of such plans, or
 
  •  adopt or implement any stockholder rights plan,
 
  •  except as required in connection with the exercise of conversion rights by BPW stockholders, declare, set aside or pay any dividend or make any other distribution or payment with respect to any shares of its stock or beneficial interests,
 
  •  except as required in connection with the exercise of conversion rights by BPW stockholders, split, combine, subdivide, reclassify or redeem, purchase or otherwise acquire any shares of its stock or beneficial interests, or any of its other securities,
 
  •  except to the extent required by applicable law or the terms of an employee benefit plan as in effect on December 8, 2009:
 
  •  increase in any manner the compensation or benefits payable or to become payable to any of its current or former directors, officers, consultants, employees or other service providers, or pay any amounts or benefits (including severance) to, or increase any amounts payable to, any such individual not required by any employee benefit plan,
 
  •  become a party to, establish, adopt, enter into, materially amend, commence participation in, terminate or commit itself to the adoption of any collective bargaining agreement or employee benefit plan,
 
  •  provide any funding for any rabbi trust or similar arrangement or in any other way secure the payment of compensation or benefits under any employee benefit plan,
 
  •  accelerate the vesting of or lapsing of restrictions with respect to any stock-based compensation or other long-term incentive compensation under any employee benefit plan, or
 
  •  materially change any actuarial or other assumptions used to calculate funding obligations with respect to any employee benefit plan or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP or applicable law,
 
  •  (i) except as required under any material contract as in effect as of December 8, 2009, lease, license, transfer, exchange or swap, mortgage (including securitizations), or otherwise dispose of any material portion of its properties or assets, or (ii) adopt or effect a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization,
 
  •  except as required under any material contract as in effect as of December 8, 2009, or as expressly contemplated by the AEON agreement or BPW sponsors’ agreement:
 
  •  incur, assume or pre-pay any indebtedness,
 
  •  assume, guarantee, endorse or otherwise become liable or responsible for the obligations of any other person,
 
  •  make any acquisition of any other person or business or make or acquire any loans, advances or capital contributions to, or investments in, any other person, or
 
  •  enter into any “keep well” or other agreement to maintain the financial condition of another entity,
 
  •  make, alter, revoke or rescind any material express or deemed election relating to taxes, settle or compromise any material legal action, amend in any material respect any material tax return except in each case as


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  required by law, file any income tax return that claims a deduction for or otherwise uses a net operating loss, or except as may be required by, or in order to conform to, applicable law or make any change to any of its material methods of reporting income or deductions (including any change to its methods or basis of write-offs of accounts receivable) for federal income tax purposes from those employed in the preparation of its federal income tax return for the taxable year ended December 31, 2008,
 
  •  fail to maintain its existing insurance coverage of all types in effect or, in the event any such coverage shall be terminated or lapse, to the extent available at reasonable cost, procure substantially similar substitute insurance policies which in all material respects are in at least such amounts and against such risks as are currently covered by such policies or, as reasonably determined by BPW, property policies with increased coverage limits to insure all of its owned and leased real property,
 
  •  make any material change to its methods of accounting as in effect on September 30, 2009 except as required by GAAP or the Securities and Exchange Commission or applicable law, or take any action, other than usual actions in the ordinary course of business and consistent with past practice, with respect to accounting policies, unless required by GAAP or the Securities and Exchange Commission or applicable law,
 
  •  enter into or amend, terminate or extend any material contract, or waive, release, assign or fail to enforce any material rights or claims under any material contract, other than for the purpose of effecting the transactions contemplated by the merger agreement,
 
  •  take, or agree to commit to take, any action that is intended to result in any of the conditions to the closing of the merger not being satisfied,
 
  •  except as expressly contemplated by the AEON agreement and BPW sponsors’ agreement, engage in any transaction with, or enter into any agreement, arrangement, or understanding with, directly or indirectly, any affiliate which involves the transfer of material consideration or has a material financial impact on BPW, other than pursuant to such agreements, arrangements, or understandings as in effect on December 8, 2009,
 
  •  other than such expenses incurred in connection with the transactions contemplated hereby or by the AEON agreement or BPW sponsors’ agreement, pay or commit to pay any expenses in excess of $1 million in the aggregate or make or commit to make any capital expenditures,
 
  •  initiate, compromise, or settle any litigation or arbitration proceedings (i) involving payments by BPW in excess of $250,000 per litigation or arbitration, or $500,000 in the aggregate, provided that BPW may not compromise or settle any litigation or arbitration proceedings which compromise or settlement involves a material conduct remedy or injunctive or similar relief or has a material restrictive impact on BPW’s business, or (ii) relating to the merger agreement, the AEON agreement, the BPW sponsors’ agreement or the transactions contemplated hereby or thereby, or
 
  •  enter into an agreement, contract, commitment or arrangement to do any of the foregoing, or to authorize, publicly recommend, publicly propose or publicly announce an intention to do any of the foregoing.
 
Expenses and Fees
 
All expenses incurred in connection with the merger agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses, except that each of Talbots and BPW will bear and pay one half of the costs and expenses incurred in connection with the filing, printing and mailing of this document (including any Securities and Exchange Commission filing fees).
 
Amendment and Waiver of the Merger Agreement
 
The merger agreement may be amended by Talbots and BPW by action taken by or on behalf of the BPW board of directors, in the case of BPW, and the Talbots board of directors, in the case of Talbots, at any time before or after any required approval of matters presented in connection with the merger by the BPW stockholders. After such approval, however, there will be made no amendment that by law requires further approval by the BPW stockholders without the further approval of such stockholders. The merger agreement may not be amended except by an instrument in writing signed by the parties.


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Indemnification and Insurance
 
The merger agreement provides that from and after the effective date of the merger, the surviving company will provide to BPW’s current and former directors and officers exculpation and indemnification which is at least as favorable as the exculpation and indemnification currently provided under BPW’s certificate of incorporation and bylaws. In addition, Talbots and the surviving company will indemnify each of BPW’s current and former directors and officers against all losses or costs in connection with any claim pertaining to (i) the fact that such person is or was a director or officer of BPW or (ii) the merger agreement and the transactions it contemplates.
 
The merger agreement further provides that Talbots will cause the officers and directors of BPW to be covered for a period of six years by BPW’s current directors’ and officers’ liability insurance, or by policies that are not less advantageous than BPW’s existing policy, with respect to acts or omissions occurring prior to the merger, provided that Talbots will not be required to pay annual premiums in excess of 300% of BPW’s current premiums.


