425

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) March 22, 2010

THE TALBOTS, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware
(State or other jurisdiction
of incorporation) 1-12552
(Commission
File Number) 41-1111318
(I.R.S. Employer
Identification No.)

One Talbots Drive, Hingham, Massachusetts
(Address of principal executive offices) 02043
(Zip Code)

Registrant’s telephone number, including area code (781) 749-7600

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

þ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INFORMATION TO BE INCLUDED IN THE REPORT

Section 8 — Other Events

Item 8.01 Other Events.

     On March 22, 2010, an affiliated group of hedge funds purportedly holding outstanding warrants (the “BPW Warrants”) to purchase shares of common stock of BPW Acquisition Corp. (“BPW”) filed an action captioned Pentwater Growth Fund, Ltd., et al. v. BPW Acquisition Corp., et al., C.A. No. 5367-VCS, in the Court of Chancery of the State of Delaware (the “Chancery Court”) against BPW and The Talbots, Inc. (“Talbots”).

     The complaint alleges that BPW has breached the Warrant Agreement, dated as of February 26, 2008, by and between BPW and Mellon Investor Services, LLC, related to the BPW Warrants (the “Warrant Agreement”) and its implied covenant of good faith and fair dealing by proposing certain amendments to the Warrant Agreement by way of a preliminary proxy statement filed by BPW with the Securities and Exchange Commission on March 16, 2010 (the “Consent Solicitation”). The complaint seeks a declaration that the proposed modifications to the Warrant Agreement constitute breach of contract and/or a breach of the implied covenant of good faith and fair dealing. In such complaint, plaintiffs indicate they do not intend to participate in the Consent Solicitation or tender their BPW Warrants in the exchange offer for such BPW Warrants currently being conducted by Talbots. On March 23, 2010 Plaintiffs subsequently filed a motion for a temporary restraining order, seeking to enjoin both the consummation of Talbots’ outstanding exchange offer for BPW Warrants and the effectiveness of the Consent Solicitation pending the Chancery Court’s ruling on the legality of the proposed amendments. Talbots believes the litigation is without merit and intends to defend against the claims vigorously.

     The foregoing descriptions regarding the complaint and motion for temporary restraining order filed in connection with this litigation are only summaries of each such complaint and motion for temporary restraining order and are qualified in their entirety to reference to such complaint and motion for temporary restraining order, which are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively to this Form 8-K and are incorporated herein by reference.

Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit
Number		Exhibit Title
	99.1	Pentwater Growth Fund, Ltd., et al. v. BPW Acquisition Corp., et al. Complaint, Docket No. C.A. 5367-VCS, filed in the Court of Chancery of the State of Delaware on March 22, 2010
	99.2	Pentwater Growth Fund, Ltd., et al. v. BPW Acquisition Corp., et al., Motion for a Temporary Restraining Order, Docket No. C.A. 5367-VCS, filed in the Court of Chancery of the State of Delaware on March 23, 2010

Cautionary Statement and Certain Risk Factors to Consider

     In addition to the information set forth in this Form 8-K, you should carefully consider the risk factors and risks and uncertainties included in each of Talbots’ and BPW’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as well as in this Form 8-K below.

     This Form 8-K contains forward-looking information. These statements may be identified by such forward-looking terminology as “expect,” “achieve,” “plan,” “look,” “believe,” “anticipate,” “outlook,” “will,” “would,” “should,” “potential,” or similar statements or variations of such terms. All of the information concerning Talbots’ or BPW’s outlook, future liquidity, future financial performance and results, future credit facilities and availability, future cash flows and cash needs, and other future financial performance or financial position, as well as assumptions underlying such information, constitute forward-looking information. Forward looking statements are

based on a series of expectations, assumptions, estimates and projections about BPW and/or Talbots, are not guarantees of future results or performance, and involve substantial risks and uncertainty, including assumptions and projections concerning liquidity, internal plans, regular-price and markdown selling, operating cash flows, and credit availability for all forward periods. Business and forward-looking statements involve substantial known and unknown risks and uncertainties, including the following risks and uncertainties:

• Talbots’ and BPW’s ability to satisfy the conditions to consummation of the contemplated transactions;

• BPW’s and Talbots’ ability to obtain the necessary participation of BPW warrant holders in the exchange of BPW warrants for Talbots stock or warrants;

• Talbots’ ability to satisfy the conditions to the $200 million credit commitment provided by GE or, failing that, to obtain sufficient alternative financing on a timely basis;

• the availability of proceeds of the BPW trust account following any exercise by stockholders of their conversion rights and the incurrence of transaction expenses;

• the continuing material impact of the deterioration in the U.S. economic environment over the past two years on Talbots’ business, continuing operations, liquidity, financing plans, and financial results, including substantial negative impact on consumer discretionary spending and consumer confidence, substantial loss of household wealth and savings, the disruption and significant tightening in the U.S. credit and lending markets, and potential long-term unemployment levels;

• Talbots’ level of indebtedness and its ability to refinance or otherwise address its short-term debt maturities, including all Aeon short-term indebtedness due April 16, 2010, on the terms or in amounts needed to satisfy maturities and to address its longer-term liquidity and cash needs, as well as its working capital, strategic initiatives and other cash requirements;

• any lack of sufficiency of available cash flows and other internal cash resources to satisfy all future operating needs and other Talbots cash requirements;

• satisfaction of all borrowing conditions under all Aeon credit facilities including no events of default, accuracy of all representations and warranties, solvency conditions, absence of material adverse effect or change, and all other borrowing conditions;

• risk of any default under Talbots’ Aeon credit facilities;

• Talbots’ ability to achieve its 2009 financial plan for operating results, working capital, liquidity and cash flows;

• risks associated with Talbots’ appointment of and transition to a new exclusive global merchandise buying agent and that the anticipated benefits and cost savings from this arrangement may not be realized or may take longer to realize than expected, and risk that upon any cessation of the relationship for any reason Talbots would be able to successfully transition to an internal or other external sourcing function;

• Talbots’ ability to continue to purchase merchandise on open account purchase terms at existing or future expected levels and with extended payment of accounts payable and risk that suppliers could require earlier or immediate payment or other security due to any payment concern or timing;

• risks and uncertainties in connection with any need to source merchandise from alternate vendors;

• any disruption in Talbots’ supply of merchandise;

• Talbots’ ability to successfully execute, fund, and achieve supply chain initiatives, anticipated lower inventory levels, cost reductions, and other initiatives;

• the risk that anticipated benefits from the sale of the J. Jill brand business may not be realized or may take longer to realize than expected and the risk that estimated or anticipated costs, charges and liabilities to settle and complete the transition and exit from and disposal of the J. Jill brand business, including both retained obligations and contingent risk for assigned obligations, may materially differ from or be materially greater than anticipated;

• Talbots’ ability to accurately estimate and forecast future regular-price and markdown selling, operating cash flows and other future financial results and financial position;

• the success and customer acceptance of Talbots merchandise offerings;

• future store closings and success of and necessary funding for closing underperforming stores;

• risk of impairment of goodwill and other intangible and long-lived assets; and

• the risk of continued compliance with NYSE continued listing conditions.

     All of the forward-looking statements are as of the date of this Form 8-K only. In each case, actual results may differ materially from such forward-looking information. Neither Talbots nor BPW can give any assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse change in one or more of the risk factors or risks and uncertainties referred to in this Form 8-K or included in Talbots’ and/or BPW’s periodic reports filed with the Securities and Exchange Commission could materially and adversely affect Talbots’ and/or BPW’s continuing operations and Talbots’ and/or BPW’s future financial results, cash flows, prospects, and liquidity. Except as required by law, neither Talbots nor BPW undertakes or plans to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections, or other circumstances affecting such forward-looking statements occurring after the date of this Form 8-K, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by Talbots and BPW following this Form 8-K which modify or impact any of the forward-looking statements contained in this Form 8-K will be deemed to modify or supersede such statements in this Form 8-K.

Important Additional Information and Where to Find It

     This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote, consent or approval. Talbots has filed with the SEC, and the SEC has declared effective, a Registration Statement on Form S-4 containing a Prospectus/Proxy Statement/Information Statement regarding the proposed merger transaction between Talbots and BPW. The final Prospectus/Proxy Statement/Information Statement regarding the proposed merger transaction has been mailed to stockholders of Talbots and BPW. Talbots has also filed with the SEC, and the SEC has declared effective, a Registration Statement on Form S-4 containing a Prospectus/Offer to Exchange and other documents, as required, in connection with the warrant exchange offer. The Prospectus/Offer to Exchange and related offer documents have been mailed to warrantholders of BPW. Investors and security holders are urged to read the Prospectus/Proxy Statement/Information Statement, the Prospectus/Offer to Exchange, any amendments or supplements thereto and any other relevant documents filed with the SEC when available carefully because they contain important information. Investors and security holders will be able to obtain free copies of the Registration Statements, the final Prospectus/Proxy Statement/Information Statement, the Prospectus/Offer to Exchange, any amendments or supplements thereto and other documents filed with the SEC by Talbots and BPW through the web site maintained by the SEC at www.sec.gov. In addition, investors and security holders will be able to obtain free copies of the Registration Statements, the final Prospectus/Proxy Statement/Information Statement, the Prospectus/Offer to Exchange, and any amendments or supplements thereto when they become available from Talbots by requesting them in writing at Investor Relations Department, One Talbots Drive, Hingham, MA 02043, or by telephone at (781) 741-4500. The documents filed by BPW may also be obtained by requesting them in writing to Doug McGovern at BPW Acquisition Corp., 767 Fifth Avenue, 5th Floor, NY, NY 10153, or by telephone at (212) 287-3200.

