UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO/A
Amendment No. 5
Tender Offer Statement under Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
CHARMING SHOPPES, INC.
(Name of Subject Company (Issuer))
COLOMBIA ACQUISITION CORP.
(Offeror)
A Wholly Owned Subsidiary of
ASCENA RETAIL GROUP, INC.
(Parent of Offeror)
(Names of Filing Persons (identifying status as offeror, issuer or other person))
COMMON STOCK, $0.10 PAR VALUE
(Title of Class of Securities)
161133103
(CUSIP Number of Class of Securities)
David R. Jaffe
President and Chief Executive Officer
Ascena Retail Group, Inc.
Colombia Acquisition Corp.
30 Dunnigan Drive
Suffern, New York 10901
(845) 369-4500
(Name, address, and telephone numbers of person authorized to receive notices and communications on behalf of filing persons)
Copies to:
Julie M. Allen, Esq.
Steven L. Kirshenbaum, Esq.
Proskauer Rose LLP
Eleven Times Square
New York, New York 10036
(212) 969-3000
CALCULATION OF FILING FEE
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| Transaction Valuation | Amount of Filing Fee | |
| $896,688,836 (1) |
$102,761 (2) | |
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| (1) | Estimated for purposes of calculating the filing fee only. This amount was determined by multiplying 121,998,481 shares of Charming Shoppes, Inc. common stock (representing the shares of common stock outstanding, in-the-money options and shares of common stock subject to restricted stock units or other awards, in each case, as of May 10, 2012) by $7.35 per share, which is the offer price. |
| (2) | The amount of the filing fee, calculated in accordance with Rule 0-11 under the Securities Exchange Act of 1934, as amended, and Fee Rate Advisory No. 3 for fiscal year 2012, issued September 29, 2011, equals $114.60 for each $1,000,000 of the value of the transaction. |
| x | Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| Amount Previously Paid: | $102,761 | Filing Party: | Colombia Acquisition Corp. and Ascena Retail Group, Inc. | |||
| Form of Registration No.: | Schedule TO-T | Date Filed: | May 15, 2012 |
| ¨ | Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. |
Check the appropriate boxes below to designate any transactions to which the statement relates:
| x | Third-party tender offer subject to Rule 14d-1. |
| ¨ | Issuer tender offer subject to Rule 13e-4. |
| ¨ | Going-private transaction subject to Rule 13e-3. |
| ¨ | Amendment to Schedule 13D under Rule 13d-2. |
Check the following box if the filing is a final amendment reporting the results of the tender offer. ¨
If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:
| ¨ | Rule 13e-4(i) (Cross-Border Issuer Tender Offer) |
| ¨ | Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) |
This Amendment No. 5 (“Amendment No. 5”) further amends and supplements the Tender Offer Statement on Schedule TO originally filed on May 15, 2012, as amended and supplemented by Amendment No. 1 filed on May 23, 2012, Amendment No. 2 filed on May 24, 2012, Amendment No. 3 filed on May 29, 2012 and Amendment No. 4 filed on May 30, 2012 (together with any amendments and supplements thereto, the “Schedule TO”), by Ascena Retail Group, Inc., a Delaware corporation (“Parent”), and Colombia Acquisition Corp., a Pennsylvania corporation and a direct wholly owned subsidiary of Parent (“Purchaser”), relating to the offer by Purchaser to purchase all of the outstanding shares of common stock, par value $0.10 per share (the “Shares”), of Charming Shoppes, Inc., a Pennsylvania corporation (the “Company”), at a purchase price of $7.35 per Share, net to the seller in cash, without interest, subject to any required withholding tax, upon the terms and subject to the conditions set forth in the Offer to Purchase dated May 15, 2012 (as amended and supplemented, the “Offer to Purchase”) and in the related Letter of Transmittal, copies of which are attached to the Schedule TO as Exhibits (a)(1)(A) and (a)(1)(B), respectively.
Except as otherwise set forth below, the information set forth in the Offer to Purchase remains unchanged and is incorporated herein by reference as relevant to the items in this Amendment No. 5. Capitalized terms used and not defined herein shall have the meanings assigned to such terms in the Offer to Purchase.
Item 11 of the Schedule TO is hereby amended and supplemented as follows:
| Item 11. | Additional Information. |
The section of the Offer to Purchase entitled “Certain Legal Matters; Regulatory Approvals—Litigation Related to the Merger” is hereby amended and supplemented by amended and restating such section as follows:
“Litigation Related to the Merger. On May 4, 2012, a Verified Shareholder Derivative and Class Action Complaint captioned Pamela Kraus v. Charming Shoppes, Inc., et al., No. 2012-04154, was filed in the Court of Common Pleas of Bucks County, Pennsylvania (the “Kraus Complaint”). The Kraus Complaint purports to assert claims derivatively on behalf of the Company and names as defendants the members of the Company Board, as well as the Company and Parent. The Kraus Complaint alleges, among other things, that the Company Board breached its fiduciary duties to the Company’s shareholders in connection with the Offer and the Merger, and further claims that Parent aided and abetted those alleged breaches of fiduciary duty. The Kraus Complaint further alleges that the Company Board engaged in abuse of control and gross mismanagement by entering into the Merger Agreement. The Kraus Complaint also alleges that the Offer and Merger involve an unfair and self-serving sales process with preclusive deal protection devices, and that the members of the Company Board agreed to the transactions to benefit themselves personally. The Kraus Complaint seeks rescission of the Merger Agreement and injunctive relief, including an order prohibiting defendants from consummating the Offer and Merger, and an award of attorneys’ and other fees and costs, in addition to other relief.