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THE BPW SPONSORS’ AGREEMENT
 
PWPA and BNYH are the sponsors of BPW and collectively hold 5,921,660 shares of BPW common stock, all of which were acquired prior to BPW’s initial public offering and warrants to acquire 14,372,089 shares of BPW common stock as of the record date for the BPW special meeting of stockholders. Pursuant to the BNYH agreement, PWPA will acquire BNYH upon the completion of the merger. In connection with the entry into the merger agreement, PWPA and BNYH have entered into the BPW sponsors’ agreement with BPW and Talbots under which, subject to the terms and conditions of that agreement, PWPA, on behalf of itself and BNYH, has agreed to, among other things:
 
  •  surrender an aggregate of 1,776,498 shares of BPW common stock at the same time as the completion of the merger for no consideration,
 
  •  in connection with the merger proposal and the pre-closing certificate amendment proposal, vote all of the shares of BPW common stock that it acquired prior to BPW’s initial public offering in accordance with the majority of the votes cast by the holders of shares of common stock issued in BPW’s initial public offering, and vote any shares of BPW common stock acquired by it in the open market in favor of the merger proposal and the pre-closing certificate amendment proposal and vote all its shares of BPW common stock (including the founders’ shares) in favor of the post-closing certificate amendment proposal and the adjournment proposal,
 
  •  exchange, at the completion of the merger, warrants to purchase shares of BPW common stock for shares of Talbots common stock, at an exchange ratio of one warrant to purchase shares of BPW common stock for one tenth of the stock consideration received for each share of BPW common stock based on the floating exchange ratio in the merger, and
 
  •  subject to exceptions described below in this document, restrict the transfer of all shares of Talbots common stock held by it for 180 days after completion of the merger.
 
Except for the 1,776,498 shares of BPW common stock held by the sponsors that will be surrendered for no consideration, all shares of BPW common stock held by the sponsors will be exchanged for shares of Talbots common stock based on the floating exchange ratio in the merger.


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THE BNYH AGREEMENT
 
Purchase of BNYH by PWPA
 
Pursuant to the terms of the BNYH agreement, BNYH BPW 1 LLC and BNYH BPW 2 LLC have agreed to sell to PWPA and an affiliate of PWPA 100% of the issued and outstanding membership units of BNYH, for an aggregate cash purchase price of $4,225,000. The sale of the BNYH membership units is conditioned on, and will be completed at the time of, the completion of the merger.
 
Additional Agreements
 
The parties to the BNYH agreement also agreed to (i) the termination of BNYH’s obligations to make purchases of shares of BPW common stock pursuant to the Rule 10b5-1 Stock Purchase Plan, dated as of January 14, 2008, by and among BNYH, BPW and Citigroup, which we refer to as the BNYH purchase plan, and (ii) an increase from $12.5 million to $25 million in the maximum aggregate purchase price of shares of BPW common stock that PWPA would be obligated to purchase under the Rule 10b5-1 Stock Purchase Plan, dated January 14, 2008, by and among PWPA, BPW and Citigroup, which we refer to as the PWPA purchase plan. As a result of these changes, PWPA assumed the full obligation of BNYH to purchase shares of BPW common stock under the BNYH purchase plan, such that there was no change in the aggregate number of shares of BPW common stock that PWPA and BNYH were collectively required to purchase under these purchase plans. Accordingly, PWPA was required to purchase any shares of BPW common stock offered for sale (and not purchased by another investor) at or below a price equal to the per share amount held in BPW’s trust account, commencing on the day after the filing of this document and ending on the earlier of (i) January 14, 2010, the business day immediately preceding the record date for the special meeting of BPW stockholders, or earlier in certain circumstances as described in the PWPA purchase plan, or (ii) until such purchases reach $25 million in total. The purchase of such shares would have been made by Citigroup. It was intended that such purchases would have satisfied the conditions of Rule 10b-18(b) under the Exchange Act and the broker’s purchase obligation would have otherwise been subject to applicable law including Regulation M under the Exchange Act, which would have prohibited or limited purchases pursuant to the PWPA purchase plan in certain circumstances. However, PWPA was not required to, and did not, purchase any shares under the PWPA purchase plan. The sponsors will participate in any liquidation distributions with respect to any shares of BPW common stock purchased by it following the consummation of BPW’s initial public offering in the event BPW is required to adopt a plan of liquidation in accordance with the BPW certificate of incorporation.
 
BNYH has also irrevocably appointed PWPA as its proxy to (i) vote its shares of BPW common stock at the BPW special meeting and any adjournment thereof (subject to BNYH’s existing obligations to vote these shares as provided in the Letter Agreement, dated as of February 26, 2008, by and among BPW, Citigroup, BNYH and Brooklyn NY Holdings LLC, which we refer to as the “BNYH Insider Letter”) and (ii) exchange its warrants to purchase BPW common stock in the warrant exchange offer.
 
In addition, BNYH has agreed to use commercially reasonable efforts to take all reasonably necessary actions, as requested in good faith by PWPA, to complete the merger, except that BNYH will not be required to incur any liabilities, expend any funds (except to the extent BNYH wishes to engage third parties, such as legal counsel, to represent its interests) or take any actions on behalf of BPW, PWPA or any of their respective affiliates in connection with the merger.
 
Indemnification
 
In addition to customary indemnification provisions, PWPA has also agreed that, effective as of December 7, 2009, if BPW is required to liquidate or dissolve prior to its initial business combination, PWPA will indemnify BNYH against certain losses arising pursuant to the BNYH Insider Letter. Further, PWPA has agreed to indemnify certain affiliates of BNYH for any losses incurred as a result of the execution by BPW of any documents relating to its initial business combination and/or the negotiation or consummation of any actual or potential initial business combination after December 8, 2009.


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THE WARRANT EXCHANGE OFFER
 
As of the record date for the BPW special meeting of stockholders, there were outstanding warrants held by public warrantholders to acquire a total of 35,000,000 shares of BPW common stock at an exercise price of $7.50 per share (not including the warrants held by the sponsors of BPW, PWPA and BNYH, as described above), which were issued under a Warrant Agreement, dated as of February 26, 2008, between BPW and Mellon Investor Services LLC. The exercise of the BPW warrants is conditioned upon the completion by BPW of a specified business combination transaction (of which the proposed merger with Talbots would be one) on or prior to February 26, 2010. In the merger agreement, Talbots and BPW agreed that Talbots would conduct an exchange offer, to be commenced following the BPW special meeting of stockholders (assuming receipt of the requisite approvals of BPW stockholders at that meeting), for the BPW warrants held by the public warrantholders of BPW.
 