     The offer by Talbots to exchange all warrants exercisable for shares of BPW common stock for shares of Talbots common stock and warrants exercisable for shares of Talbots common stock, subject to the election and proration procedures set forth in the Prospectus/Offer to Exchange, will only be made pursuant to such Prospectus/Offer to Exchange, the letter of election and transmittal and other offer documents, as amended or supplemented. The warrant exchange offer is scheduled to expire at 12:00 midnight, New York City time, at the end of March 26, 2010, unless extended. If the offer is extended, Talbots will notify the exchange agent for the offer and issue a press release announcing the extension on or before 9:00 a.m. New York City time on the first business day following the date the exchange offer was scheduled to expire.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	THE TALBOTS, INC.
Dated: March 25, 2010	By:	/s/ Richard T. O’Connell, Jr.
		Name:	Richard T. O’Connell, Jr.
		Title:	Executive Vice President, Real Estate, Legal, Store Planning & Design and Construction, and Secretary

Exhibit
Number		Exhibit Title
	99.1	Pentwater Growth Fund, Ltd., et al. v. BPW Acquisition Corp., et al. Complaint, Docket No. C.A. 5367-VCS, filed in the Court of Chancery of the State of Delaware on March 22, 2010
	99.2	Pentwater Growth Fund, Ltd., et al. v. BPW Acquisition Corp., et al., Motion for a Temporary Restraining Order, Docket No. C.A. 5367-VCS, filed in the Court of Chancery of the State of Delaware on March 23, 2010

EX-99.1

EFiled: Mar 22 2010 4:45PM EDT
Transaction ID 30180052
Case No. 5367-

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

	:
PENTWATER GROWTH FUND, LTD.,	:
OCEANA MASTER FUND, LTD., and	:
PENTWATER EQUITY	:
OPPORTUNITIES MASTER FUND,	:
	:
	:
Plaintiffs,	:
	:
v.	:	C. A. No.
	:
BPW ACQUISITION CORP.,	:
a Delaware corporation, and	:
THE TALBOTS, INC.,	:
a Delaware corporation,	:
	:
Defendants.	:

VERIFIED COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF

     Plaintiffs Pentwater Growth Fund, Ltd., Oceana Master Fund, Ltd., and Pentwater Equity Opportunities Master Fund (collectively, “Pentwater” or “Plaintiffs”), by their undersigned counsel, bring this action against defendants BPW Acquisition Corp. (“BPW” or the “Company”) and The Talbots, Inc. (“Talbots” and together with BPW, the “Defendants”), for (i) a declaration that Defendants’ attempt to amend a warrant agreement that governs the terms and conditions under which BPW’s publicly-traded warrants can be exercised constitutes a breach of contract and/or a breach of the implied covenant of good faith and fair dealing, and (ii) an injunction to enjoin both the closing of an exchange offer for the warrants and the effectiveness of the consent solicitation to amend the warrant agreement until such time as this Court rules on the legality of the proposed warrant amendments. In support thereof, Pentwater hereby alleges, upon knowledge as to its own

conduct and acts in which it was involved and upon information and belief as to other matters, as follows:

NATURE OF THE ACTION

     1. BPW and Talbots signed an agreement and plan of merger on December 8, 2010, which was subsequently amended on February 17, 2010 (the “Merger”). A shareholder vote of BPW and Talbot’s shareholders approving the Merger occurred on February 24, 2010. The last remaining substantive condition to closing the Merger is an exchange offer involving BPW’s warrants. That exchange offer was launched on March 1, 2010 and is scheduled to expire at midnight on March 26, 2010. The Merger is expected to close on or about March 31, 2010.

     2. On Wednesday March 17, 2010, just nine (9) days prior to the expiration of the warrant exchange offer, BPW filed a preliminary proxy statement by which it is seeking consents to amend the warrant agreement governing the BPW warrants. The amendment seeks to decrease the Warrant Exercise Period and remove anti-dilution protections from the warrant agreement. BPW claims that it only needs a majority of public warrant holders to consent to its requested amendments despite protections contained within the warrant agreement that require written consent of all warrant holders to make such changes. BPW has chosen to file its preliminary proxy statement just nine days prior to the expiration of the warrant exchange offer in an attempt to coerce warrant holders into participating in the exchange offer. That coercion is exacerbated by the fact that there is precious little time to seek a legal remedy. The result of the proposed amendments which seek to decrease the Warrant Exercise Period and remove the anti-dilution protections would be to materially decrease the value of the BPW warrants for

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those holders who do not tender into the exchange offer. For example, if the consent solicitation is successful, non-tendering BPW warrantholders will be left with warrants having an exercise period delayed by one year and stripped of valuable and customary anti-dilution and anti-destruction provisions. The proposed warrant amendments are coercive because (i) they punish non-tendering warrantholders with the threat of economically marginalized warrants on terms significantly worse than the terms on which the warrants were purchased, and (ii) permit those who participate in the exchange to nonetheless simultaneously amend the warrant they are exchanging to the detriment of those who do not participate. The structural coerciveness aside, the proposed amendments to the warrant agreement violate the express terms of the warrant agreement itself, as well as the implied covenant of good faith and fair dealing. In particular, the proposed amendments impermissibly reduce the exercise period of the BPW warrants and also impermissibly reduce the number of shares of common stock issuable upon exercise of the warrants.

THE PARTIES

     3. Plaintiffs are all funds raised and managed by Pentwater Capital Management, LP (“Pentwater Capital”), which is a limited partnership organized under the laws of Delaware and based in Chicago, Illinois. Pentwater Capital manages $1 billion in equity and credit investments for its investors. Plaintiffs are the beneficial owners of 3,304,070 public warrants issued by BPW, which constitutes approximately 9% of the currently outstanding public warrants. Plaintiffs are also holders of BPW common stock.

     4. Defendant BPW is a blank check company — commonly referred to as a special purpose acquisition company or “SPAC” — formed on October 12, 2007 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more operating

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businesses, referred to as an “Initial Business Combination.” If BPW fails to consummate an Initial Business Combination by April 26, 2010 BPW will liquidate and distribute the proceeds held in a trust account to the Company’s public stockholders. BPW is a Delaware corporation and its registered agent for service of process is National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904.

     5. Defendant Talbots is a specialty retailer and direct marketer of women’s apparel, shoes, and accessories. At the end of fourth quarter 2009, the Company operated 580 Talbots brand stores in 46 states, the District of Columbia, and Canada. Talbots is a Delaware corporation and its registered agent for service of process is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. While this Complaint contains no cause of action against Talbots, Talbots is nevertheless made a party because Talbots is a necessary (or, at least, interested) party with respect of the relief sought herein.

JURISDICTION AND GOVERNING LAW

     6. This Court has subject matter jurisdiction over this action based on, inter alia, Section 111(a) of the Delaware General Corporation Law.

     7. While the warrant agreement at issue provides that the Company (i.e., BPW) commits to bring any action arising out of the agreement in the state or federal courts of New York, there is no such restriction on warrantholders’ ability to commence suit in any competent jurisdiction. The agreement also provides that the warrants are contracts formed under the laws of New York and shall be construed in accordance with New York law.

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FACTUAL BACKGROUND

The IPO And The Warrant Agreement

     8. On March 3, 2008, the Company consummated its initial public offering (the “IPO”). The Company sold 35,000,000 Units in the IPO. Each Unit consisted of one share of the Company’s common stock and one warrant to purchase one share of the Company’s common stock at an exercise price of $7.50 per share. Upon information and belief, warrants to purchase 35,000,000 shares of the Company’s common stock are held by public warrantholders. Upon information and belief, warrants to purchase 14,776,471 shares of the Company’s common stock are held by Perella Weinberg Partners Acquisition LP and BNYH BPW Holdings LLC (which are banks that sponsored the IPO) as well as certain of the Company’s directors.

     9. The terms of the Company’s warrants issued in the IPO (together, “Public Warrants” or “BPW Warrants”) are set forth in a Warrant Agreement dated as of February 26, 2008 (the “Warrant Agreement”). A true and correct copy of the Warrant Agreement is attached hereto as Exhibit “A.”