On May 4, 2012, the Company received a letter from counsel for Mario Lamanna (the “Demand Letter”) demanding that the Company Board commence an action on behalf of the Company against the individual members of the Company Board for breaches of fiduciary duty arising out of allegedly wrongful conduct in connection with the Offer and the Merger. Specifically, the Demand Letter asserts that the members of the Company Board breached their duties of loyalty, care, good faith and/or candor by causing and/or allowing the Company to be acquired by Parent for inadequate consideration and by failing to adequately shop the Company before the transaction. The Demand Letter also alleges that the members of the Company Board agreed to the Offer to benefit themselves personally, approved improper deal protection devices and ignored or failed to protect against conflicts of interest.
On May 7, 2012, a Verified Shareholder Derivative and Class Action Complaint captioned Philip E. Ricciardi v. Charming Shoppes, Inc., et al., No. 2012-04154, was filed in the Court of Common Pleas of Bucks County, Pennsylvania (the “Ricciardi Complaint”). The Ricciardi Complaint purports to assert both direct and derivative claims and names as defendants the members of the Company Board, as well as the Company, Parent and Purchaser. The Ricciardi Complaint alleges, among other things, that the Company Board breached its fiduciary duties to the Company’s shareholders in connection with the Offer and the Merger, and further claims that Parent and Purchaser aided and abetted those alleged breaches of fiduciary duty. The Ricciardi Complaint further alleges that the Company Board engaged in self-dealing and corporate waste by entering into the Merger Agreement. The Ricciardi Complaint seeks rescission of the Merger Agreement and injunctive relief, including an order prohibiting defendants from consummating the Offer and Merger, and an award of attorneys’ and other fees and costs, in addition to other relief.
On May 14, 2012, the Company received a letter dated May 8, 2012, from counsel for Phillip E. Ricciardi (the “Ricciardi Demand Letter”) demanding that the Company Board conduct an investigation and commence an action on behalf of the Company against the individual members of the Company Board for breaches of fiduciary duty arising out of allegedly wrongful conduct in connection with the Offer and the Merger. The Ricciardi Demand Letter refers to the allegations set forth in the Ricciardi Complaint.
On May 8, 2012, a Verified Class Action and Shareholder Derivative Complaint captioned Mario Lamanna v. Charming Shoppes, Inc., et al., No. 2012-04275, was filed in the Court of Common Pleas of Bucks County, Pennsylvania (the “Lamanna Complaint”). The Lamanna Complaint purports to assert both direct and derivative claims and names as defendants the members of the Company Board, as well as the Company, Parent and Purchaser. The Lamanna Complaint alleges, among other things, that the Company Board engaged in waste of corporate assets and breached its fiduciary duties to the Company’s shareholders in connection with the Offer and the Merger, and further claims that Parent and Purchaser aided and abetted those alleged breaches of fiduciary duty. Specifically, the Lamanna Complaint asserts that the Company Board wrongfully allowed or caused the Company to be acquired by Parent for unfair and inadequate consideration. The Lamanna Complaint further alleges that the Company Board failed to take steps to maximize the value of the Company to its public shareholders, failed to properly value the Company and its assets and operations, and ignored or failed to protect against conflicts of interest with respect to the Offer and Merger. The Lamanna Complaint also alleges that the Offer and Merger involve unfair and preclusive deal protection devices, and that the members of the Company Board agreed to the transactions to benefit themselves personally. As to the Company Board’s rejection of the Demand Letter, the Lamanna Complaint alleges the Company Board’s rejection was unreasonable, not in good faith, and not protected by the business judgment rule. The Lamanna Complaint seeks rescission of the Merger Agreement and injunctive relief, including an order that prohibits defendants from consummating the Offer and Merger, and an award of attorneys’ fees and other fees and costs, in addition to other relief.
On May 9, 2012, a Verified Shareholder Derivative and Class Action Complaint captioned Robert Steinfeld v. Charming Shoppes, Inc., et al., No. 2012-04284, was filed in the Court of Common Pleas of Bucks County, Pennsylvania (the “Steinfeld Complaint”). The Steinfeld Complaint purports to assert claims derivatively on behalf of the Company and names as defendants the members of the Company Board, as well as the Company and Parent. The Steinfeld Complaint alleges, among other things, that the Company Board breached its fiduciary duties to the Company’s shareholders in connection with the Offer and the Merger, and further claims that Parent aided and abetted those alleged breaches of fiduciary duty. The Steinfeld Complaint further alleges that the Company Board engaged in abuse of control and gross mismanagement by entering into the Merger Agreement. The Steinfeld Complaint also alleges that the Offer and Merger involve an unfair and self-serving sales process with preclusive deal protection devices, and that the members of the Company Board agreed to the transaction to benefit themselves personally. The Steinfeld Complaint seeks rescission of the Merger Agreement and injunctive relief, including an order prohibiting defendants from consummating the Offer and Merger, and an award of attorneys’ and other fees and costs, in addition to other relief.
On May 22, 2012, a Verified Class Action and Shareholder Derivative Complaint captioned John Vineyard v. Charming Shoppes, Inc., et al., No. 2012-04715, was filed in the Court of Common Pleas of Bucks County, Pennsylvania (the “Vineyard Complaint”). The Vineyard Complaint purports to assert both direct and derivative claims and names as defendants the members of the Company Board, the Company, Parent and Purchaser. The Vineyard Complaint alleges, among other things, that the Company Board engaged in waste of corporate assets and breached its fiduciary duties to the Company’s shareholders in connection with the Offer and the Merger, and further claims that Parent and Purchaser aided and abetted those alleged breaches of fiduciary duties. Specifically, the Vineyard Complaint asserts that the Company Board wrongfully allowed or caused the Company to be acquired by Parent for unfair and inadequate consideration. The Vineyard Complaint further alleges that the Company Board failed to take steps to maximize the value of the Company to its public shareholders, failed to properly value the Company and its assets and operations, and ignored or failed to protect against conflicts of interest with respect to the Offer and Merger. The Vineyard Complaint also alleges that the Offer and Merger involve unfair and preclusive deal protection devices, and that the members of the Company Board agreed to the transactions to benefit themselves personally. In addition, the Vineyard complaint alleges that the defendants disseminated a materially false and misleading Schedule 14d-9. The Vineyard Complaint seeks rescission of the Merger Agreement and injunctive relief, including an order that prohibits defendants from consummating the Offer and Merger, and an award of attorneys’ fees and other fees and costs, in addition to other relief.