In the warrant exchange offer, holders of BPW warrants may elect to exchange their outstanding BPW warrants for either:
 
  •  new warrants to purchase shares of Talbots common stock with a stated term of five years from the date of the completion of the merger, which new warrants will have an exercise price equal to the product of 1.30 and the average Talbots closing price, and which will expire and thereafter represent solely the right to receive $0.01 per warrant if the trading price of shares of Talbots common stock exceeds the product of 1.75 and the average Talbots closing price for any 20 trading days within a 30-trading-day period, or
 
  •  shares of Talbots common stock at an exchange ratio of one warrant to purchase shares of BPW common stock for one tenth of the stock consideration received for each share of BPW common stock based on the floating exchange ratio in the merger.
 
The completion of the warrant exchange offer is expected to be conditioned, among other things, on the participation in the warrant exchange offer of holders of at least 90% of the BPW warrants that were issued in BPW’s initial public offering. If the warrant exchange offer is completed, the BPW warrants of warrantholders that did not participate in the warrant exchange offer will, in accordance with the terms of the warrant agreement, be converted into warrants to purchase the number of shares of Talbots common stock as such warrantholder would have received in the merger had the warrants been converted to shares of BPW common stock immediately prior to the completion of the merger.
 
The warrant exchange offer will be structured such that if, in the aggregate, less than 50% of the BPW warrants held by the public warrantholders (counting for these purposes BPW warrants held by the public warrantholders that do not elect to participate in the warrant exchange offer) elect to receive shares of Talbots common stock, then the number of BPW warrants to be exchanged for shares of Talbots common stock will be increased and the number of BPW warrants to be exchanged for new warrants to purchase shares of Talbots common stock will be decreased for each exchanging public warrantholder, proportionate to the number of BPW warrants held by such holder, until 50% of the BPW warrants held by the public warrantholders (counting for these purposes BPW warrants held by non participating warrantholders) would be exchanged for shares of Talbots common stock. If, in the aggregate, less than 50% of the BPW warrants held by the public warrantholders elect to receive new warrants to purchase shares of Talbots common stock, then the number of BPW warrants to be exchanged for new warrants to purchase shares of Talbots common stock will be increased and the number of BPW warrants to be exchanged for shares of Talbots common stock will be decreased for each exchanging public warrantholder, proportionate to the number of BPW warrants held by such holder, until 50% of the BPW warrants held by the public warrantholders would be exchanged for new warrants to purchase shares of Talbots common stock.
 
The warrant exchange offer will be conducted pursuant to a registration statement on Form S-4, which Talbots will subsequently file with the Securities and Exchange Commission and which Talbots will request the Securities and Exchange Commission not to declare effective until the BPW special meeting has been conducted. The warrant exchange offer is expected to be completed at or immediately prior to the completion of the merger, if the conditions to the warrant exchange offer are satisfied. The completion of the merger is conditioned upon the completion of the warrant exchange offer on the terms and conditions set forth in the merger agreement and described in this document. As discussed above, PWPA, on behalf of itself and BNYH (its then wholly owned subsidiary) has agreed to exchange all of its BPW warrants for shares of Talbots common stock in the warrant exchange offer.


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THE DEBT COMMITMENT LETTER
 
Talbots has received a debt commitment letter, dated as of December 7, 2009, from GE Capital, to provide, subject to the conditions set forth in the debt commitment letter, a $200 million revolving credit facility under which Talbots and certain of its subsidiaries would be the borrowers. We refer to the revolving credit facility contemplated by the debt commitment letter as the GE facility.
 
Conditions Precedent to the Debt Commitment
 
The availability of the GE facility is subject to, among other things:
 
  •  the consummation of the merger in accordance with the merger agreement and other documents executed in connection with the merger,
 
  •  Talbots receiving cash consideration in the merger sufficient to satisfy certain existing indebtedness and certain costs and expenses of Talbots without having more than $222 million of secured indebtedness on the date the merger occurs and the GE facility is entered into,
 
  •  the application of such merger consideration and the proceeds, if any, of term loans toward certain indebtedness existing and costs and expenses of Talbots,
 
  •  the repayment of all amounts due or outstanding under certain existing indebtedness of Talbots,
 
  •  completion by GE Capital of all legal due diligence with results reasonably satisfactory to GE Capital,
 
  •  GE Capital’s reasonable satisfaction with the tax structure of the merger and related transactions, and
 
  •  evidence reasonably satisfactory to GE Capital that all rent payments for real property that are due on or prior to the date that the merger occurs and the GE facility is entered into have been timely paid.
 
Description of the GE Facility
 
General
 
The GE facility would have a term of three and one half years. Availability under the GE facility would be determined pursuant to a borrowing base formula, based primarily upon the borrowers’ levels of domestic finished goods inventory and domestic private label credit card receivables, subject to certain limitations. Proceeds of the GE facility would be available for working capital, capital expenditures and other corporate purposes and, subject to certain conditions, to refinance Talbots’ existing debt and pay transaction expenses related to the GE facility and the merger.
 
Interest Rate and Fees
 
Loans under the GE facility are expected to bear interest, at the borrowers’ option, at a rate equal to either the adjusted London interbank offer rate plus 4.5% or an alternate base rate plus 3.5%. An unused facility fee shall be payable on the unused portion of the facility. The unused facility fee shall be 1.00% of the unused amount of the GE facility for the first six months after the GE facility is entered into, and thereafter shall range from 0.50% to 1.00% of the unused portion of the GE facility, depending on the proportion of the GE facility that is utilized. For the first year after the GE facility is entered into, any reduction in the size of the GE facility shall trigger a prepayment premium equal to 1.00% of such reduction.
 
Guarantors
 
All obligations under the GE facility would be unconditionally guaranteed by certain Talbots’ subsidiaries, to be agreed upon.
 
Security
 
The obligations of the borrowers under the GE facility and the related guarantees would be secured, subject to permitted liens and other agreed upon exceptions, by a pledge of substantially all present and future assets of the


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borrowers and each guarantor (limited, in the case of the equity interest of foreign subsidiaries, to 100% of the non-voting equity interests (if any) and 66% of the voting equity interests of such subsidiaries).
 
Ability to Incur Additional Secured Debt
 
The GE facility would permit Talbots, in certain circumstances, to incur up to $50 million of term loans and obtain letters of credit in an aggregate amount to be mutually agreed upon and to secure its obligations under such term loans or letters of credit with first liens on real estate and intellectual property. The debt commitment letter limits the secured indebtedness of the borrowers and guarantors under the GE facility to $222 million on the date that the merger occurs and the GE facility is entered into.
 
Availability on Closing Date
 
On the date that the merger occurs and the GE facility is entered into, the amount of the GE facility that would be available would be limited to $160 million, subject to satisfaction of the conditions to the debt commitment letter and the borrowing base formula described above.
 