     10. Section 6(a) of the Warrant Agreement provides for a “Warrant Exercise Period.” For the Public Warrants, the Warrant Exercise Period is to commence “on the later of (1) the date that is l2 months from the final prospectus relating to the IPO; and (2) on the date on which the Company completes its Initial Business Combination.” (Ex. “A” at A-6.) The Warrant Exercise Period is to end upon the earlier of “(A) the date that is six years from the final prospectus relating to the IPO, and (B) the Business Day preceding the date upon which such Warrants are redeemed pursuant to Section 6(b) below or expire pursuant to Section 6(f) below.” (Id.) Upon information and belief, the Company does not

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anticipate that the Public Warrants will be redeemed pursuant to Section 6(b) or expire pursuant to Section 6(f). Accordingly, it is presently anticipated that (i) the Warrant Exercise Period will commence upon the completion of the Merger, and (ii) the Warrant Exercise Period will continue until February 26, 2014.

     11. Section 11 of the Warrant Agreement provides for certain adjustments in the number of shares of the Company’s common stock issuable upon the exercise of each warrant, including certain provisions commonly referred to as anti-dilution and anti-destruction provisions. (See id. at A-11.) These provisions are intended to protect the warrantholders in the event of certain events that, absent such provisions, would have the effect of decreasing the proportional equity interest in the Company available to a warrantholder upon the exercise of a warrant. In addition, Section 11(g) expressly obligates the Company’s board of directors (“Board”) to exercise “good faith judgment” to make further adjustments in accordance with the “essential intent and principles” of the section “to protect such [warrantholders’] purchase rights[.]” (Id.)

     12. Section 18 of the Warrant Agreement sets forth the procedures that must be followed for the Warrant Agreement to be amended. (See id. at A-18.) Section 18 requires that the Company obtain the consent of each and every warrantholder before the Company may amend the Warrant Agreement to “reduce the Warrant Exercise Period.” (Id.) Section 18 further provides that the consent of each and every warrantholder is needed before the Company may amend the Warrant Agreement to “reduce the number of Warrant Shares issuable upon the exercise of a Warrant except as contemplated by Section 11.” (Id.) Neither the Warrant Exercise Period (in Section 6) nor the provisions of Section 11 of the Warrant Agreement have ever been amended.

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BPW And Talbots Execute The Merger Agreement

     13. On December 8, 2009, the Company publicly announced that it had entered into a merger agreement to be acquired by Talbots (the “Merger Agreement”). On February 24, 2010, the Company’s stockholders approved the Merger Agreement. Pursuant to the Merger Agreement, a direct wholly-owned subsidiary of Talbots will be merged with and into BPW, with BPW being the surviving entity. BPW publicly disclosed that it expected the Merger to close in the first quarter of calendar year 2010. It also publicly disclosed that it anticipates the Merger will constitute the Initial Business Combination by reference to which the Warrant Exercise Period is calculated.

     14. In the Merger, each share of BPW common stock (other than shares of BPW common stock owned by Talbots 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 under BPW’s charter to receive cash), will be converted into the right to receive a number of shares of Talbots common stock having an implied value of approximately $11.25.

Talbots Launches An Exchange Offer For BPW Warrants

     15. In connection with the Merger, Talbots is currently conducting an offer to exchange (the “Exchange Offer”) each BPW Warrant for shares of common stock, par value $0.01 per share, of Talbots (the “Talbots Common Stock”) or warrants to acquire shares of Talbots Common Stock (the “Talbots Warrants”). The Exchange Offer commenced on March 1, 2010, simultaneously with the filing by Talbots of a Registration Statement to cover the common stock issuable in connection with the Exchange Offer. The Exchange Offer is set to expire at midnight on March 26, 2010 and is subject to a

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minimum tender condition requiring that at least 90% of the Public Warrants be tendered and not properly withdrawn prior to expiration of the Exchange Offer.

     16. Pursuant to the Exchange Offer, BPW Warrants may be exchanged for either (i) a number of shares of Talbots Common Stock determined by using the same exchange ratio used to determine the Merger consideration, or (ii) a number of Talbots Warrants based on an exchange ratio equal to 10 times the Talbots Common Stock exchange ratio used to determine the Merger consideration.

     17. Holders of BPW Warrants who exchange them for Talbots’ Warrants will end up holding warrants worth substantially less that warrants that are not voluntarily exchanged. Despite an economically sound rationale for some holders of Public Warrants to decline the Exchange Offer, Defendants, as explained below, are attempting to amend impermissibly the warrants to disincentivize holders of BPW Warrants from retaining those more valuable warrants and coerce them into accepting the Exchange Offer.

To Coerce Warrantholders To Tender Into The Offer,
BPW Solicits Consents To Impermissibly Amend The Warrant Agreement

     18. The Company filed a Preliminary Proxy Statement on March 17, 2010 (the “Proxy”) for the purpose of soliciting consents in respect of each outstanding Warrant in favor of authorization to amend the Warrant Agreement (the “Consent Solicitation”). A true and correct copy of the Proxy is attached hereto as Exhibit “B.” Contrary to the unanimity requirement of Section 18 of the Warrant Agreement, the Consent Solicitation is premised on the (incorrect) notion that only majority consent is needed for an amendment. The Consent Solicitation works in tandem with the Exchange Offer to pressure BPW’s warrantholders to tender into the Exchange Offer by ensuring that non-tendering warrantholders will be left with watered-down BPW Warrants upon completion of the

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Merger. For example, and as described more fully below, the Company seeks to amend the Warrant Agreement to reduce the Warrant Exercise Period so that unexchanged BPW Warrants will not be exercisable for a period of one year from the date of the completion of the Merger. This materially and detrimentally alters the rights of warrantholders to exercise their BPW Warrants immediately upon the completion of the Merger, as is currently allowed by the Warrant Agreement.

     19. Further, unexchanged Warrants also will be stripped of certain anti-dilution and other protections currently in effect under the Warrant Agreement. Following the Merger, Talbots will be able to take certain actions with respect to the Talbots Common Stock, including common stock dividends, stock splits, extraordinary dividends (including distributions of cash, securities or other assets) and similar actions, without any required anti-dilution adjustment to the terms of the unexchanged BPW Warrants. For example, in the event of a stock split with respect to the Talbots Common Stock, the terms of the unexchanged BPW Warrants as amended by the Warrant Amendment would provide for no corresponding increase to the number of shares of Talbots Common Stock issuable on exercise of unexchanged BPW Warrants and corresponding decrease of the exercise price.

     20. In addition, if the Warrant Amendment is approved, upon the occurrence of certain future events, including without limitation certain reclassifications, reorganizations, mergers or consolidations involving Talbots or BPW, or upon a dissolution of Talbots or BPW following certain asset sales or transfers involving Talbots or BPW, the Board at such time will have the option to cancel each unexchanged BPW Warrant in exchange for the right to receive a cash payment equal to the excess, if any, of the fair market value (as determined by the Board in its sole discretion) of the consideration that the holder of such

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unexchanged BPW Warrant would have received if such holder had exercised such unexchanged BPW Warrant immediately prior to such event, over the exercise price then applicable to such unexchanged BPW Warrant.

     21. Approval of the Warrant Amendment further harms the holders of unexchanged BPW Warrants because, in connection with the completion of the Exchange Offer and the Merger, BPW will seek to delist the BPW Warrants from trading on the NYSE Amex. Unexchanged BPW Warrants will therefore cease to be eligible for trading on any public market.

     22. Specifically, the Warrant Amendment would delete or alter certain provisions of the Warrant Agreement as follows:

     a. Section 6(a), which includes the Warrant Exercise Period, would be revised to modify the exercise period such that the exercise period would commence on the earlier of (i) 12 months from the date on which BPW completes its Initial Business Combination, which is anticipated to be the Merger, and (ii) a determination of the board of directors of BPW, in its discretion, that the Warrant Exercise Period has commenced, and, in each case would end on the earlier of (x) the date this is earlier of (1) seven years from the date of the final prospectus relating to BPW’s initial public offering (i.e., February 26, 2015) and (2) in the event that the Warrant Exercise Period with respect to BPW Warrants other than BPW Warrants issued to BPW’s sponsors prior to BPW’s initial public offering shall have commenced pursuant clause (ii) above, six years from the date of the final prospectus relating to BPW’s initial public offering (i.e., February 26, 2014) plus the number of days following the date on which BPW completes its Initial