On May 23, 2012, an Individual and Class Action Complaint captioned Judith Nadler v. Charming Shoppes, Inc., et al., No. 2:12-cv-02838-HB, was filed in the United States District Court for the Eastern District of Pennsylvania (the “Federal Action”). The complaint in the Federal Action names as defendants the Company and the members of the Company Board. The complaint in the Federal Action alleges, among other things, that defendants disseminated a Schedule 14d-9 in which they made untrue statements of material facts or failed to state all material facts necessary in order to make the statements made, in light of the circumstances in which they were made, not misleading, or engaged in deceptive or manipulative acts or practices. The complaint in the Federal Action also alleges that the Offer and the Merger are on terms that are fundamentally unfair. The Federal Action seeks injunctive relief, including an order that prohibits defendants from consummating the Offer and Merger, and an award of attorneys’ fees and other fees and costs, in addition to other relief.
On May 23, 2012, by agreement of the parties, a Stipulation and Order Regarding Consolidation of Related Actions and Appointment of Lead Counsel was filed with the Court of Common Pleas, Bucks County, Pennsylvania with regard to the actions described in the Kraus Complaint, the Ricciardi Complaint, the Lamanna Complaint, the Steinfeld Complaint and the Vineyard Complaint. The court approved the order on May 24, 2012, which consolidated these proceedings before the Court of Common Pleas, Bucks County, Pennsylvania, into a single case captioned In Re Charming Shoppes, Inc. Derivative and Class Action Litigation, No. 2012-04154 (the “Consolidated Action”). Also on May 24, 2012, the plaintiffs in the Consolidated Action filed a Verified Amended Class Action and Derivative Complaint (the “Amended Complaint”) that purports to assert both direct and derivative claims and names as defendants the members of the Company Board, the Company, Parent and Purchaser. The Amended Complaint alleges, among other things, that the Company’s directors engaged in waste of corporate assets and breached their fiduciary duties to the Company’s shareholders in connection with the Offer and the Merger, and further claims that Parent and Purchaser aided and abetted those alleged breaches of fiduciary duties. Specifically, the Amended Complaint asserts that the Company’s directors wrongfully allowed or caused the Company to be acquired by Parent for unfair and inadequate consideration. The Amended Complaint further alleges that the Company’s directors failed to take steps to maximize the value of the Company to its public shareholders, failed to properly value the Company and its assets and operations, and ignored or failed to protect against conflicts of interest with respect to the Offer and Merger. The Amended Complaint also alleges that the Offer and Merger involve unfair and preclusive deal protection devices, and that the Company’s directors agreed to the transactions to benefit themselves personally. In addition, the Amended Complaint alleges that the Schedule 14d-9 was materially false and misleading. The Amended Complaint seeks rescission of the Merger Agreement and injunctive relief, including an order that prohibits defendants from consummating the Offer and Merger, and an award of attorneys’ fees and other fees and costs, in addition to other relief.
The defendants named in the Consolidated Action and the Federal Action (collectively, the “Defendants”) believe that the Consolidated Action and the Federal Action are entirely without merit, and that they have valid defenses to all claims raised by Judith Nadler and the plaintiffs named in the Consolidated Action (collectively, the “Plaintiffs”). Nevertheless, and despite their belief that they ultimately would have prevailed in the defense of the Plaintiffs’ claims, to avoid the costs, disruption and distraction associated with such litigation, on May 31, 2012, the Defendants entered into a Memorandum of Understanding (“MOU”) with the Plaintiffs. Under the MOU, the Plaintiffs and the purported class of Company shareholders they represent agreed to negotiate and present a final stipulation of settlement to the court presiding over the Consolidated Action which provides for the dismissal with prejudice of the Consolidated Action and the Federal Action and the discharge and release of the Defendants, their agents, advisors and certain affiliated parties from and against all direct, derivative, legal or equitable claims, known and unknown, that are based on, arise out of or relate in any way, directly or indirectly, to the allegations and claims in the Consolidated Action, the Federal Action, the Merger, the Offer and the other transactions contemplated by the Merger Agreement (collectively with the Offer and the Merger, the “Contemplated Transactions”), the negotiations and deliberations related to the Merger Agreement, the various public filings relating to the Contemplated Transactions and certain other potential legal or equitable claims described more fully in the MOU. In exchange for such settlement and release, the parties agreed, after arm’s length discussions between and among the Defendants and Plaintiffs, that the Company would include additional supplemental disclosures in the Schedule 14d-9 (such disclosures, as well as disclosures not sought by Plaintiffs, being set forth in Amendment No. 4 to the Schedule 14d-9 filed with the SEC on June 1, 2012), although the Company and the other Defendants do not make any admission that such additional supplemental disclosures are material as a matter of law or in the context of a shareholder’s decision to tender Shares into and accept the Offer. After reaching agreement on the substantive terms of the MOU, the parties also agreed that they would attempt to reach an agreement as to an amount of attorneys’ fees and expenses that the Company, or its successor, will pay to Plaintiffs’ counsel. If the parties are not able to agree on the amount of fees payable to Plaintiffs’ counsel within two weeks of executing the MOU, then Plaintiffs’ counsel will seek an award of attorneys’ fees and expenses from either the court presiding over the Consolidated Action or the court presiding over the Federal Action, but not both. If agreement is reached on the amount of attorneys’ fees and expenses payable to Plaintiffs’ counsel, Plaintiffs’ counsel will seek an award of attorneys’ fees and expenses and the Company, or its successor, will pay an amount decided by the court, not to exceed the agreed upon amount. Defendants reserved their right to contest the amount of fees and expenses sought by Plaintiffs’ counsel. The settlement is also contingent upon, among other things, consummation of the Contemplated Transactions and the approval of the Court of Common Pleas, Bucks County, Pennsylvania. The MOU recognizes, among other things, that the parties will cooperate and use their best efforts to execute a Stipulation of Settlement and present the Stipulation of Settlement and such other documentation as may be required by the court within 30 days from the date of the MOU in order to obtain court approval of the settlement.