Other Terms
 
The GE facility would contain, among other terms, customary representations and warranties, affirmative and negative covenants (but no financial covenants) and events of default, subject to exceptions to be agreed upon. In connection with entry into the debt commitment letter, Talbots has paid GE Capital a fee of $1 million. In the event that the debt commitment letter is terminated, Talbots is not entitled to any refund of such fee. If Talbots enters into definitive documentation with respect to the GE Facility, certain other fees will be payable by Talbots to GE Capital.


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THE AEON REPURCHASE, REPAYMENT AND SUPPORT AGREEMENT
 
The following description of the AEON repurchase, repayment and support agreement is subject to, and qualified in its entirety by, reference to the Repurchase, Repayment and Support Agreement, dated as of December 8, 2009, by and between Talbots, BPW, AEON Co., Ltd. and AEON (U.S.A.), Inc., which is attached to this document as Appendix D and is incorporated by reference into this document. We urge you to read the AEON agreement carefully in its entirety.
 
In connection with the merger, Talbots and BPW entered into a Repurchase, Repayment and Support Agreement with AEON (U.S.A.), Inc., the majority stockholder of Talbots, which we refer to as AEON USA, and AEON Co., Ltd., the parent company of AEON USA. Unless the context requires otherwise, references to AEON in this document refer to AEON Co., Ltd. and AEON (U.S.A.), Inc. together.
 
Share Repurchase and Discharge of Indebtedness; Acknowledgments Under AEON Facilities
 
Under the terms of the AEON agreement, AEON has agreed to sell to Talbots all of the shares of Talbots common stock owned by AEON for an aggregate of one million warrants to purchase shares of Talbots common stock on terms and conditions substantially the same as the warrant exchange offer, discussed above; provided, that the exercise price of such warrants will be the closing price of Talbots common stock on the date of the completion of the merger (or, if not available on such date, the closing price on the business day immediately preceding such date). This share repurchase will be completed at the same time as the merger is completed. In addition, immediately prior to such purchase, Talbots will repay in full all outstanding indebtedness under its financing agreements with AEON, and will repay in full all outstanding indebtedness under its financing agreements with third parties. Upon the completion of this share repurchase and repayment of indebtedness, AEON will no longer own any shares of Talbots common stock or be a lender to Talbots under any of Talbots’ financing arrangements.
 
In addition, under the AEON agreement, AEON makes a number of acknowledgments under the AEON financing agreements, in its capacity as a lender under such financing agreements, including, among others, that it waives any breach, violation, default under any AEON financing agreement arising from entry by Talbots into the merger or any of the transactions contemplated by the merger agreement, the BPW sponsors’ agreement and the AEON agreement and the consummation of the transactions contemplated thereby, that it waives any action or other requirement provided for in any AEON financing agreement which otherwise would constitute a condition precedent to the merger, including without limitation any requirement to deliver any notice, document, certificate or opinion, and that during the term of the AEON agreement, it will not sell, transfer, suffer a lien upon or otherwise dispose of any interest in or to any AEON financing agreement, including any outstanding loan amounts.
 
Restriction on Transfer
 
From the date of the AEON agreement until the earliest to occur of (a) the amendment or waiver of any provision of the merger agreement in a manner that is adverse in any material respect to AEON, or the amendment of the exchange ratio in the merger, in each case without the prior consent of AEON, (b) the repurchase of AEON’s shares of Talbots common stock and the repayment of Talbots’ indebtedness to AEON and all third parties in accordance with the terms of the AEON agreement, (c) the termination of the merger agreement in accordance with its terms and (d) April 17, 2010, AEON agrees not to transfer, whether directly or indirectly, any of the shares of Talbots common stock that it owns or that it acquires after the date of the AEON agreement.
 
Debt Guarantees
 
In February 2009, AEON guaranteed Talbots’ outstanding debt under its working capital facilities with lenders other than AEON, which total $165.0 million, and under its revolving credit and term loan facilities with lenders other than AEON, which total $100.0 million. In April 2009, AEON also agreed (a) that it would continue to provide a guaranty for the refinancing of any of the debt described in the previous sentence, which currently matures at various dates on and before April 13, 2012 and (b) if any lender of such debt fails to agree to refinance such debt on or before the existing maturity date, or if any other condition occurs that requires AEON to make a payment under its existing guaranty, AEON will make a loan to Talbots, due on or after April 16, 2010, within the limits of AEON’s existing loan guaranty.


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Under the AEON agreement, AEON represents and acknowledges that these guarantees are in full force and effect and that they will remain in full force and effect until Talbots’ indebtedness to AEON is discharged in accordance with the AEON agreement. AEON further agrees to honor all of its commitments and obligations under the guaranty agreements prior to the repayment of Talbots’ indebtedness to AEON and all third parties. AEON will be released from its guarantees of Talbots indebtedness when the merger and the transactions contemplated by the AEON agreement are completed.
 
AEON Covenants Regarding Talbots Financing
 
Certain of Talbots’ existing indebtedness to parties other than AEON will expire or mature in the next six months. In particular:
 
  •  Talbots’ $165 million working capital line of credit (of which $141.1 million is drawn as of December 8, 2009) is committed until December 2009,
 
  •  Talbots’ $28 million term loan matures in December 2009,
 
  •  $34 million of Talbots’ $52 million revolving credit agreement matures in January 2010, and
 
  •  $18 million of the revolving credit agreement matures in April 2010.
 
The debt facilities described above may expire or mature before the merger is completed. Under the terms of the AEON agreement, AEON acknowledges that between the date of the merger agreement and the completion of the merger, Talbots will make borrowings under the $150 million secured revolving credit agreement with AEON to satisfy payment obligations under its indebtedness with parties other than AEON. However, Talbots must also receive new financing in order to fully satisfy its obligations over the next six months, as well to have sufficient funds in order to complete the share repurchase and discharge of indebtedness transactions contemplated by the AEON agreement (including with respect to any amounts borrowed under the $150 million secured revolving credit agreement with AEON).
 
Even if the merger is completed before any of the facilities described above has expired or matured, the completion of the merger will provide the lender under each of these facilities, as well as each other lending facility with a party other than AEON, with the right to demand immediate repayment of all amounts outstanding under such facility. Accordingly, all of Talbots’ indebtedness under these facilities needs to be refinanced or replaced in order for the merger to be completed, and the completion of the merger and the transactions contemplated by the AEON agreement are conditioned upon the receipt of this financing. Talbots has received a commitment letter to provide $200 million from GE Capital, which is sometimes referred to in this document as the debt commitment letter, to be used to complete the transactions contemplated by the merger agreement and AEON agreement, including the refinancing of any third party debt outstanding at the time the merger is completed and the discharge of any amounts borrowed before the merger is completed under the $150 million secured revolving credit agreement with AEON. Please see “The Debt Commitment Letter” for more information.
 