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Business Combination up to and including the date of such public announcement, and (y) the business day preceding the date on which the BPW Warrants are redeemed or expires;

     b. Section 11(a), which provides for an increase in the number of shares of common stock issuable upon exercise of BPW Warrants in the event of stock dividends and stock splits, would be deleted in its entirety. This, in conjunction with the amendment of Section 6(a) to delay the commencement of the Warrant Exercise Period, provides a particularly strong example of the coercive effect of the Offer and the Consent Solicitation. Assume a share of Talbots Common Stock is worth approximately $12. Assume further a post-Merger 2:1 stock split. Absent the Warrant Amendments, the BPW Warrants would be adjusted to double the number of shares issuable upon exercise. Giving effect to the Warrant Amendments, a BPW Warrantholder like Pentwater is left with warrants having no anti-dilution protection and an exercise price of $7.50 for shares of common stock now worth $6.00. Just as bad, if not worse, the holder of post-Merger unexchanged BPW Warrants will be prevented from exercising for one year following the Merger, leaving that holder completely unprotected from the dilutive effect of a stock split at any time within one year after the Merger. Yet, the ability of Talbots to do a stock split without having to increase the number of shares upon exercise is precisely one of the publicly disclosed purposes for the Warrant Amendments;

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     c. Section 11(c), a so-called anti-destruction clause, would be revised to (i) exclude any increase in the number of outstanding shares of Talbots Common Stock resulting from a stock dividend payable in shares of Talbots Common Stock or from a split-up of shares of Talbots Common Stock or other similar event and (ii) provide that the Board at such time will have the option to cancel each unexchanged BPW Warrant in exchange for the right to receive a cash payment upon certain reclassifications, reorganizations, mergers or consolidations involving Talbots or BPW, or a dissolution of Talbots or BPW following certain assets sales or transfers involving Talbots or BPW, as applicable;

     d. Section 11(d), which provides for an increase in the number of shares of common stock issuable upon exercise of BPW Warrants in the event that the Company distributes extraordinary dividends to its holders of Common Stock, would be deleted in its entirety. This adjustment would be made, for example, if the Company distributed assets such as cash or debt securities (but not stock dividends, which are governed by Section 11(a) of the Warrant Agreement) to holders of its Common Stock other than as part of regular quarterly or other periodic dividends; and

     e. Section 11(g), which requires the Board to use its good faith judgment to protect the “purchase rights of the registered holders of the Warrants in accordance with the essential intent and principles” of Section 11, would be deleted in its entirety.

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     23. In sum, the purpose of the Warrant Amendment is to permit Talbots, following the Merger, to take certain actions with respect to the Talbots Common Stock, including common stock dividends, stock splits, extraordinary dividends (including distribution of cash, securities or other assets) and similar actions without any required anti-dilution adjustment to the terms of the unexchanged BPW Warrants and to provide the Board at such time with the option, upon the occurrence of certain future events, including without limitation certain reclassifications, reorganizations, mergers or consolidations involving Talbots or BPW, or upon a dissolution of Talbots or BPW following certain asset sales or transfers involving Talbots or BPW, as applicable, to cancel each unexchanged BPW Warrant in exchange for the right to receive a cash payment equal to the excess, if any, of the fair market value (as determined by the Board at such time, acting in its sole discretion) of the consideration that the holder of such unexchanged BPW Warrant would have received if such holder had exercised such unexchanged BPW Warrant immediately prior to such event, over the exercise price then applicable to such unexchanged BPW Warrant.

     24. The structure and timing of the Consent Solicitation and impermissible Warrant Amendment reveals that they are inextricably linked to the Exchange Offer and are intended as a mechanism to coerce holders of Public Warrants into accepting the Exchange Offer, or risk having their unexchanged warrants devalued and stripped of customary anti-dilution and anti-destruction protections. BPW’s own Proxy states:

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If the Warrant Amendment becomes effective, holders of unexchanged BPW Warrants (if any) will not be able to exercise their unexchanged BPW Warrants for up to one year from the date of the completion of the Merger...In addition, the Warrant Amendment will clarify that the unexchanged BPW Warrants will no longer be entitled to the benefit of anti-dilution protections and other provisions in the Existing Warrant Agreement that will be removed or modified. As a result, following the Merger, Talbots will be able to take certain actions with respect to the Talbots Common Stock, including common stock dividends, stock splits, extraordinary dividends (including distributions of cash, securities or other assets) and similar actions, without any required anti-dilution adjustment to the terms of the unexchanged BPW Warrants. For example, in the event of a stock split with respect to the Talbots Common Stock, the terms of the unexchanged BPW Warrants as amended by the Warrant Amendment would provide for no corresponding increase to the number of shares of Talbots Common Stock issuable on exercise of unexchanged BPW Warrants and corresponding decrease of the exercise price.

(Ex. “B”at 1.)

COUNT I — DECLARATORY JUDGMENT
(Breach of Warrant Agreement — Modification of Warrant Exercise Period)

     25. Pentwater repeats and reallages the allegations in Paragraphs 1-24 as if fully set forth herein.

     26. Pentwater seeks a declaration, in accord with 10 Del. C. § 6501, et seq., that BPW’s contention that it can alter the Warrant Exercise Period by seeking consent from a majority of warrantholders is a violation of Section 18 of the Warrant Agreement, which provides in pertinent part that “without the prior written consent of each holder of Warrants affected, an amendment or supplement may not...reduce the Warrant Exercise Period.”

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     27. The one-year delay in the commencement of the Warrant Exercise Period contemplated by the Warrant Amendment is a reduction of the current Warrant Exercise Period and materially prejudices holders of unexchanged BPW Warrants for the reasons set forth herein.

     28. There is a ripe controversy regarding the proper legal interpretation of Section 18 of the Warrant Agreement, and a declaration by this Court will resolve an issue having a material and immediate impact on significant legal rights.

     29. Pentwater has no adequate remedy at law.

COUNT II — DECLARATORY JUDGMENT

(Breach of Implied Covenant — Modification of Warrant Exercise Period)

     30. Pentwater repeats and reallages the allegations in Paragraphs 1-29 as if fully set forth herein.

     31. As an alternative, or in addition to the relief requested in Count I, Pentwater seeks a declaration that BPW’s attempt to alter the Warrant Exercise Period is a violation of the implied covenant of good faith and fair dealing.

     32. For the reasons set forth herein, Defendants’ conduct is designed to deny Pentwater the benefit of Section 18 of the Warrant Agreement, which provides in pertinent part that “without the prior written consent of each holder of Warrants affected, an amendment or supplement may not...reduce the Warrant Exercise Period.” The intent and purpose of this provision is to protect the reasonable commercial expectations of BPW Warrantholders and that intent and purpose is being frustrated by the Warrant Amendment.

     33. Echoing the obligations imposed on BPW by the implied covenant of good faith and fair dealing, and bolstering all the allegations forth herein, the Board has obligated itself to “protect the purchase rights of the registered holders of the Warrants in

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accordance with the essential intent and principles of” the provisions of Section 11 of the Warrant Agreement. (See Ex. “A” at A-13, §11(g).) The Exchange Offer and Consent Solicitation have been timed and structured to impair the rights of warrantholders who do not participate in the Exchange Offer.

     34. There is a ripe controversy regarding whether BPW’s attempt to modify the Warrant Exercise Period by delaying its commencement for one year is violative of the implied covenant of good faith and fair dealing, and a declaration by this Court will resolve an issue having a material and immediate impact on significant legal rights.

     35. Pentwater has no adequate remedy at law.

COUNT III — DECLARATORY JUDGMENT
(Breach of Warrant Agreement — Reduction of Shares Issuable Upon Exercise)

     36. Pentwater repeats and reallages the allegations in Paragraphs 1-35 as if fully set forth herein.

     37. Pentwater seeks a declaration, in accord with 10 Del. C. § 6501, et seq., that BPW’s attempt to eliminate and/or alter the anti-dilution and anti-destruction provisions of the Warrant Agreement is a violation of Section 18 of the Warrant Agreement, which provides in pertinent part that “without the prior written consent of each holder of Warrants affected, an amendment or supplement may not...reduce the number of Warrant Shares issuable upon the exercise of a Warrant....”

     38. There is a ripe controversy regarding the proper legal interpretation of Section 18 of the Warrant Agreement, and a declaration by this Court will resolve an issue having a material and immediate impact on significant legal rights.

     39. Pentwater has no adequate remedy at law.

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COUNT IV — DECLARATORY JUDGMENT
(Breach of Implied Covenant — Reduction of Shares Issuable Upon Exercise)

     40. Pentwater repeats and reallages the allegations in Paragraphs 1-39 as if fully set forth herein.

     41. As an alternative, or in addition to the relief requested in Count III, Pentwater seeks a declaration that BPW’s attempt to eliminate and/or alter the anti-dilution and anti-destruction provisions in the Warrant Agreement is a violation of the implied covenant of good faith and fair dealing.

     42. For the reasons set forth herein, BPW’s conduct is designed to deny Pentwater the benefit of Section 18 of the Warrant Agreement, which provides in pertinent part that “without the prior written consent of each holder of Warrants affected, an amendment or supplement may not... reduce the number of Warrant Shares issuable upon the exercise of a Warrant....” by eliminating and/or altering the anti-dilution and anti-destruction provisions in the Warrant Agreement. The intent and purpose of this provision is to protect the reasonable commercial expectations of BPW Warrantholders and that intent and purpose is being frustrated by the Warrant Amendment.