The MOU provides that the Defendants deny that they committed any violation of law or breach of duty or acted improperly in any way, and they believe that they acted properly at all times and that the Consolidated Action and the Federal Action have no merit, but wish to settle the Consolidated Action and the Federal Action in order to avoid the costs, disruption and distraction of further litigation.
Any settlement will not affect the amount of the Offer Price or the Merger Consideration. There can be no assurance that the parties will ultimately enter into a stipulation of settlement or that the Court of Common Pleas, Bucks County,
Pennsylvania will approve the settlement even if the parties were to enter into such stipulation. In such event, the proposed settlement as contemplated by the MOU may be terminated. In the event that the MOU is not approved and the conditions described above are not satisfied, the Defendants will continue to vigorously defend the Consolidated Action and the Federal Action.
This summary of the MOU does not purport to be complete and is qualified in its entirety by reference to the MOU, which is filed as Exhibit (d)(5) to the Schedule TO and which is incorporated herein by reference.”
Item 12 of the Schedule TO is hereby amended and supplemented as follows:
| Item 12. | Exhibits. |
Item 12 of the Schedule TO is hereby amended and supplemented by adding the following exhibit thereto:
| “(d)(5) | Memorandum of Understanding, In Re Charming Shoppes, Inc. Derivative and Class Action Litigation, No. 2012-04154, dated May 31, 2012.” |
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: June 1, 2012
| COLOMBIA ACQUISITION CORP. | ||
| By |
/s/ David R. Jaffe | |
| Name: |
David R. Jaffe | |
| Title: |
President and Chief Executive Officer | |
| ASCENA RETAIL GROUP, INC. | ||
| By |
/s/ David R. Jaffe | |
| Name: |
David R. Jaffe | |
| Title: |
President and Chief Executive Officer | |
| Exhibit |
Exhibit Name | |
| (a)(1)(A)* | Offer to Purchase dated May 15, 2012. | |
| (a)(1)(B)* | Form of Letter of Transmittal (including Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9). | |
| (a)(1)(C)* | Form of Notice of Guaranteed Delivery. | |
| (a)(1)(D)* | Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. | |
| (a)(1)(E)* | Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. | |
| (a)(5)(A) | Joint Press Release, dated May 2, 2012, issued by Parent and the Company, incorporated herein by reference to Exhibit 99.1 to the Schedule TO-C filed by Purchaser, on May 2, 2012. | |
| (a)(5)(B) | Internal Announcement to Employees of Parent, dated May 2, 2012, incorporated herein by reference to Exhibit 99.2 to the Schedule TO-C filed by Purchaser, on May 2, 2012. | |
| (a)(5)(C) | Transcript of Investor Conference Call with Investors of Parent, held on May 2, 2012, incorporated herein by reference to Exhibit 99.4 of the Schedule TO-C filed by Purchaser, on May 2, 2012. | |
| (a)(5)(D) | Presentation by David R. Jaffe, President and Chief Executive Officer of Parent, to Employees of the Company, on May 2, 2012, incorporated herein by reference to Exhibit 99.3 to the Schedule TO-C filed by Purchaser, on May 2, 2012. | |
| (a)(5)(E) | Presentation by David R. Jaffe, President and Chief Executive Officer of Parent, to Employees of Parent, on May 3, 2012, incorporated herein by reference to Exhibit 99.1 to the Schedule TO-C filed by Purchaser, on May 3, 2012. | |
| (a)(5)(F)* | Summary Newspaper Advertisement as published in The Wall Street Journal on May 15, 2012. | |
| (b) | Not applicable. | |
| (d)(1) | Agreement and Plan of Merger dated as of May 1, 2012, by and among the Company, Parent and Purchaser, incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Parent on May 2, 2012. | |
| (d)(2)* | Confidentiality Agreement dated as of December 15, 2011, by and between the Company and Parent, as supplemented by the Confidentiality Agreement Addendum dated as of March 26, 2012, by and among the Company, Parent and Opus Law Group PLLC. | |
| (d)(3)* | Letter Agreement regarding Exclusivity dated as of April 26, 2012, by and between the Company and Parent, as modified by the Letter Agreement regarding Exclusivity dated as of April 27, 2012. | |
| (d)(4)* | Amended and Restated Commitment Letter dated as of May 11, 2012, from JPMorgan Chase Bank, N.A. and Bank of America, N.A. to Parent. | |
| (d)(5) | Memorandum of Understanding, In Re Charming Shoppes, Inc. Derivative and Class Action Litigation, No. 2012-04154, dated May 31, 2012. | |
| (g) | Not applicable. | |
| (h) | Not applicable. | |
| * | Previously filed on May 15, 2012 as an exhibit to the Schedule TO. |
Exhibit 99(d)(5)
MEMORANDUM OF UNDERSTANDING
WHEREAS, there is a lawsuit currently pending in the Court of Common Pleas of Bucks County, Pennsylvania (the “Court”), entitled In re Charming Shoppes, Inc. Derivative & Class Action Litigation, No. 2012-04154 (the “Action”), where the plaintiffs, Pamela Kraus, Philip E. Ricciardi, Mario Lamanna, Robert Steinfeld and John Vineyard, assert class action claims on behalf of the public stockholders of Charming Shoppes, Inc. (“Charming Shoppes” or the “Company”), against Arnaud Ajdler, Michael C. Appel, Richard W. Bennet, III, Michael J. Blitzer, Michael Goldstein, Katherine M. Hudson, Bruce J. Klatsky, Paula A. Price, Anthony M. Romano and Alan Rosskamm (collectively, the “Board”), Ascena Retail Group, Inc. (“Ascena”) and Colombia Acquisition Corp. (“Colombia”) (collectively, Charming Shoppes, the Board, Ascena and Colombia are the “Defendants”) and derivative claims on behalf of Charming Shoppes against the Board, Ascena and Colombia;