Additional AEON Covenants
 
Under the AEON agreement, AEON agrees that during the term of the agreement, AEON will not take any action with the purpose or effect of revoking, rescinding or limiting in any manner the authority of the audit committee of the Talbots board of directors to review and approve all material transactions with affiliated entities, including the merger agreement, BPW sponsors’ agreement and AEON agreement.
 
At or prior to the completion of the merger, AEON will deliver to Talbots letters of resignation from each of AEON’s representatives or designees on the Talbots board of directors. AEON also agrees to waive certain rights and claims against BPW’s trust account.


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Conditions to Completion of the Stock Repurchase and Debt Repayment
 
The obligation of Talbots to complete the transactions contemplated by the AEON agreement is subject to the following conditions:
 
  •  the accuracy of AEON’s representations and warranties and the performance by AEON of its covenants under the AEON agreement,
 
  •  the receipt by Talbots of the full amount of the debt financing required (taking into account the net proceeds in the trust account and other available cash) to consummate the transactions contemplated by the merger agreement, the BPW sponsors’ agreement and the AEON agreement,
 
  •  the receipt by Talbots of payoff letters in respect of the discharged indebtedness to AEON, and
 
  •  the completion of the merger.
 
The obligations of AEON to complete the transactions contemplated by the AEON agreement is subject to the accuracy of Talbots’ representations and warranties and the full repayment of all Talbots indebtedness to AEON and third parties.
 
Termination of the Agreement
 
The AEON agreement remains in effect until the earliest to occur of (a) the amendment or waiver of any provision of the merger agreement in a manner that is adverse in any material respect to AEON, or the amendment of the exchange ratio, in each case without the prior consent of AEON, (b) the repurchase of AEON’s shares of Talbots common stock and repayment of Talbots’ indebtedness to AEON and all third parties in accordance with the terms of the AEON agreement, (c) the termination of the merger agreement in accordance with its terms and (d) April 17, 2010, subject to the continued survival of AEON’s waiver with respect to BPW’s trust account and certain other limited provisions of the AEON agreement.
 
Representations and Warranties
 
In the AEON agreement, AEON makes customary representations to BPW and Talbots regarding title to the shares of Talbots common stock owned by AEON and of the loans under the AEON financing agreements, due organization, authority to enter into the AEON agreement and absence of a requirement upon AEON to obtain any consent in connection with the AEON agreement, absence of a conflict between the execution, delivery and performance by AEON of its obligations under the AEON agreement and its organizational documents, applicable laws or contracts, other than with respect to consents or conflicts that would not reasonably be expected to impair the ability of AEON to perform its obligations under the AEON agreement or consummate the transactions contemplated by the AEON agreement.
 
BPW and Talbots each make customary representations to AEON regarding due organization, authority to enter into the AEON agreement, absence of a requirement upon either to obtain any consent in connection with the AEON agreement and absence of a conflict between the execution, delivery and performance by BPW or Talbots of its obligations under the AEON agreement and its organizational documents, applicable laws or contracts, other than with respect to consents or conflicts that would not reasonably be expected to impair the ability of BPW or Talbots to perform its obligations under the AEON agreement or consummate the transactions contemplated by the AEON agreement.
 
Indemnification
 
Talbots has agreed to provide, from and after the completion of the merger, exculpation and indemnification for each person who is now or has been at any time prior to the date hereof or who becomes prior to the completion of the merger, an officer or director of Talbots, which is at least as favorable to such persons as the exculpation and indemnification provided to the officers and directors by Talbots immediately prior to the completion of the merger; provided, that such exculpation and indemnification covers actions on or prior to the completion of the merger, including all transactions contemplated by the AEON agreement, the merger agreement, and the BPW sponsors’ agreement.


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For six years after the completion of the merger, Talbots will maintain in effect Talbots’ current directors’ and officers’ liability insurance covering acts or omissions occurring prior to the completion of the merger with respect to those persons who are currently covered by Talbots’ directors’ and officers’ liability insurance policy, on terms with respect to such coverage and amount no less favorable in the aggregate to Talbots’ directors and officers, as the case may be, than those of such policy in effect on the date of the AEON agreement (provided, that Talbots may substitute with policies of at least the same coverage containing terms and conditions which are no less advantageous); provided that, none of Talbots and its subsidiaries are obligated to pay premiums per annum in excess of 300% of the aggregate amount per annum that Talbots paid for such coverage in its last full fiscal year prior to the date of the AEON agreement; provided, further that, in the event that the aggregate premiums for maintaining such insurance for the benefit of the persons currently covered by Talbots’ officers and directors insurance policy are in excess of 300% of the aggregate amount per annum, then Talbots is only obligated to maintain such insurance coverage as is reasonably available for such amount.


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ACCOUNTING TREATMENT
 
Talbots prepares its financial statements in accordance with GAAP. In determining the accounting treatment of the merger, management has evaluated all pertinent facts and circumstances, including whether BPW, which is a special purpose acquisition company, meets the definition of a business. BPW has raised significant capital through the issuance of shares and warrants and was formed to effect a merger, capital, stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more operating businesses. Accordingly, Talbots has concluded that BPW is a business and business combination accounting would apply to the transaction.
 
The merger will be accounted for using the acquisition method of accounting, which requires the determination of which entity is the accounting acquirer. The accounting acquirer is the entity that obtains control of the acquiree. The determination of the acquirer considers many factors, including the relative voting rights in the combined entity after the business combination, the existence of a large minority interest in the combined entity if no other owner or organized group of owners has a significant voting interest, the composition of the governing body of the combined entity, the composition of the senior management of the combined entity, the terms of the exchange of equity securities, the relative size of the combining entities and which of the combining entities initiated the combination. There is no hierarchical guidance on determining the acquirer in a business combination effected through an exchange of equity interests.
 
Talbots has concluded that Talbots is the accounting acquirer based on its evaluation of the facts and circumstances of the acquisition. The purpose of the merger was to assist Talbots with the refinancing and recapitalization of its business and Talbots initiated the transaction. Talbots is the larger of the two entities and is the operating company within the combining companies. Talbots’ continuing board members will continue to hold a majority of the seats on the Talbots board of directors and BPW stockholders will not have any continuing board appointment rights after the initial consent to 3 additional board members appointed to serve after the merger. Talbots’ senior management will be continuing as senior management of the combined company. In addition, the terms of the exchange provide BPW stockholders with a premium (subject to a formula related to Talbots’ common stock price over a defined period) over the market value of shares of BPW common stock prior to the merger announcement. Although a larger portion of the voting rights in the combined entity will be held by former BPW stockholders, this was not considered determinative, as all other important elements considered in determining which party has control, including board of directors representation and management continuity were not aligned with this voting interest. Additionally, the BPW stockholders are expected to represent a diverse group of stockholders at completion of the merger and we are not aware of any voting or other agreements that suggest that they can act as one party.
 