     43. Echoing the obligations imposed on BPW by the implied covenant of good faith and fair dealing, and bolstering all the allegations forth herein, the Board has obligated itself to “protect the purchase rights of the registered holders of the Warrants in accordance with the essential intent and principles of” the provisions of Section 11 of the Warrant Agreement. (See Ex. “A” at A-13, §11(g).)

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     44. There is a ripe controversy regarding whether BPW’s attempt to eliminate and/or alter the anti-dilution and anti-destruction provisions in the Warrant Agreement is violative of the implied covenant of good faith and fair dealing, and a declaration by this Court will resolve an issue having a material and immediate impact on significant legal rights.

     45. Pentwater has no adequate remedy at law.

PRAYER FOR RELIEF

     WHEREFORE, Plaintiffs respectfully request that this Honorable Court enter an Order:

a.	Declaring that BPW’s attempt to modify the Warrant Exercise Period constitutes a breach of the Warrant Agreement;
b.	Declaring that BPW’s attempt to reduce the number of shares issuable upon exercise of the Warrants by eliminating and/or modifying the anti-dilution and anti-destruction provisions constitutes a breach of the Warrant Agreement;
c.	Declaring that BPW’s attempt to modify the Warrant Exercise Period constitutes a breach of the implied covenant of good faith and fair dealing;
d.	Declaring that BPW’s attempt to reduce the number of shares issuable upon exercise of the Warrants by eliminating and/or modifying the anti-dilution and anti-destruction provisions constitutes a breach of the implied covenant of good faith and fair dealing;
e.	Enjoining the closing of the Exchange Offer until such time as this Court rules on the legality of the Warrant Amendment;
f.	Enjoining the effectiveness of the Consent Solicitation to amend the Warrant Agreement until such time as the Court rules on the legality of the Warrant Amendment; and
g.	Granting such other and further relief as the Court deems just and proper.

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DATED: March 22, 2010	EDWARDS ANGELL PALMER & DODGE LLP
	/s/ John L. Reed
	John L. Reed (I.D. No. 3023)
	Paul D. Brown (I.D. No. 3903)
	K. Tyler O’Connell (I.D. No. 4514)
	Aleine M. Porterfield (I.D. No. 5053)
	919 North Market Street, Suite 1500
	Wilmington, Delaware 19801
	302-777-7770 (Telephone)
	302-777-7263 (Facsimile)
	Attorneys for Plaintiffs Pentwater Growth Fund, Ltd., Oceana Master Fund, Ltd., and Pentwater Equity Opportunities Master Fund

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EX-99.2

EFiled: Mar 23 2010 3:08PM EDT
Transaction ID 30200986
Case No. 5367-VCS

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

	:
PENTWATER GROWTH FUND, LTD.,	:
OCEANA MASTER FUND, LTD., and	:
PENTWATER EQUITY	:
OPPORTUNITIES MASTER FUND,	:
	:
Plaintiffs,	:
	:
v.	:	C. A. No. 5367-VCS
	:
BPW ACQUISITION CORP.,	:
a Delaware corporation, and	:
THE TALBOTS, INC.,	:
a Delaware corporation,	:
	:
Defendants.	:
	:

MOTION FOR A TEMPORARY RESTRAINING ORDER

     Plaintiffs Pentwater Growth Fund, Ltd., Oceana Master Fund, Ltd., and Pentwater Equity Opportunities Master Fund (collectively “Pentwater” or “Plaintiffs”) hereby seek an order preventing (1) the closing of defendant BPW Acquisition Corp’s (“BPW”) ongoing warrant exchange offer, which is currently set to close at midnight on Friday, March 26, 2010 (the “Exchange Offer”); and (2) the effectiveness of BPW’s ongoing consent solicitation to amend a warrant agreement dated as of February 26, 2008 (the “Consent Solicitation”).

PRELIMINARY STATEMENT

     BPW and The Talbots, Inc. (“Talbots”) signed an agreement and plan of merger on December 8, 2010, which was subsequently amended on February 17, 2010 (the “Merger”). A shareholder vote of BPW and Talbots’s shareholders approving the Merger occurred on February 24, 2010. The last remaining substantive condition to closing the

Merger is the Exchange Offer, which was launched on March 1, 2010 and is scheduled to expire at midnight on March 26, 2010. The Merger is expected to close on or about March 31, 2010.

     On Wednesday March 17, 2010, just nine (9) days prior to the expiration of the Exchange Offer, BPW filed a preliminary proxy statement by which it is seeking consents to amend the warrant agreement governing the BPW warrants (as previously defined, the “Consent Solicitation”). The amendment seeks to decrease the Warrant Exercise Period and remove anti-dilution protections from the warrant agreement. BPW claims that it only needs a majority of public warrant holders to consent to its requested amendments despite protections contained within the warrant agreement that require written consent of all warrant holders to make such changes. BPW has chosen to file its preliminary proxy statement just nine days prior to the expiration of the Exchange Offer in an attempt to coerce warrant holders into participating in that Offer. That coercion is exacerbated by the fact that there is little time to seek a legal remedy, and non-tendering warrantholders who fail to do so will undoubtedly be confronted with an argument that they waived any rights to challenge the Exchange Offer and the Consent Solicitation and are thus stuck with devalued unexchanged BPW warrants. The result of the proposed amendments would be to materially decrease the value of the BPW warrants for those holders who do not tender into the Exchange Offer.

     For example, if the Consent Solicitation is successful, non-tendering BPW warrantholders will be left with warrants having an exercise period delayed by one year and stripped of valuable and customary anti-dilution and anti-destruction provisions. The proposed warrant amendments are coercive because (i) they punish non-tendering

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warrantholders with the threat of economically marginalized warrants on terms significantly worse than the terms on which the warrants were purchased, and (ii) encourage those who participate in the Exchange Offer to nonetheless simultaneously amend the warrant they are exchanging (despite that they will have no economic interest in such warrant) to the detriment of those who do not participate. The threatened loss of the protective provisions of the BPW warrants, coupled with the difficulty of calculating damages if Plaintiffs are correct that the warrant amendments are violative of the warrant agreement, constitutes irreparable harm to Plaintiffs.

     The structural coerciveness aside, Plaintiffs have a colorable claim that the proposed amendments to the warrant agreement violate the express terms of the warrant agreement itself, as well as the implied covenant of good faith and fair dealing. In particular, the proposed amendments impermissibly reduce the exercise period of the BPW warrants and also impermissibly reduce the number of shares of common stock issuable upon exercise of the warrants.

FACTUAL BACKGROUND

     Plaintiffs are all investment funds managed by Pentwater Capital Management, L.P. The Plaintiffs together are the beneficial owners of over 3,300,000 warrants to purchase BPW common stock. (See Compl. ¶ 3.)¹

     BPW is a publicly-traded “special purpose acquisition company” formed for the purpose of effecting an extraordinary transaction, such as a merger, capital stock exchange, asset acquisition, stock purchase or similar business combination. (See id. ¶ 4.) BPW’s initial public offering took place on March 3, 2008 (the “IPO”).

¹ Citations to “Compl. ___” refer to the Plaintiffs’ Verified Complaint For Declaratory And Injunctive Relief, which was filed with the Court on March 22, 2010.

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     BPW has 49,776,471 warrants outstanding. Each warrant permits its holder to purchase one share of BPW common stock at an exercise price of $7.50. Approximately 35,000,000 of BPW’s warrants are held by public warrantholders, a group which includes Pentwater.
(See id. ¶ 8.)

The Warrant Agreement

     The terms of BPW’s warrants (the “BPW Warrants”) are set forth in a Warrant Agreement dated as of February 26, 2008 (the “Warrant Agreement”). (See Compl. Ex. A.) The Warrant Agreement contains the following pertinent provisions:

• Section 6(a) provides for an exercise price of $7.50 per share and a “Warrant Exercise Period” to commence “on the later of (1) the date that is 12 months from the final prospectus relating to the IPO; and (2) on the date on which the Company completes its Initial Business Combination.” In pertinent part, the Warrant Exercise Period is to end upon the date that is “six years from the final prospectus relating to the IPO [i.e., March 3, 2014].” (See Compl., Ex. “A” at A-6.);

• Section 11 contains several related provisions that are intended to protect the warrantholders should certain events occur that, absent such provisions, would have the effect of decreasing the proportional equity interest in BPW available upon a warrantholder’s exercise of a warrant. (See id. at A-11 to A-12.) For example:

o Section 11(a) is an “anti-dilution” provision that provides for the issuance of additional shares of BPW stock upon exercise of a warrant in the event of stock dividends, split ups or similar events

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	that increase the number of outstanding shares of BPW common stock;
o	Section 11(c) is an “anti-destruction” provision that protects the warrantholders in the event of a merger, reorganization, asset sale or similar event, by providing that in such events warrantholders are to receive the same consideration as if they had exercised the warrants prior to such a triggering event; and
o	Section 11(g) obligates BPW’s board of directors to exercise “good faith judgment” to make further adjustments in accordance with the “essential intent and principles” of Section 11 to “protect such [warrantholders’] purchase rights[.]” (Id.)