WHEREAS, there is a lawsuit currently pending in the United States District Court for the Eastern District of Pennsylvania, entitled Nadler v. Charming Shoppes, Inc., No. 2:12-cv-02838-HB (the “Federal Action”), where the plaintiff, Judith Kaye Nadler (collectively, plaintiffs Kraus, Ricciardi, Lamanna, Steinfeld, Vineyard and Nadler are “Plaintiffs”), asserts an individual claim against Charming Shoppes and the Board and a class action claim on behalf of the public stockholders of Charming Shoppes against Charming Shoppes and the Board;
WHEREAS, the claims in the Action and the Federal Action challenge the Board’s decision to approve the sale of Charming Shoppes to Colombia for $7.35 in cash for each share of Charming Shoppes common stock, which was first announced on May 2, 2012 (the “Acquisition”), and contend that disclosures made in a Schedule 14D-9 filed with the United States Securities and Exchange Commission (the “SEC”) on May 15, 2012 were false and misleading;
WHEREAS, Defendants have produced and Plaintiffs have reviewed certain core documents related to the Acquisition;
WHEREAS, counsel for the Defendants and counsel for Plaintiffs in the Action and the Federal Action (“Plaintiffs’ Counsel”) have engaged in extensive arms’-length negotiations concerning a possible settlement of the Action and the Federal Action;
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| MEMORANDUM OF UNDERSTANDING |
WHEREAS, counsel for all parties to the Action and the Federal Action have reached an agreement in principle, set forth in this Memorandum, providing for the settlement of the Action and the Federal Action between and among Plaintiffs, on behalf of themselves and the putative Class (as defined below), and Defendants, on the terms and subject to the conditions set forth below (the “Settlement”);
WHEREAS, Defendants have consented to the conditional certification of the Action as a class action pursuant to Pennsylvania Rules of Civil Procedure 1710-1711 for settlement purposes only, as defined in ¶6(a) hereinafter;
WHEREAS, Plaintiffs’ Counsel has determined that a settlement of the Action and the Federal Action on the terms reflected in this Memorandum is fair, reasonable, adequate, and in the best interests of Plaintiffs and the putative Class;
WHEREAS, Defendants, to avoid the costs, disruption and distraction of further litigation, and without admitting the validity of any allegations made in the Action or the Federal Action, or any liability with respect thereto, have concluded that it is desirable that the claims against them be settled and dismissed on the terms reflected in this Memorandum;
NOW, THEREFORE, as a result of the foregoing and the negotiations among counsel for the parties, the parties to the Action and the Federal Action have agreed as follows:
1. Charming Shoppes will include certain additional disclosures (the “Disclosures”) in a supplement to the Schedule 14D-9 (the “Disclosure Supplement”), as reflected in Exhibit A hereto. Neither Plaintiffs nor Plaintiffs’ Counsel will seek additional disclosures as a condition of this settlement beyond those set forth in the Disclosure Supplement. Plaintiffs’ Counsel reviewed and approved the Disclosure Supplement before the Disclosure Supplement was filed with the SEC. The Disclosure Supplement shall be filed with the SEC on Schedule 14D-9/A no later than 5:30 p.m. (New York Time) on June 1, 2012.
2. Defendants agree that the Action and the Federal Action, and Plaintiffs’ efforts in the Action and the Federal Action, are the primary cause of Defendants’ decision to file the Disclosure Supplement with the SEC, and Defendants further agree that they will not contest that the Disclosures conferred a real benefit on the shareholder class;
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| MEMORANDUM OF UNDERSTANDING |
3. Defendants will provide Plaintiffs’ Counsel with reasonable confirmatory discovery as may be requested to confirm the fairness and adequacy of the Settlement and the Disclosures relating to the Acquisition (the “Settlement-Related Proceedings”); provided, however, that Plaintiffs and Plaintiffs’ Counsel will not seek confirmatory depositions from more than two witnesses.
4. The parties to the Action and the Federal Action will use their best efforts to agree upon, execute and present to the Court within thirty (30) days a formal stipulation of settlement (“Stipulation”) and such other documents as may be necessary and appropriate to obtain Final Court Approval of the Settlement and the dismissal with prejudice of the Action and the Federal Action in the manner contemplated herein and by the Stipulation. As used herein, “Final Court Approval” means that the Court has entered an order approving the Settlement and that such order is finally affirmed on appeal or is no longer subject to appeal, review following a writ petition, or any other form of judicial relief.