As Talbots was determined to be the acquirer for accounting purposes, the accounting for the transaction will be similar to that of a capital infusion as the only significant pre-combination asset of BPW is the cash and cash equivalents, which are already recognized by BPW at fair value, obtained from BPW’s investors. No intangibles or goodwill will arise through the accounting for the transaction. The accounting is the equivalent of Talbots issuing shares of common stock for the net monetary assets of BPW. Accordingly, Talbots will record the equity issued in exchange for BPW based on the value of the net monetary assets received as of the closing date of the merger.
 
Talbots will allocate the purchase price to the fair value of the assets acquired and liabilities assumed at the acquisition date. Acquisition-related costs, which include advisory, legal, accounting, valuation, and other professional or consulting fees, will be expensed in the period incurred. The costs to issue equity securities will be recognized against the proceeds. Deferred financing fees will be amortized over the term of the new financing.


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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
 
The following general discussion sets forth a summary of certain material United States federal income tax consequences of the merger to U.S. holders (as defined below) of BPW common stock that exchange their shares of BPW common stock for shares of Talbots common stock and cash instead of fractional shares of Talbots common stock in the merger. This discussion does not address any tax consequences arising under the laws of any state, local or foreign jurisdiction, or under any United States federal laws other than those pertaining to income tax.
 
This discussion is based upon the Internal Revenue Code of 1986, as amended, referred to as the Code, the regulations promulgated under the Code and court and administrative rulings and decisions, all as in effect on the date of this document. These laws may change, possibly retroactively, and any change could affect the accuracy of the statements and conclusions set forth in this discussion. This discussion addresses only those BPW stockholders that hold their shares of BPW common stock as a capital asset within the meaning of Section 1221 of the Code. Further, this discussion does not address all aspects of United States federal income taxation that may be relevant to you in light of your particular circumstances or that may be applicable to you if you are subject to special treatment under the United States federal income tax laws, including, but not limited to, if you are:
 
  •  a financial institution,
 
  •  a tax-exempt organization,
 
  •  an S corporation or other pass-through entity (or an investor in an S corporation or other pass-through entity),
 
  •  an insurance company,
 
  •  a mutual fund,
 
  •  a dealer or broker in stocks and securities, or currencies,
 
  •  a trader in securities that elects mark-to-market treatment,
 
  •  a holder of BPW common stock subject to the alternative minimum tax provisions of the Code,
 
  •  a holder of BPW common stock that received BPW common stock through the exercise of an employee stock option, through a tax qualified retirement plan or otherwise as compensation,
 
  •  a holder of warrants to purchase BPW common stock,
 
  •  a person that is not a U.S. holder (as defined below),
 
  •  a person that has a functional currency other than the United States dollar,
 
  •  a holder of BPW common stock that holds BPW common stock as part of a hedge, straddle, constructive sale, conversion or other integrated transaction, or
 
  •  a United States expatriate.
 
The determination of the actual tax consequences of the merger to you will depend on your specific situation and on factors that are not within our control. You should consult with your own tax advisor as to the tax consequences of the merger in your particular circumstances, including the applicability and effect of the alternative minimum tax and any state, local, foreign or other tax laws and of changes in those laws. For purposes of this discussion, the term “U.S. holder” means a beneficial owner of BPW common stock that is for United States federal income tax purposes (1) an individual citizen or resident of the United States, (2) a corporation (including any entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States or any state thereof or the District of Columbia, (3) a trust if (x) a United States court is able to exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust or (y) it has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person, or (4) an estate that is subject to United States federal income tax on its income regardless of its source.
 
The United States federal income tax consequences to a partner in an entity or arrangement treated as a partnership, for United States federal income tax purposes, that holds BPW common stock generally will depend on the status of the partner and the activities of the partnership. Partners in a partnership holding BPW common stock should consult their own tax advisors.


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None of BPW, Talbots or Merger Sub has requested a ruling from the Internal Revenue Service in connection with the merger or related transactions. Accordingly, the discussion below neither binds the Internal Revenue Service nor precludes it from adopting a contrary position. Furthermore, no opinion of counsel has been, or is expected to be, rendered with respect to the tax consequences of the merger or related transactions.
 
Tax Consequences of the Merger Generally
 
The receipt of Talbots common stock and cash instead of fractional shares of Talbots common stock in exchange for BPW common stock in the merger is generally expected to be treated as a taxable transaction for United States federal income tax purposes. In general, a U.S. holder whose shares of BPW common stock are converted into the right to receive Talbots common stock and cash instead of fractional shares of Talbots common stock in the merger is generally expected to recognize capital gain or loss for United States federal income tax purposes in an amount equal to the difference, if any, between (1) the sum of the fair market value of the Talbots common stock received in the merger plus the amount of any cash received instead of fractional shares of Talbots common stock (referred to as the amount realized) and (2) the stockholder’s adjusted tax basis in the shares of BPW common stock exchanged in the merger. Gain or loss, as well as the holding period, will be determined separately for each block of shares (i.e., shares acquired at the same cost in a single transaction) surrendered pursuant to the merger. Such gain or loss will be long-term capital gain or loss provided that a shareholder’s holding period for such shares is more than one year at the time of the consummation of the merger. Long-term capital gains of individuals are generally eligible for reduced rates of taxation. The deductibility of capital losses is subject to certain limitations. A holder’s tax basis in the shares of Talbots common stock received pursuant to the merger will be equal to the fair market value of those shares on the date of the consummation of the merger and the holding period of those shares will begin on the date following the date of the consummation of the merger.
 
It is possible that the surrender of shares of BPW common stock by the sponsors of BPW pursuant to the BPW sponsors’ agreement (referred to as the surrender) could have an adverse effect on BPW stockholders who receive Talbots common stock in the merger. The Internal Revenue Service might contend that, for United States federal income tax purposes, shares of Talbots common stock should be treated as having been issued in the merger based on BPW stockholders’ ownership of BPW common stock prior to the surrender, followed by a transfer by the sponsors of BPW to the other BPW stockholders of an amount of Talbots common stock equal to the excess of the amount received by the other BPW stockholders over the amount that such stockholders would have received if the BPW sponsors had not surrendered any shares. Under this theory, a portion of the amount realized by each BPW stockholder (other than the sponsors of BPW) could be recharacterized as ordinary income, resulting in a corresponding reduction in such BPW stockholder’s capital gain or an increase in such BPW stockholder’s capital loss. In light of the absence of controlling authority directly on point, no assurance can be given as to whether the Internal Revenue Service would take such a position or, if it did, whether it would prevail.
 