     The Warrant Agreement protects these rights by making it extremely difficult for the Warrant Agreement to be amended in a way that impairs them. Section 18 of the Warrant Agreement sets forth the procedures that must be followed for the Warrant Agreement to be amended. (See id. at A-18). Reflecting the importance of the Warrant Exercise Period and the anti-dilution and anti-destruction provisions of Section 11, Section 18 requires the “prior written consent” of each and every warrantholder before BPW may (1) “reduce the Warrant Exercise Period”, or (2) “reduce the number of Warrant shares issuable upon the exercise of a Warrant except as contemplated by Section 11.” (Id.)²

² Section 11 permits a proportional reduction of shares issuable upon exercise in the event, for example, of a reverse stock split. See Compl. Ex. “A” § 11(b). Such predicate events permitting a proportional reduction of shares issuable upon exercise are wholly absent in this case.

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BPW Breaches The Warrant Agreement

     On December 9, 2009, BPW announced that it had entered into a merger agreement with defendant Talbots (the “Merger Agreement”). The Merger Agreement was approved by BPW’s stockholders on February 24, 2010. It is expected that the Merger will close by March 31, 2010. (See Compl. ¶ 13.) The Merger is the Initial Business Combination that triggers the Warrant Exercise Period under Section 6(a). The Merger Agreement (at § 6.1(b)) requires BPW to use its “reasonable best efforts” to facilitate an Exchange Offer resulting in the exchange of at least 90% of BPW’s outstanding warrants for specified ratios of Talbots common stock or Talbots warrants.³ BPW and Talbots commenced the Exchange Offer on March 1, 2010. It is set to expire this Friday, March 26, 2010, at midnight. (See Compl. ¶ 15.)

      Pentwater does not intend to tender its BPW Warrants in the Exchange Offer, because Pentwater believes retaining its warrants is the economically preferable course of action. Pentwater believes that those who exchange their warrants in the Exchange Offer will be left with securities of substantially lower value. (See id. ¶ 17.)

     In an apparent attempt to coerce warrantholders to tender into the Exchange Offer, BPW initiated the Consent Solicitation through the filing of a Preliminary Proxy Statement on March 17, 2010 (the “Proxy”). (See Compl. Ex. “B.”) As BPW acknowledges, the Consent Solicitation seeks to amend the Warrant Agreement to affect the rights of those warrantholders who choose not to tender in the Exchange Offer.

³ The BPW/Talbots Merger Agreement is available at http://www.sec.gov/Archives/edgar/data/1418255/000119312509251168/dex21.htm.

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     The Consent Solicitation seeks written consents from holders of only a majority of the outstanding publicly-held warrants to effect certain fundamental changes to the Warrant Agreement. Among other things, BPW seeks to (1) prevent warrantholders from exercising their warrants in the first year following the Merger by amending the Warrant Exercise Period, and (2) remove the anti-dilution and anti-destruction protections of the Warrant Agreement. Each of these amendments requires unanimous, not majority, consent. BPW’s Proxy admits that warrantholders who do not tender in the Exchange Offer will be adversely affected in this manner if the Consent Solicitation is effective. (See Compl. ¶ 24 (quoting from proxy statement).) For example, a non-tendering warrantholder will be unable to exercise her warrants for a year, during which time BPW would be free to dilute the warrants’ value to nothing through extraordinary transactions. The Consent Solicitation has the clear effect (and Pentwater believes the intent) of coercing warrantholders to tender into the Exchange Offer because those who do not will be left with materially devalued warrants. BPW has structured the process in a way that facilities its goal. Warrantholders, irrespective of whether they have tendered, are being approached by the Company and being asked to execute a Letter Agreement giving irrevocable consent to the Warrant Amendment in exchange for the Company’s commitment not to give different consideration to other tendering warrantholders.

     Because Section 18 of the Warrant Agreement clearly prevents the Warrant Exercise Period and the anti-dilution and anti-destruction provisions from being written out of the Warrant Agreement without the consent of each and every warrant holder, Pentwater commenced this action on March 22, 2010.

7

ARGUMENT

     In these circumstances, a temporary restraining order should issue to prevent BPW from breaching the Warrant Agreement in a manner that coerces Pentwater (and the other public warrantholders) to tender into the Exchange Offer.

I. THE APPLICABLE STANDARD

     A temporary restraining order should issue where (i) plaintiff has a colorable claim on the merits, (ii) plaintiff will suffer irreparable harm if relief is not granted, and (iii) the balance of hardships favors plaintiff. See ACE Ltd v. Capital Re Corp., 747 A.2d 95, 102 (Del. Ch. 1999); Stirling Inv. Holdings, Inc. v. Glenoit Universal, Ltd., 1997 WL 74659, at *2 (Del. Ch. Feb. 12, 1997). Application of this standard generally requires this Court to concentrate:

on whether the absence of a TRO will permit imminent, irreparable injury to occur to the applicant and whether that possibility of injury outweighs the injury that the TRO itself might inflict on the defendants. In a case where this balance tilts in favor of the applicant and where a responsible consideration of the merits cannot be had, this court will issue a TRO even though that applicant has only raised claims that “are colorable, litigable, or . . . raise questions that deserve serious attention.”

ACE Ltd., 747 A.2d at 102 (quoting Cottle v. Carr, 1988 WL 10415, at *2-3 (Del. Ch. Feb. 9, 1988)).

II. PENTWATER HAS COLORABLE CLAIMS

     The merits of a case support the granting of a temporary restraining order so long as “a colorable claim has been made out if the facts alleged are true.” Mitsubishi Power Sys. Am., Inc. v. Babcock and Brown Infrastructure Group US, LLC, 2009 WL 1199588, at *3, at *8-9 (Del. Ch. Apr. 24, 2009) (citing UIS Inc. v. Walbro Corp., 1987 WL 18108, at

8

*1 (Del. Ch. Oct. 6, 1987)). Here, the clear facts show that BPW has breached the express provisions of the Warrant Agreement and/or the implied covenant of good faith and fair dealing.

     Section 21 of the Warrant Agreement provides that it “shall be construed in accordance with the internal laws of the State of New York.” (See Compl. Ex. “A” at A-19.) Under New York law, the “court’s role in interpreting a contract is to ascertain the intention of the parties at the time they entered the contract.” Evans v. Famous Music Corp., 807 N.E. 2d 869, 872 (N.Y. App. Ct. 2004). “In searching for the probable intent of the parties . . . our goal must be to accord the words of the contract their ‘fair and reasonable’ meaning.” Sutton v. East River Sav. Bank, 435 N.E.2d 1075, 1078 (N.Y. App. Ct. 1982) (citation omitted). “The aim is a practical interpretation of the expressions of the parties to the end that there be a realization of reasonable expectations.” Id.; see also In re IBP, Inc. S’holder Litig., 789 A.2d 14, 54 (Del. Ch. 2001) (applying New York law). Here, the parties’ reasonable expectations based upon a fair reading of Section 18 would be that a majority of warrantholders could not completely eviscerate the rights of the minority.

     Section 18 requires unanimous consent for amendments to several key provisions central to warrantholders’ economic interests. In this regard, it expressly provides that unanimous consent is needed for any amendments that would “. . . reduce the Warrant Exercise Period.” (Compl. Ex. “A” at A-18).⁴ Warrant Exercise Period has a clear

⁴ The same section of the Warrant Agreement that requires unanimous consent to amend the Warrant Exercise Period also requires unanimous consent to amend the warrant exercise price, the other key element of any warrant. The Warrant Exercise Period and the exercise price are inextricably linked because a holder’s ability to obtain the benefit of the strike price is affected by the time horizon over which that holder may exercise. The

9

meaning that specifically includes the first year following the Merger. The proposed amendments would eliminate the entire first year of the exercise period. While BPW might argue that the exercise period is not “reduced” because a year is added to it on the back end, that would be an unreasonable reading of the Warrant Agreement. If BPW is correct in its argument, it could validly move the Warrant Exercise Period back several decades — and in doing so, render the warrants completely worthless — provided that the length of the Warrant Exercise Period is the same. No reasonable reading of Section 18 permits this absurd result.