5. Pending the negotiation and execution of the Stipulation, the parties shall seek to have all proceedings in the Action and the Federal Action, except for Settlement-Related Proceedings, stayed. The Stipulation shall provide that all proceedings in the Action, except for Settlement Related Proceedings, shall be stayed until the Settlement Related Proceedings are concluded and Final Court Approval of the Settlement has been obtained. Within three (3) days of signing this Memorandum, counsel for the parties to the Federal Action shall execute and file a stipulation providing that the Federal Action shall be stayed pending Final Court Approval in the Action, at which time the Federal Action shall be dismissed with prejudice.
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| MEMORANDUM OF UNDERSTANDING |
6. The Stipulation shall also include, among other things, provisions which provide:
(a) for the conditional certification of the Action as a class action pursuant to Pennsylvania Rules of Civil Procedure 1710-1711 for settlement purposes only, on behalf of a Class consisting of all holders of Charming Shoppes common stock during the period from May 2, 2012 through and including the date of the closing of the Acquisition, including any and all of their respective successors in interest, predecessors, representatives, trustees, executors, administrators, heirs, assigns or transferees, immediate and remote, and any person or entity acting for or on behalf of, or claiming under, any of them, and each of them (the “Class”). Excluded from the Class are Defendants, members of the immediate family of any Defendant, any entity in which a Defendant has or had a controlling interest, officers of Charming Shoppes and the legal representatives, heirs, successors or assigns of any such excluded person, and any individual or entity excluded from the Class;
(b) for the complete discharge, dismissal with prejudice on the merits, release and settlement, to the fullest extent permitted by law, of all known and unknown claims of every nature and description whatsoever, whether or not concealed or hidden, against Defendants and their respective predecessors, successors-in-interest, parents, subsidiaries, affiliates, representatives, agents, trustees, executors, heirs, spouses, marital communities, assigns or transferees and any person or entity acting for or on behalf of any of them and each of them, and each of their predecessors, successors-in-interest, parents, subsidiaries, affiliates, representatives, agents, trustees, executors, heirs, spouses, marital communities, assigns or transferees and any person or entity acting for or on behalf of any of them and each of them (including, without limitation, any investment bankers, accountants, insurers, reinsurers or attorneys and any past, present or future officers, directors and employees of any of them) (collectively, the “Released Parties”), that have been or could have been asserted by Plaintiffs or any member of the Class in their capacity as shareholders of Charming Shoppes, and each of their respective predecessors, successors-in-interest, parents, subsidiaries, affiliates, representatives, agents, trustees, executors, heirs, spouses, marital communities, assigns or transferees and any person or entity acting for or on behalf of
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| MEMORANDUM OF UNDERSTANDING |
any of them and each of them, and each of their predecessors, successors-in-interest, parents, subsidiaries, affiliates, representatives, agents, trustees, executors, heirs, spouses, marital communities, assigns or transferees and any person or entity acting for or on behalf of any of them and each of them (the “Releasing Parties”) related to: (i) the Acquisition, including any amendment thereto; (ii) the adequacy of the consideration to be paid to stockholders of Charming Shoppes in connection with the Acquisition; (iii) the fiduciary obligations of any of the Defendants or Released Parties in connection with the Acquisition, including any amendment thereto; (iv) the negotiations in connection with the Acquisition, including any amendment thereto and any alleged deal protection devices; (v) the disclosures or disclosure obligations of any of the Defendants or Released Parties in connection with the Acquisition; (vi) the alleged aiding and abetting of any breach of fiduciary duty in connection with the Acquisition; (vii) any alleged personal benefit, conflict of interest, payments of any remuneration, or employment benefits to any individual made in connection with the Acquisition; and (viii) the allegations in the Action or the Federal Action (collectively, the “Settled Claims”); provided, however, that the Settled Claims shall not include: (a) the right of any members of the Class to seek appraisal rights pursuant to the Pennsylvania Business Corporation Law; or (b) the right of any party to enforce in the Court the terms of the Stipulation or this Memorandum;
(c) that Defendants and the Released Parties release Plaintiffs, members of the Class and their counsel, from all claims arising out of the instituting, prosecution, settlement or resolution of the Action or the Federal Action; provided, however, that the Defendants and Released Parties shall retain the right to enforce in the Court the terms of the Stipulation or this Memorandum;
(d) that Defendants have denied, and continue to deny, that any of them have committed or have threatened to commit any violations of law or breaches of duty to the Plaintiffs, the Class, the Company or anyone else;
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(e) that Defendants are entering into the Settlement solely because it will eliminate the uncertainty, distraction, burden and expense of further litigation;
(f) that in the event the Settlement does not become final for any reason, Defendants reserve the right to oppose certification of any class in future proceedings;
(g) that subject to the Order of the Court, pending final determination of whether the Settlement should be approved, Plaintiffs and all members of the Class, and any of them, are barred and enjoined from commencing, prosecuting, instigating or in any way participating in the commencement or prosecution of any action asserting any Settled Claims, either directly, representatively, derivatively or in any other capacity, against any Released Person;
(h) that once the Settlement Related Proceedings are concluded and once Final Court Approval of the Settlement has been obtained, the Federal Action will be dismissed with prejudice; and
(i) that neither Plaintiffs nor Plaintiffs’ Counsel will seek the payment of fees or expenses in connection with both the Action and the Federal Action.
7. The Stipulation shall also provide that: (a) the release contemplated by the Stipulation shall extend to claims that the Releasing Parties do not know or suspect to exist at the time of the release, which if known, might have affected the Releasing Parties’ decision to enter into the release; (b) the Releasing Parties shall be deemed to relinquish, to the extent applicable, and to the full extent permitted by law, the provisions, rights and benefits of Section 1542 of the California Civil Code, which states that:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
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and (c) the Releasing Parties shall be deemed to waive any and all provisions, rights and benefits conferred by any law of any state or territory of the United States, or principle of common law, which is similar, comparable or equivalent to California Civil Code Section 1542.