Backup Withholding
 
If you are a non-corporate holder of BPW common stock you may be subject to information reporting and backup withholding (currently at a rate of 28%) on any cash payments you receive in connection with the merger. You generally will not be subject to backup withholding, however, if you:
 
  •  furnish a correct taxpayer identification number, certify that you are not subject to backup withholding on the substitute Form W-9 or successor form included in the election form/letter of transmittal you will receive and otherwise comply with all the applicable requirements of the backup withholding rules, or
 
  •  provide proof that you are otherwise exempt from backup withholding.
 
Any amounts withheld under the backup withholding rules will generally be allowed as a refund or credit against your United States federal income tax liability, provided you timely furnish the required information to the Internal Revenue Service.
 
This summary of certain material United States federal income tax consequences is for general information only and is not tax advice. Holders are urged to consult their tax advisors with respect to the application of United States federal income tax laws to their particular situations as well as any tax consequences arising under the United States federal estate or gift tax rules, or under the laws of any state, local, foreign or other taxing jurisdiction or under any applicable tax treaty.


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COMPARISON OF RIGHTS OF TALBOTS AND BPW STOCKHOLDERS
 
The following is a summary of certain material differences between the rights of holders of BPW common stock and the rights of holders of Talbots common stock, but it is not a complete description of those differences. These differences arise from the governing documents of the two companies, including Talbots’ amended certificate of incorporation and amended and restated bylaws and BPW’s amended and restated certificate of incorporation and bylaws. Talbots and BPW are each Delaware corporations and are governed by the DGCL. After completion of the merger, the rights of BPW stockholders who become Talbots stockholders will be governed by the DGCL and Talbots’ amended certificate of incorporation and bylaws. The following is a comparison of the material rights of the holders of shares of Talbots common stock and the holders of shares of BPW common stock, but it is not a complete description of those rights. We urge you to read each of the Talbots amended and restated certificate of incorporation and bylaws in its entirety. For additional information, see “Where You Can Find More Information” below.
 
Capitalization
 
Talbots.  Talbots is authorized under its certificate of incorporation to issue 200,000,000 shares of common stock, par value $0.01 per share, and no shares of preferred stock.
 
BPW.  The total number of shares of all classes of securities authorized under BPW’s amended and restated certificate of incorporation is 201,000,000 shares, comprised of 200,000,000 shares of common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share. As of January 15, 2010, there were 41,176,471 shares of common stock issued and outstanding and there were no shares of preferred stock issued and outstanding.
 
Voting Rights
 
Talbots.  Talbots’ bylaws provide that each stockholder entitled to vote at any meeting of stockholders is entitled to one vote for each share of stock held by such stockholder that has voting power upon the matter in question.
 
BPW.  Pursuant to BPW’s bylaws, the holders of BPW common stock are entitled to one vote per share on all matters to be voted on by stockholders.
 
Conversion Rights
 
Talbots.  Talbots stockholders do not have the right to demand conversion of their shares into cash upon specified events.
 
BPW.  Pursuant to BPW’s amended and restated certificate of incorporation, at any time after BPW mails a proxy statement to its stockholders in connection with seeking their approval of a proposed initial business combination or an amendment of its certificate of incorporation extending its corporate existence, as the case may be, and until the business day immediately preceding the date on which such vote is to be taken, each holder of shares of BPW common stock issued in its initial public offering who votes against such business combination or such amendment to the certificate of incorporation, as the case may be, and duly exercises such stockholder’s conversion rights (defined below) will have the right, if such initial business combination is approved and completed or such amendment to the certificate of incorporation is approved, as the case may be, and such holder of shares of BPW common stock issued in its initial public offering continues to hold the shares of common stock issued in the initial public offering to be converted on the date on which the business combination is completed or on the date on which such amendment to the certificate of incorporation is approved, as the case may be, to convert (we refer to these rights as the conversion rights) such shares of common stock issued in the initial public offering held by such person into a cash amount per share (calculated two business days prior to the completion of such initial business combination or two business days prior to the stockholder vote on the certificate of incorporation amendment, as the case may be) equal to the quotient determined by dividing (i) the aggregate amount then on deposit in the trust account established by BPW in connection with the initial public offering (including deferred underwriting discounts and commissions incurred in connection with the initial public offering being held in the


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trust account and including interest income earned on the trust account, net of income taxes previously paid on such interest income and net of interest income previously released to BPW to fund its working capital and general corporate requirements) by (ii) the total number of shares of common stock issued in the initial public offering (less, in the case of a conversion in connection with the stockholder vote required to approve an initial business combination, the number of shares of common stock issued in the initial public offering converted in connection with the approval of the certificate of incorporation amendment); provided that a holder of shares of BPW common stock issued in its initial public offering together with any affiliate or any other person or entity with whom or which such stockholder is acting in concert or as a partnership, syndicate or other group for the purposes of acquiring, holding or disposing of BPW’s securities, shall be restricted from seeking conversion rights with respect to more than 10% of the total number of shares of common stock issued in the initial public offering. Shares of common stock issued in the initial public offering converted in connection with the stockholder vote to approve the certificate of incorporation amendment and the stockholder vote to approve our initial business combination will be aggregated for purposes of this 10% limit.
 
Payment of the amounts necessary to satisfy the conversion rights duly exercised shall be made as promptly as practicable following the completion of the business combination or approval of the certificate of incorporation amendment, as the case may be, and satisfaction by them of the conversion requirements (defined below). Holders of shares of BPW common stock issued in its initial public offering who do not exercise their conversion rights will retain their shares of common stock issued in the initial public offering and shall be deemed to have given their consent to the release of the remaining funds in the trust account to BPW. The exercise of conversion rights by holders of shares of BPW common stock issued in its initial public offering is conditioned on such stockholder meeting the specific requirements and following the specific procedures for the exercise of such conversion rights set forth in the proxy statement sent to BPW’s stockholders relating to the approval of a proposed initial business combination or the certificate of incorporation amendment, as the case may be. We refer to these requirements as the “conversion requirements”.
 
Stockholder Action by Written Consent
 
The DGCL allows actions to be taken by stockholders by written consent to be made by the holders of the minimum number of votes that would be needed to approve a matter at an annual or special meeting of stockholders, unless this right to act by written consent is denied in the certificate of incorporation.
 
Talbots.  The Talbots certificate of incorporation does not prohibit stockholders from taking action by written consent.
 
BPW.  Pursuant to BPW’s amended and restated certificate of incorporation, any action required or permitted to be taken by BPW stockholders must be effected at a duly called annual or special meeting and may not be effected by written consent.
 