     Similarly, Section 18 requires unanimous consent before BPW may “. . . reduce the number of Warrant Shares issuable upon the exercise of a warrant except as contemplated by Section 11.” As discussed above, Section 11 provides for anti-dilution and anti-destruction rights of great economic importance, and expressly obligates BPW’s board of directors to affirmatively “fairly and adequately protect the purchase rights” of the warrantholders in accordance with the essential intent and principles of [Section 11’s] provisions.” (Compl. Ex. “B,” A-11-13). BPW’s proposed amendments would eliminate these protections. The Proxy admits that the amendments would permit Talbots to dilute the warrantholders in ways not currently allowed by the Warrant Agreement. (See Compl. ¶ 24 (quoting Proxy).) There is no way around the conclusion that this would “reduce the number of warrant shares issuable upon exercise of a warrant . . .” and so requires unanimous consent under Section 18.

Warrant Amendment is thus a back-door attempt by Defendants to effectively increase the exercise price in contravention of Section 18 of the Warrant Agreement because it delays by a year the warrantholders’ otherwise right to exercise at $7.50 immediately upon consummation of the Merger.

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     In addition, an implied covenant of good faith and fair dealing inheres in every contract governed by New York law. See, e.g., N.Y. Univ. v. Cont’l Life Ins. Co., Inc., 662 N.E.2d 763, 769 (N.Y. Ct. App. 1995). Encompassed within the implied obligation of each promisor to exercise good faith are “any promises which a reasonable person in the position of the promisee would be justified in understanding were included.” Dalton v. Educ. Testing Serv., 663 N.E.2d 289, 296 (N.Y. App. Ct. 1995). The implied covenant thus forbids conduct that — although not expressly forbidden — impairs the promisee’s “right to receive the fruits of the contract.” 511 W. 232 Owners’ Corp. v. Jennifer Realty, Co., 773 N.E. 2d 496, 500-01 (N.Y. App. Ct. 2002). Any reasonable purchaser of the BPW Warrants would be justified in believing that the unanimous consent requirements of Section 18 would protect her from a bare majority of other warrantholders changing the key economic terms of the BPW Warrants. This is particularly salient in these circumstances when one considers that the bare majority — who BPW clearly hopes will tender in the Exchange Offer — may approve changes in key terms despite that they have no continuing economic interests in the BPW Warrants. Even if this conduct were not forbidden by the express terms of the BPW Warrants (which it is), it plainly impairs the non-tendering warrantholders’ rights to receive the economic benefits of the Warrant Agreement.

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III. PENTWATER FACES IRREPARABLE HARM IN THE ABSENCE OF A TRO

A. The Exchange Offer And Consent Solicitation Work In Tandem To Coerce BPW Warrantholders To Exchange Their Existing Warrants For Less Valuable Warrants, To The Benefit Of Defendants And To
The Detriment Of Pentwater

     As set forth in the Verified Complaint, and explained more fully below, Pentwater purchased BPW Warrants in reliance upon the Warrant Agreement filed in connection with the Company’s IPO in March 2008. Those warrants have a strike price of $7.50 and the customary anti-dilution and anti-destruction provisions described in the Verified Complaint. The Exchange Offer commenced on March 1, 2010 and is set to expire on March 26, 2010. Since Pentwater acquired its warrants, and through the date of the commencement of the Exchange Offer, the material provisions of the BPW Warrants remained intact. Thus, as it then stood, Pentwater and other holders of BPW Warrants were free to accept or reject the Exchange Offer based on its merits.

     The Merger is conditioned on a waivable minimum tender condition of 90%. In an eleventh hour attempt to guarantee 90% participation in the Exchange Offer (or some percentage reasonably close thereto), Talbots and BPW hatched a scheme to restructure the transaction to coerce BPW Warrantholders into tendering.⁵ The impetus? Talbots has a $490 million debt obligation to its controlling stockholder and lender, AEON. To satisfy this debt, which is a condition to the Merger, Talbots needs to tap the funds in BPW’s SPAC trust account. The SPAC will expire by its own terms on April 26, 2010. Accordingly, if the Merger does not close, the SPAC will terminate and the funds in the trust account will be distributed to BPW’s stockholders. Moreover, the BPW Warrants

⁵ BPW obligated itself to help secure the requisite minimum participation in the Exchange Offer. (See Merger Agreement, § 7.2(g).)

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currently are in-the-money (Talbots is trading at approximately $12/share) and the exercise of those warrants will have a significant dilutive impact on Talbots Common Stock. The solution? On Wednesday March 17, 2010, just nine (9) days prior to the expiration of the Exchange Offer, BPW filed the Proxy, by which it is seeking consents to amend the Warrant Agreement.

     The amendment seeks to decrease the Warrant Exercise Period and remove anti-dilution protections from the Warrant Agreement. A long line of this Court’s cases, dealing with a wide variety of situations, have held that the loss of important substantive rights in an ongoing economic relationship constitutes irreparable harm. See, e.g., NAMA Holdings LLC v. Related World Market Center LLC, 922 A.2d 417, 438 (Del. Ch. 2007) (holding breach of operating agreement provision requiring the segregation of disputed funds constituted irreparable harm); Qwest Communications, Int’l v. Nat’l Union Fire Ins. Co., 821 A.2d 323, 329 (Del. Ch. 2002) (holding breach of contract depriving promissee right to insist upon mediation versus arbitration in large insurance coverage dispute threatened irreparable harm); Solar Cells, Inc. v. True North Partners LLC, 2002 Del. Ch. LEXIS 38, at *27 (Del. Ch. Apr. 25, 2002) (holding merger that threatened to dilute plaintiff and deprive rights to appoint a minority of managers under LLC agreement constituted irreparable harm); Boesky v. CX Partners, L.P., 1988 WL 42250, at *13 (Del. Ch. Apr. 28, 1988) (holding loss of contractual right to receive distributions on a pari passu basis constituted irreparable harm). Of particular importance, given that BPW seeks to strip the warrants of important protective provisions, this Court has reasoned that the loss of important protective rights in an ongoing economic relationship constitutes irreparable harm:

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. . . protective rights “can be of material commercial advantage . . .” They are designed to provide, not only protection for Plaintiffs’ investment, but also leverage in negotiations regarding the future of [the Company]. The denial of the leverage which Plaintiffs reasonably believed they had secured through their bargain restructures the commercial relationship between Plaintiffs and [the Company] and constitutes a harm that cannot be measured by money damages.

Telecom-SNI Investors, L.L.C. v. Sorrento Networks, Inc., 2001 WL 1117505, at *9 (Del. Ch. Sept. 7, 2001) (holding loss of various contractual protective provisions conferred upon preferred stockholders constituted irreparable harm) (quoting Boesky, 1988 WL 42250, at * 14). To hold that money damages — which would be exceedingly difficult to calculate here, see infra pp. 17-19 — are “an appropriate substitute” for such rights “would essentially involve the judicial nullification” of the important economic rights conferred by the protective provisions. NAMA Holdings, 922 A.2d at 438 (citation omitted).

     BPW claims that it only needs a majority of public warrant holders to consent to its requested amendments despite protections contained within the Warrant Agreement that require written consent of all warrant holders to make such changes. As part of the Warrant Amendment, BPW has indicated it will seek delisting of any unexchanged warrants, making them ineligible for trading on a national exchange. See Eisenberg v. Chicago Milwaukee Corp., 537 A.2d 1051, 1061 (Del. Ch. 1987) (finding actionable coercion based, in part, on a threatened delisting). This leaves warrantholders with a Hobson’s Choice: (i) accept Talbots Warrants in the Exchange Offer, which warrants are out-of-the-money and otherwise substantially less valuable (as explained below) than the warrants currently held by Pentwater and other holders of Public Warrants, or (ii) face the very real risk that the Warrant Amendment will pass and leave holders of unexchanged

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warrants with unexercisable stripped down warrants subject to dilution by Talbots at its whim.

     It is this irreparable harm occasioned by the wrongfully coercive structure of the Exchange Offer, in conjunction with the Consent Solicitation, that is of paramount significance in evaluating the present application for a temporary restraining order. See, e.g., CBOT Holdings, Inc. v. Chicago Board Options Exchange, Inc., 2007 WL 2296356, at *3 n.11 (Del. Ch. Aug. 3, 2007) (noting the court’s “chief focus when reviewing an application for a temporary restraining order: ‘the nature and imminence of the allegedly impending injury.’”); Walbro, 1987 WL 18108, at *1 (recognizing that “the focus of the court on [a motion for a temporary restraining order] is not importantly upon an assessment of the probability of ultimate success, but is primarily upon the injury to plaintiff that is threatened”).

     In dollar terms, the disparity between the value of the BPW Warrants and the Talbots Warrants in the Exchange Offer can be summarized as follows. BPW Warrants carry a strike price of $7.50. As of March 22, 2010, Talbots Common Stock was trading at $11.35. Talbots Warrants, on the other hand, have a strike price equal to the product of 1.30 and an average closing price of Talbots Common Stock, subject to a maximum initial exercise price of $16.25 and a minimum initial exercise price of $11.05. (Exchange Offer at 75.)⁶ Based on this formula, the strike price on the Talbots Warrants being forced on BPW Warrantholders through the combined effect of the Exchange Offer and the Consent Solicitation is approximately $14.85. Given this difference in value, it is reasonable to conclude that some holders of BPW Warrants (like Pentwater) might wish to decline the

⁶ The Exchange Offer is available at http://www.sec.gov/Archives/edgar/data/912263/000095012310018566/y82930sv4.htm.