8. This Memorandum shall be null and void and of no force and effect, unless otherwise agreed to by the parties pursuant to the terms hereof, if: (a) Plaintiffs conclude, after obtaining any confirmatory discovery requested and agreed upon, that the Settlement memorialized herein is not fair, adequate, and in the best interests of the Class; (b) the Settlement does not receive Final Court Approval; provided, however, that any decision by the Court to approve an award of attorneys’ fees and expenses less than the amount of attorneys’ fees and expenses sought by Plaintiffs or Plaintiffs’ Counsel shall not void this Memorandum, the Stipulation or the Settlement; or (c) the Proposed Transaction, including any amendment thereto, is not concluded for any reason. In the event the settlement does not become final for any reason, this Memorandum shall not be deemed to prejudice in any way the respective positions or rights of the parties with respect to the Action or the Federal Action, and neither the existence of this Memorandum, nor its contents, nor the negotiations leading to it, shall be admissible in evidence or shall be referred to for any purpose in the Action or the Federal Action or in any other litigation or proceeding.
9. If any action is currently pending or is later filed in state or federal court asserting claims that are related to the subject matter of the Action or the Federal Action prior to Final Court Approval of the Settlement, Plaintiffs shall cooperate with the Defendants in obtaining the dismissal or withdrawal of such related litigation, including where appropriate joining in any motion to dismiss such litigation.
10. This Memorandum will be executed by counsel for the parties to the Action and the Federal Action, each of whom represents and warrants that they have the authority from their client(s) to enter into this Memorandum and bind their clients thereto, that Plaintiffs are the only holders and
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owners of their claims and causes of action asserted in the Action and the Federal Action, and that none of Plaintiffs’ claims or causes of action referred to in any complaint in the Action or the Federal Action or this Memorandum have been assigned, encumbered or in any manner transferred in whole or in part.
11. This Memorandum, the Stipulation and the Settlement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania without regard to Pennsylvania’s principles governing choice of law. The parties agree that any dispute arising out of or relating in any way to this Memorandum, the Stipulation or the Settlement shall not be litigated or otherwise pursued in any forum or venue other than the Court, and the parties expressly waive any right to demand a jury trial as to any such dispute.
12. This Memorandum may be modified or amended only by a writing, signed by all of the signatories hereto, that refers specifically to this Memorandum.
13. The provisions contained in this Memorandum shall not be deemed a presumption, concession or admission by any Defendant of any fault, liability or wrongdoing as to any facts or claims that have been or might be alleged or asserted in the Action or the Federal Action or any other action or proceeding that has been, will be, or could be brought, and shall not be interpreted, construed, deemed, invoked, offered, or received in evidence or otherwise used by any person in the Action or the Federal Action, or in any other action or proceeding, whether civil, criminal or administrative, for any purpose other than as provided expressly herein.
14. This Memorandum shall be binding upon and inure to the benefit of the parties and their respective agents, executors, heirs, successors and assigns.
15. Defendants agree that Plaintiffs and their Counsel have a right to receive payment for their reasonable attorneys’ fee and expenses. Following the execution of the Memorandum, the parties will negotiate in good faith regarding an agreed-to amount of attorneys’ fees payable to Plaintiffs’ Counsel in the Action. If no agreement is reached within two weeks, Plaintiffs and Plaintiffs’ Counsel
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intend to seek an award of fees and expenses in either the Action or the Federal Action but agree they will not do so in both. Defendants reserve the right to oppose the amount sought in such petition. If the parties are unable to reach agreement regarding a reasonable award of fees and reimbursement of reasonable expenses, the parties intend to, and do, preserve all arguments in connection with any petition for attorneys’ fees and expenses by Plaintiffs’ Counsel to the extent that such arguments do not directly contradict the terms herein. Any fee award shall not affect the validity of the settlement. Charming Shoppes or its successor shall pay the fee and expenses awarded to Plaintiffs’ Counsel within ten (10) days of execution of the Court’s order approving the Settlement and dismissing the Action with prejudice. In the event the order is reversed or modified on appeal, Plaintiffs’ Counsel shall refund to Defendants the advanced amount and all interest accrued or accumulated thereon.
16. Charming Shoppes shall be responsible for providing notice of the Settlement to the members of the Class. Charming Shoppes shall pay all costs and expenses incurred in providing notice of the Settlement to the members of the Class, with the understanding that notice shall be effected by mail unless otherwise provided by law.
17. This Memorandum may be executed in any number of actual or telecopied counterparts and by each of the different parties on several counterparts, each of which when so executed and delivered will be an original. The executed signature page(s) from each actual or telecopied counterpart may be joined together and attached and will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Memorandum effective as of the date set forth below.