Dividends and Trust Account Distributions
 
The DGCL permits a corporation to declare and pay dividends out of “surplus” or, if there is no “surplus,” out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. “Surplus” is defined as the excess of the net assets of the corporation over the amount determined to be the capital of the corporation by the board of directors. The capital of the corporation is typically calculated to be (and cannot be less than) the aggregate par value of all issued shares of capital stock. Net assets equals the fair value of the total assets minus total liabilities. The DGCL also provides that dividends may not be paid out of net profits if, after the payment of the dividend, capital is less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets.
 
Talbots.  The Talbots certificate of incorporation and by-laws are silent with respect to dividends, so the provision of the DGCL described above applies.
 
BPW.  Pursuant to BPW’s amended and restated certificate of incorporation, the holders of shares of BPW common stock are entitled to receive such dividends and other distributions, when, as and if declared by the board of directors from time to time. Dividends are payable in cash, property or shares of common stock or preferred stock.


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The holders of shares of BPW common stock from the initial public offering are entitled to receive distributions from the trust account established in connection with BPW’s initial public offering only in the event of a liquidation of BPW or in the event such stockholder exercises conversion rights. In no other circumstances will any stockholder have any right or interest of any kind in or to the trust account. No stockholders of BPW other than holders of BPW common stock from the initial public offering are entitled to receive distributions of any kind from the trust account.
 
Number of Directors
 
Under the DGCL, the board of directors of a corporation must consist of one or more members, each of whom must be a natural person.
 
Talbots.  The bylaws of Talbots state that the board of directors will consist of not fewer than five nor more than fifteen members, the number to be determined from time to time by the Talbots board of directors. There are currently eight members of the Talbots board of directors.
 
BPW.  BPW’s certificate of incorporation provides that the number of directors of BPW, other than those who may be elected by the holders of one or more series of preferred stock voting separately by class or series, shall be fixed from time to time exclusively by the board of directors pursuant to a resolution adopted by a majority of the “whole board.” “Whole board” means the total number of directors that BPW would have if there were no vacancies on the board of directors. BPW’s bylaws provide that the board of directors shall consist of not less than one nor more than fifteen members, the exact number of which shall initially be fixed by the board of directors from time to time. There are currently five board members of the BPW board of directors.
 
Classification of Directors
 
The DGCL permits the directors of any corporation to be divided into one, two or three classes, with the term of office of those directors of the first class expiring at the first annual meeting held after such classification becomes effective, of the second class one year thereafter, of the third class two years thereafter, with directors being chosen for a full term to replace those whose terms expire at each annual election thereafter.
 
Talbots.  The board of directors of Talbots is not classified: all Talbots directors are elected annually to serve one-year terms.
 
BPW.  The members of BPW’s board of directors are classified into three classes, the members of one class of which are elected at each meeting of the stockholders. Each board class is elected to hold office for a three-year term and until the successors of such class have been elected and qualified. Any increase or decrease in the number of directors shall be apportioned by the board of directors among the classes so as to maintain the number of directors in each class as nearly equal as possible, but in no case will a decrease in the number of directors shorten the term of any incumbent director.
 
Election of Directors
 
The DGCL provides that directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors, and that a bylaw amendment adopted by stockholders which specifies the votes that shall be necessary for the election of directors shall not be further amended or repealed by the board of directors.
 
Talbots.  Talbots directors are elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.
 
BPW.  The BPW bylaws provide that directors shall be elected by a plurality of the votes cast at each annual meeting of stockholders and that each director so elected shall hold office until the next annual meeting of stockholders in which such director’s class stands for election and until such director’s successor is duly elected and qualified, or until such director’s earlier death, resignation or removal.


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Removal of Directors
 
The DGCL provides that in the absence of cumulative voting or a classified board, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote in an election of directors.
 
Talbots.  Talbots directors may be removed with or without cause by the holders of a majority of the shares then entitled to vote at an election of directors.
 
BPW.  BPW’s certificate of incorporation provides that any or all of the BPW directors may be removed from office at any time, but only for cause and only by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of BPW capital stock entitled to vote generally in the election of directors, voting together as a single class.
 
Vacancies
 
Talbots.  The Talbots bylaws provide that vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class or from any other cause may be filled by a majority of the directors then in office, although less than a quorum, or by the sole remaining director. Any director elected or appointed to fill a vacancy shall hold office until the next annual meeting of the stockholders and his or her successor is elected and qualified or until his or her earlier resignation or removal.
 
BPW.  The BPW certificate of incorporation provides that newly created directorships resulting from an increase in the number of directors and any vacancies on the BPW board of directors resulting from death, resignation, retirement, disqualification, removal or other cause may be filled solely by a majority vote of the BPW directors then in office, even if less than a quorum, or by a sole remaining director (and not by stockholders), and that any director so chosen shall hold office for the remainder of the full term of the class of directors to which the new directorship was added or in which the vacancy occurred and until his or her successor has been elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, disqualification or removal.
 
Amendments to Certificate of Incorporation
 
Under the DGCL, an amendment to the certificate of incorporation requires (1) the approval of the board of directors, (2) the approval of the holders of a majority of the outstanding stock entitled to vote upon the proposed amendment, and (3) the approval of the holders of a majority of the outstanding stock of each class entitled to vote thereon as a class.
 
Talbots.  The Talbots amended and restated certificate of incorporation is silent with respect to amendment, so the DGCL requirements described above govern amendment of the Talbots certificate of incorporation.
 
BPW.  The BPW certificate of incorporation provides that BPW reserves the right to amend, alter, change or repeal any provision contained in the certificate of incorporation in the manner prescribed by the certificate of incorporation and the DGCL, and provides that other than with respect to the provisions of the certificate of incorporation addressing liability and indemnification of directors, officers and others, all rights, preferences and privileges conferred by the certificate of incorporation upon stockholders, directors and any other persons are granted subject to this right of amendment. The BPW certificate of incorporation also provides that, in addition to any other vote that may be required by law or the terms of any preferred stock:
 
  •  the affirmative vote of the holders of a majority of the voting power of all then outstanding shares of capital stock of BPW entitled to vote generally in the election of directors, voting together as a single class, is required to amend, alter or repeal, or adopt any provision inconsistent with the purpose and intent of, Article V (Board of Directors), Article VI (Amendments to Bylaws), Article VII (Meetings of Stockholders; Action By Written Consent) or Article X (Amendment to Certificate of Incorporation),


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  •  Article IX of the certificate of incorporation, which concerns stockholder vote requirements for a business combination or an amendment to the certificate of incorporation relating to BPW’s length of existence, may only be amended by:
 
  •  the vote of the BPW board of directors and the affirmative vote of the holders of at least 90% of the voting power of BPW’s then outstanding common stock, or