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Exchange Offer.

     This straightforward choice between tendering or not tendering has been complicated needlessly by the concerted efforts of BPW and Talbots to cram down the Talbots Warrants on the BPW Warrantholders by subjecting those who do not tender to the Warrant Amendment. This conduct is wrongfully coercive and constitutes irreparable harm to Pentwater. See Ivanhoe Partners v. Newmont Mining Corp., 533 A.2d 585, 605 (Del. Ch. 1987), aff’d., 535 A.2d 1334 (Del. 1987) (holding that actionable coercion exists upon a showing that offerees are being wrongfully induced to tender “for reasons unrelated to the economic merits” of the transaction); Weiss v. Samsonite Corp., 741 A.2d 366, 372 (Del. Ch. 1999) (holding that an offer is coercive when those being asked to tender are “the victims of inequitable action to tender for reasons unrelated to the economic merits of the offer”). Here, the Exchange Offer is being forced on BPW Warrantholders based on the threat of evisceration of the protective anti-dilution and anti-destruction provisions in the unexchanged BPW Warrants, as well as the threat of a dilutive stock split or other extraordinary transaction by Talbots. This is akin to the type of tender offers referred to as structurally “coercive” because they leave non-tendering holders with less valuable securities or no back-end protections. See Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946, 956 (Del. 1985); Gilbert v. El Paso Co., 575 A.2d 1131, 1139 (Del. 1990) (recognizing that an offer that provides “neither for a second-step transaction nor any back-end protections for [non-tendering holders is] an archetype of this coercive mechanism”); see also In re Pure Resources, Inc., S’Holders Liig., 808 A.2d 421, 452-53 (Del. Ch. 2002)

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(enjoining tender offer based on the possibility of structural coercion);⁷ AC Acquisitions Corp. v. Anderson, Clayton & Co., 519 A.2d 103 (Del. Ch. 1986) (enjoining a self-tender).

     To make matters worse, the Company is also soliciting all BPW Warrantholders to sign a Letter Agreement (a copy of which is attached hereto as Exhibit “1”) committing warrantholders to give their consent to the Warrant Amendment in exchange for the Company’s agreement to not give different consideration to other tendering warrantholders. This incentivizes those relinquishing their BPW Warrants and ceasing to have an interest therein to simultaneously vote to disadvantage those warrantholders who do not exchange their warrants. This is further evidence of Defendants’ coercive conduct, the effects of which should be enjoined until this Court can rule on the merits of Pentwater’s claims.

B. In The Absence Of Injunctive Relief, Damages Will Be Difficult, If Not Impossible, To Calculate

     If the Court refuses to enjoin the closing of the Exchange Offer and the efficacy of the Consent Solicitation, and the Merger goes forward, damages will be difficult to calculate if Pentwater ultimately prevails on the merits of its claim that the Warrant Amendment is being affected in contravention of Section 18 of the Warrant Agreement. In such a situation, Pentwater will be left in the untenable situation of holding unexchanged BPW Warrants that are not exercisable for a one year period despite the fact that the Warrant Agreement provides Warrantholders with the right to exercise during that period. (Under the Warrant Amendment, Pentwater would be foreclosed from exercising its

⁷ Pure Resources also considers that “retributive threats” render a tender offer structurally coercive. See 808 A.2d at 445. In this case, it is difficult to imagine a greater retributive threat than coupling the Exchange Offer with the Consent Solicitation, which seeks to strip unexchanged BPW Warrants of all or substantially all of their value.

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unexchanged warrants for one year from the Merger date.) An economically rational actor, like Pentwater, would seek to exercise its warrants at a time when it concludes in its own judgment that the delta between the exercise price of $7.50 and the price of Talbots Common Stock is at its greatest. This, of course, could happen at any time during the one-year period immediately following the Merger, which period Defendants are attempting to eliminate through the Warrant Amendment. A damages award for an improper amendment of the Warrant Agreement would seek to restore Pentwater to the position in which it would have remained but for Defendants’ wrongful conduct (i.e., free to exercise at a time of its choosing immediately upon the consummation of the Merger). The difficulty of calculating this type of expectation damage in a situation such as this is evident. How can one approximate if and when Pentwater would have exercised? This uncertainty in the ability to award monetary damages to restore Pentwater to a pre-breach status quo is reason enough to grant the relief sought herein. See, e.g., County of York Employees Retirement Plan v. Merrill Lynch & Co., Inc., 2008 WL 4824053, at *8 (Del. Ch. Oct. 28, 2008) (expediting proceedings upon showing of irreparable harm because damages were difficult to calculate); TCW Tech. P’Ship v. Intermedia Commc’ns, Inc., 2000 WL 1478537, at *2 (Del. Ch. Oct. 2, 2000) (expediting proceedings due to uncertainty surrounding damages calculation); In re Anderson, Clayton S’holders’ Litig., 519 A.2d 669, 676 (Del. Ch. 1986) (granting injunction because calculating damages from a completed transaction would be “exceedingly difficult” to prove). Pentwater need not demonstrate that damages are incalculable; rather, it is sufficient if movant can show, as Pentwater has here, that “theoretically calculable” damages are nevertheless “highly difficult to calculate.” See Retirement Board of Allegheny County v. Rothblatt, 2009 WL

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3349262, at *2 n.10 (Del. Ch. Oct. 13, 2009) (citing Sealy Mattress Co. of New Jersey, Inc. v. Sealy, Inc., 532 A.2d 1324 (Del. Ch. 1987)).

C. If The Exchange Offer Closes, And The Warrant Amendment Takes Effect, BPW’s Capital Structure Will Be Altered And
The Court Will Not Be Able To “Unscramble The Eggs”

     Finally, the closing of the Exchange Offer on March 26, 2010 will significantly change the capital structures of BPW and Talbots. Further, BPW has announced that it expects the Merger to close shortly after the completion of the Exchange Offer (which is a condition to Talbots’s obligations under the Merger Agreement), i.e., by the end of March. Such fundamental changes to BPW’s and Talbot’s capital structures cannot practically be undone after the fact. See, e.g., Police & Fire Ret. Sys. of The City of Detroit v. Bernal, 2009 WL 1873144, at *2 (Del. Ch. Jun. 26, 2009) (finding irreparable harm from threatened close of merger and reasoning “it would be impossible to ‘unscramble the eggs’ by attempting to unwind the merger once it has been completed”); Gilmartin v. Adobe Resources Corp., 1992 WL 71510, at *13 (Del. Ch. Apr. 6, 1992) (finding irreparable harm where following transaction new, publicly-traded securities would be issued); Gimbel v. Signal Cos., 316 A.2d 599, 603 (Del. Ch. 1974) (recognizing the “various obstacles” to rescinding the sale of a company after the fact, including “tax consequences, accounting practices, business reorganizations, management decisions concerning capital investments, dividends, etc. and a host of other problems which as a practical matter will make rescission very difficult indeed”).

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IV. THE BALANCE OF THE EQUITIES TIPS DECIDEDLY IN FAVOR OF PENTWATER

     For all the reasons set forth in the Verified Complaint and in this Motion, Pentwater will suffer irreparable harm in the absence of an order temporarily enjoining the closing of the Exchange Offer and the efficacy of the Consent Solicitation. Defendants, on the other hand, will suffer no harm whatsoever. Should the minimum tender condition be met, or waived, the Merger can close. This preserves the ability of the Merger to serve as the Initial Business Combination contemplated in connection with the Company’s IPO in March 2008, thus avoiding the dissolution and liquidation of the SPAC by its own terms on April 26, 2010. As to Talbots, its economic interest in the Merger is also preserved, as are the interests of any BPW Warrantholders who accept the Exchange Offer. The only inconvenience to BPW and Talbots will be the possibility that some holders of BPW Warrants who plan on tendering might not do so by the current March 26, 2010 deadline. Because the merits of the Verified Complaint involve mostly contract interpretation, however, the Court should be able to resolve the underlying issues in this case quickly and in ample time for there to be a final decision in advance of April 26, 2010.

DATED: March 23, 2010	EDWARDS ANGELL PALMER & DODGE LLP
	/s/ John L. Reed
	John L. Reed (I.D. No. 3023)
	Paul D. Brown (I.D. No. 3903) K. Tyler O’Connell (I.D. No. 4514) Aleine M. Porterfield (I.D. No. 5023) 919 North Market Street, Suite 1500 Wilmington, DE 19801 (302) 777-7770 (302) 777-7263 (Fax) Attorneys for Plaintiffs

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