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Subsequent Events
6 Months Ended
Jul. 30, 2011
Subsequent Events
16. Subsequent Events
Stockholder Rights Plan
Effective August 1, 2011, the Company’s Board of Directors unanimously voted to adopt a stockholder rights plan, dated August 1, 2011, between the Company and Computershare Trust Company, N.A., as rights agent, (the “Rights Plan”) and directed the issuance, and declared a dividend of one common share purchase right (a “Right” and collectively, the “Rights”) for each outstanding share of common stock, par value of $0.01 per share, of the Company outstanding as of the close of business on August 12, 2011. Initially, no separate certificate representing the Rights will be issued.
Under the Rights Plan, the Rights would be distributed upon the earlier to occur of (i) the tenth business day following a public announcement indicating that a person or group of affiliated or associated persons (an “Acquiring Person”) has acquired beneficial ownership of 10.0% or more of the Company’s outstanding common stock or such earlier date as a majority of the Board of Directors becomes aware of such acquisition or (ii) the tenth business day (or such later date as the Board of Directors may determine prior to such time as any person or group becomes an Acquiring Person) following the commencement of, or first public announcement of an intention to commence, a tender or exchange offer the consummation of which would result in a person or group becoming the beneficial owner of 10.0% or more of the then outstanding common stock (the “Distribution Date”). The Rights are not exercisable until the Distribution Date. After the Distribution Date, each Right will entitle the holder to purchase from the Company one share of common stock at a purchase price of $24.00 per common share (the “Purchase Price”), subject to adjustment. Following the existence of an Acquiring Person, all Rights that are, or were beneficially owned by any Acquiring Person will be null and void.
If a person or group becomes an Acquiring Person (with certain limited exceptions), each holder of a Right will thereafter have the right to receive, upon exercise, common stock (or, in certain circumstances, other securities of the Company, cash or assets of the Company) having a value equal to two times the Purchase Price. Also, in the event at any time after a person becomes an Acquiring Person, if the Company consolidates or merges with any other person or engages in other specified transactions, proper provision will be made so that each holder of a Right will thereafter have the right to receive, upon exercise, common stock of the acquiring company having a value equal to two times the Purchase Price. At any time after any person or group becomes an Acquiring Person and prior to the acquisition by such person or group of 50.0% or more of the outstanding common stock, the Board of Directors may exchange the Rights (other than Rights owned by such person or group which have become void), in whole or in part, at an exchange ratio of one share of common stock per Right (subject to adjustment).
On August 1, 2021, the Rights Plan will terminate automatically and the Rights will expire, unless this date is amended or unless the Rights are earlier redeemed or exchanged by the Company, in each case, as described in the agreement. The foregoing is a general summary and is qualified in its entirety by reference to the detailed terms and conditions set forth in the Rights Plan.
Trade Payables Arrangement
On September 1, 2011, the Company entered into an arrangement with its exclusive global apparel sourcing agent, whereby the Company will be able to extend payment terms for merchandise purchases sourced by its exclusive agent. Under this arrangement, the Company’s sourcing agent will settle the Company’s merchandise accounts payable with the vendors organized under the buying agency agreement as they become due and extend the Company’s payment obligation an additional 30 days, at which time the Company will be obligated to reimburse its sourcing agent the full amount of merchandise accounts payable due and pay accrued fees. The amount of payables due under this arrangement is not to exceed $50.0 million at any time. Fees are calculated and payable monthly on amounts outstanding under this arrangement at a rate of 1.0% per month. Additional fees may be charged on amounts overdue under this arrangement at a rate of 2.0% per month, calculated on a daily basis. This arrangement will become effective for amounts that are or become due beginning on September 1, 2011 and continue until February 29, 2012, with an option to renew for an additional six month period upon the mutual agreement of the Company and its sourcing agent. This arrangement is subject to suspension or earlier termination as provided in the arrangement, including any termination by the Company’s sourcing agent upon 28 days notice at any time. In addition, the Company’s sourcing agent has agreed to extend letters of credit, on behalf and at the request of the Company, to vendors organized under the buying agency agreement for certain future merchandise purchases, which may be suspended at the discretion of the sourcing agent.