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| MEMORANDUM OF UNDERSTANDING |
| DATED: May 31, 2012 |
ROBBINS GELLER RUDMAN & DOWD LLP RANDALL J. BARON A. RICK R. ATWOOD, JR. DAVID T. WISSBROECKER STEVEN M. JODLOWSKI | |||
| /s/ DAVID T. WISSBROECKER | ||||
| DAVID T. WISSBROECKER | ||||
| 655 West Broadway, Suite 1900 San Diego, CA 92101 Telephone: 619/231-1058 619/231-7423 (fax) | ||||
| Attorneys for Plaintiffs Pamela Kraus, Robert Steinfeld and John Vineyard | ||||
| THE LAW OFFICE OF DEBRA S. GOODMAN DEBRA S. GOODMAN 1301 Skippack Pike Suite 7A, # 133 Blue Bell, PA 19422 Telephone: 610/277-6057 484/231-1922 (fax) | ||||
| Attorneys for Plaintiff Pamela Kraus | ||||
| POWERS TAYLOR LLP PATRICK W. POWERS ZACHERY GROOVER Campbell Centre II 8150 North Central Expressway, Suite 1575 Dallas, TX 75206 Telephone: 214/239-8900 214/239-8901 (fax) | ||||
| THE BRISCOE LAW FIRM, PLLC WILLIE C. BRISCOE State Bar No. 24001788 8117 Preston Road, Suite 300 Dallas, TX 75225 Telephone: 214/706-9314 214/706-9315 (fax) | ||||
| Attorneys for Plaintiffs Robert Steinfeld and John Vineyard | ||||
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| MEMORANDUM OF UNDERSTANDING |
| ANTHEIL MASLOW & MACMINN, LLP WILLIAM T. MACMINN Attorney I.D. # 25597 131 W. State Street Post Office Box 50 Doylestown, PA 18901 Telephone: 215/230-7500 215/230-7796 (fax) | ||||
| Local Counsel for Plaintiffs Pamela Kraus, Robert Steinfeld and John Vineyard | ||||
| DATED: May 31, 2012 |
RYAN & MANISKAS, LLP RICHARD A. MANISKAS | |||
| /s/ RICHARD A. MANISKAS | ||||
| RICHARD A. MANISKAS | ||||
| 995 Old Eagle School Road, Suite 311 Wayne, PA 19087 Telephone: 484/588-5516 484/450-2582 (fax) | ||||
| ROBBINS UMEDA LLP BRIAN J. ROBBINS STEPHEN J. ODDO ARSHAN AMIRI EDWARD B. GERARD JUSTIN D. RIEGER 600 B Street, Suite 1900 San Diego, CA 92101 Telephone: 619/525-3990 619/525-3991 (fax) | ||||
| LAW OFFICE OF ALFRED G. YATES, JR., P.C. ALFRED G. YATES, JR. 519 Allegheny Building 429 Forbes Avenue Pittsburgh, PA 15219 Telephone: 412/391-5164 412/471-1033 (fax) | ||||
| Attorneys for Plaintiff Philip E. Ricciardi | ||||
| DATED: May 31, 2012 |
BEGLEY, CARLIN & MANDIO, LLP DOUGLAS C. MALONEY | |||
| 680 Middletown Blvd. Langhorne, PA 19047 Telephone: 215/750-0110 | ||||
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| BERNSTEIN LIEBHARD LLP U. SETH OTTENSOSER
/s/ U. SETH OTTENSOSER U. SETH OTTENSOSER
10 East 40th Street New York, NY 10016 Telephone: 212/779-1414 212/779-3218 (fax) | ||||
| THE WEISER LAW FIRM, P.C. PATRICIA WEISER JOSEPH M. PROFY 22 Cassatt Avenue Berwyn, PA 19312 Telephone: 610/225-2677 610/408-8062 (fax) | ||||
| Attorneys for Plaintiff Mario Lamanna | ||||
| DATED: May 31, 2012 | POMERANTZ HAUDEK GROSSMAN & GROSS LLP GUSTAVO F. BRUCKNER SAMUEL J. ADAMS | |||
| /s/ GUSTAVO F. BRUCKNER | ||||
| GUSTAVO F. BRUCKNER | ||||
| 100 Park Avenue New York, NY 10017-5516 Telephone: 212/661-1100 212/661-8665 (fax) | ||||
| TRUJILLO RODRIGUEZ & RICHARDS, LLC KENNETH I. TRUJILLO IRA NEIL RICHARDS JENNIFER AGNEW 1717 Arch Street, Suite 3838 Philadelphia, PA 19103 Telephone: 215/731-9004 215/731-9044 (fax) | ||||
| Attorneys for Plaintiff Judith Kaye Nadler | ||||
| DATED: May 31, 2012 | DRINKER BIDDLE & REATH LLP MICHAEL F. BROWN | |||
| /s/ MICHAEL F. BROWN | ||||
| MICHAEL F. BROWN | ||||
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| MEMORANDUM OF UNDERSTANDING |
| One Logan Square, Suite 2000 Philadelphia, PA 19103 Telephone: 215/988-2700 215/988-2757 (fax) | ||||
| Attorneys for Charming Shoppes, Inc. | ||||
| DATED: May 31, 2012 | GRIM, BIEHN & THATCHER JEFFREY G. TRAUGER | |||
| 104 S. 6th Street P.O. Box 215 Perkasie, PA 18944 Telephone: 215/257-6811 215/257-5374 (fax) | ||||
| SCHULTE ROTH & ZABEL LLP MICHAEL E. SWARTZ
/s/ MICHAEL E. SWARTZ MICHAEL E. SWARTZ
919 Third Avenue New York, NY 10022 Telephone: 212/756-2000 212/593-5955 (fax) | ||||
| Attorneys for Defendants Michael Goldstein, Arnaud Ajdler, Michael C. Appel, Richard W. Bennet, III, Michael J. Blitzer, Katherine M. Hudson, Bruce J. Klatzky, Paula A. Price, Anthony M. Romano and Alan Rosskamm | ||||
| DATED: May 31, 2012 | PEPPER HAMILTON LLP JAY A. DUBOW | |||
| /s/ JAY A. DUBOW | ||||
| JAY A. DUBOW | ||||
| 3000 Two Logan Square 18th & Arch Streets Philadelphia, PA 19103 Telephone: 215/981-4000 215/981-4750 (fax) | ||||
| PROSKAUER ROSE LLP SARAH S. GOLD Eleven Times Square Eighth Avenue & 41st Street New York, NY 10036-8299 Telephone: 212/969-3000 212/969-2900 (fax) | ||||
| Attorneys for Defendants Ascena Retail Group, Inc. and Colombia Acquisition Corp. | ||||
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| MEMORANDUM OF UNDERSTANDING |