Subsequent Event

On May 17, 2015, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Ascena Retail Group, Inc., a Delaware corporation (“Ascena”), and Avian Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of Ascena (“Merger Sub”). The Merger Agreement provides for, among other things, the merger of Merger Sub with and into the Company, with the Company continuing as the surviving corporation (the “Merger”). The Boards of Directors of both companies, by unanimous vote, approved the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement.

Subject to the terms and conditions of the Merger Agreement, upon the closing of the Merger, which is expected to occur in the second half of 2015, each outstanding share of common stock of the Company (other than shares, if any, held by Ascena, Merger Sub and the Company and shares with respect to which appraisal rights have been properly demanded in accordance with the Delaware General Corporation Law) will be converted into the right to receive (i) $37.34 in cash and (ii) 0.68 of a share of Ascena common stock, par value $0.01 per share, with cash payable in lieu of fractional shares of Ascena common stock.


8.	Subsequent Event (Continued)

Completion of the Merger is subject to various closing conditions, including: approval by the Company’s stockholders of the Merger; the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; the absence of any governmental order prohibiting the consummation of the transactions contemplated by the Merger Agreement; the U.S. Securities and Exchange Commission (the “SEC”) declaring effective the Form S-4 to be filed by Ascena with respect to the shares of Ascena common stock to be issued in the Merger; the shares of Ascena common stock to be issued in the Merger being approved for listing on the NASDAQ Global Select Market; the accuracy of the representations and warranties of each party (subject to certain materiality standards) and the material compliance by each party with its obligations under the Merger Agreement. Consummation of the Merger is not subject to a financing condition and does not require approval by Ascena stockholders.

The Merger Agreement contains customary representations, warranties and covenants, including, among others, covenants providing for each of the parties to conduct its business in the ordinary course during the period between the execution of the Merger Agreement and the closing and to use reasonable best efforts to obtain required government approvals, subject to certain exceptions. The Merger Agreement also includes covenants requiring the Company (1) not to solicit, or enter into discussions with third parties relating to, alternative business combination transactions during the period between the execution of the Merger Agreement and the closing, subject to fulfillment of certain fiduciary requirements of the Company’s Board and (2) to call and hold a special meeting of the Company’s stockholders to approve the Merger and, subject to certain exceptions, not to withdraw, amend or modify in a manner adverse to Ascena the recommendation of the Company’s Board that the Company’s stockholders approve the Merger.

The Merger Agreement contains certain termination rights, including the right of either party to terminate the Merger Agreement if the Merger does not occur by February 17, 2016, the right of the Company to terminate the Merger Agreement to accept a superior proposal for an alternative business combination (as long as the Company complies with certain notice and other requirements under the Merger Agreement) and the right of Ascena to terminate due to a change of recommendation by the Company’s Board. Upon termination of the Merger Agreement by the Company or Ascena upon specified conditions, a termination fee of $48,270,000 may be payable by the Company. In addition, upon a termination of the Merger Agreement for the failure to obtain the approval of the Company’s stockholders, the Company may be required to reimburse Ascena for up to $5 million in expenses related to the Merger Agreement.

Ascena has obtained a commitment letter from Goldman, Sachs & Co. and Guggenheim Securities (the “Lenders”) for the purpose of financing the transactions contemplated by the Merger Agreement. The obligations of the Lenders to provide financing under the commitment letter are subject to certain conditions.

For further information on the Merger and the Merger Agreement, please refer to the Current Report on Form 8-K filed by the Company on May 18, 2015 and the Merger Agreement and other documents filed as exhibits thereto. The foregoing description of the Merger does not purport to be complete, is subject to, and is qualified in its entirety by reference to, the Merger Agreement.