LTD » Topics » Lock-Up Agreement

This excerpt taken from the LTD 8-K filed Nov 28, 2006.

Lock-Up Agreement

     On November 15, 2006, the Offeror entered into the Lock-Up Agreement with the Supporting Shareholders, among others. The Lock-Up Agreement was also executed by certain family members of the Supporting Shareholders and by certain holding companies of the Supporting Shareholders holding the shares of La Senza. The Supporting Shareholders represented to the Offeror that, collectively, as at November 15, 2006, they were the direct or indirect beneficial owners of an aggregate of 4,942,569 MV Shares (100% of the MV Shares, which upon conversion represent 4,942,569 SV Shares), 1,835,316 SV Shares, and Options to purchase 352,400 SV Shares. These shares represent 7,130,285 SV Shares in the aggregate, or approximately 48% of the issued and outstanding SV Shares on a fully-diluted basis (assuming conversion into SV Shares of all MV Shares).

     The following is a summary of the principal terms of the Lock-Up Agreement.

     Agreement to Make the Offer: The Offeror agreed to make the Offer within the time period and upon and subject to the terms and conditions set out in the Support Agreement and to use commercially reasonable efforts to complete the Offer.

     Agreement to Tender: The Supporting Shareholders agreed to irrevocably accept the Offer and to deposit or cause to be deposited under the Offer all SV Shares which they own or over which they exercise direction or control, including SV Shares issuable upon the exercise of Options held by them and SV Shares issuable upon conversion of MV Shares held by them, or, under the Holdco Alternative, the shares of Holdcos holding such shares.

     Competing Offer: The Supporting Shareholders are not permitted under the terms of the Lock-Up Agreement to deposit the Subject Shares to a competing offer.

     Donation Shares: Provided that the Offeror is satisfied, acting reasonably, that any such gift will not adversely affect the Offeror in connection with the Offer, or the completion of the Offer or the Offeror’s ability to acquire SV Shares pursuant to the Offer, Irving Teitelbaum is permitted to donate to a registered charity up to a maximum of 375,000 SV Shares and Stephen Gross is permitted to donate to a registered charity up to a maximum of 208,000 SV Shares (collectively the “Donation Shares”) out of the SV Shares that are subject to the Lock-Up Agreement.

     Escrow Arrangements: The Supporting Shareholders agreed to deposit into escrow with the Escrow Agent, promptly following the execution of the Lock-Up Agreement, share certificates representing, in aggregate: (a) 4,942,569 MV Shares (representing 100% of the issued and outstanding MV Shares); (b) 1,247,316 SV Shares; and (c) the shares of the Holdcos holding such shares, (collectively the “Escrowed Shares”). The Escrowed Shares are to be held and released by the Escrow Agent pursuant to the Escrow Agreement. See “— Escrow Agreement.”

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     Holdco Alternative: The Offeror agreed to allow the Supporting Shareholders to make the Holdco Elections, subject to and in accordance with the terms and conditions set out in the Support Agreement, in respect of the SV Shares subject to the Lock-Up Agreement provided that the Supporting Shareholders made such elections and entered into a Holdco Agreement promptly following execution of the Lock-Up Agreement and deposited into escrow with the Escrow Agent all documentation required in connection with such Holdco Alternative along with the certificates for the Escrowed Shares.

     Covenants of the Supporting Shareholders: Each Supporting Shareholder agreed, among other things, that it will (a) immediately terminate any existing discussions with parties (other than the Offeror) with respect to any Acquisition Proposal, and will not, make or solicit proposals or offers from any Person whatsoever (including any of its officers or employees) relating to any Acquisition Proposal, enter into any agreement related to any Acquisition Proposal, furnish to any Person any information with respect to, or otherwise cooperate in any way with, or otherwise assist or participate in, facilitate or encourage, any effort or attempt by any Person other than the Offeror or its affiliates to do or seek to do any of the foregoing; (b) not enter into any transaction reasonably similar to the Offer; (c) not take any action of any kind which would cause its representations or warranties in the Lock-Up Agreement to become untrue or which may in any way adversely affect the success of the Offer or the purchase of any Shares under the Offer or the completion of the Offer or any Compulsory Acquisition or Subsequent Acquisition Transaction; (d) not sell, transfer, pledge, encumber or otherwise convey or grant an option in any way over any Subject Shares (or enter into any agreement or commitment to do any of the foregoing) or modify its right to vote any Subject Shares, except as provided in the Lock-Up Agreement; (e) promptly notify the Offeror in any event within 24 hours of receiving any Acquisition Proposal, or becoming aware of any bona fide inquiry, proposal, discussions or negotiation with respect to any Acquisition Proposal; (f) not release or permit the release of any third party from or waive any confidentiality, non-solicitation or standstill agreement to which such Supporting Shareholder and such third party are parties; (g) take all such steps as are required to ensure that at the time at which the Supporting Shareholder tenders the Subject Shares to the Offer or deposits such Shares in escrow and at the time the Offeror becomes entitled to take up and pay for the Subject Shares, the Subject Shares will be owned beneficially by such Supporting Shareholder directly or indirectly through a Holdco with a good and marketable title; (h) use its reasonable efforts in its capacity as a Shareholder to complete the Offer and the other transactions contemplated by the Support Agreement and the Lock-Up Agreement; (i) not grant or agree to grant any proxy or other right to the Subject Shares, or enter into any voting trust, vote pooling or other agreement with respect to the right to vote, call meetings of Shareholders of the Company or give consents or approval of any kind as to the Subject Shares; (j) not convert any MV Shares to SV Shares or take any action of any kind, directly or indirectly, which would contravene with the Coattail Trust Agreement or the Voting Trust Agreement; (k) not vote or cause to be voted any of the Subject Shares in respect of any proposed action by the Company or its Shareholders or affiliates or any other Person in a manner which might reasonably be regarded as likely to prevent or delay the successful completion of the Offer; (l) exercise the voting rights attached to the Subject Shares and otherwise use its reasonable efforts in its capacity as a security holder to oppose any proposed action by the Company, its shareholders, its Subsidiaries or any other Person in respect of any Acquisition Proposal; (m) not do indirectly that which it may not do directly in respect of the restrictions on its rights with respect to the Subject Shares pursuant to the Lock-Up Agreement by the sale of any shares in any direct or indirect holding company or interest in a partnership or the granting of a proxy on the shares of any direct or indirect holding company and which would have, indirectly, any effect prohibited by the Lock-Up Agreement; and (n) not purchase or enter into any agreement or right to purchase any additional Shares or any other securities of the Company (except SV Shares issuable on the exercise of outstanding Options and on conversion of the issued and outstanding MV Shares).

     Representations and Warranties of the Supporting Shareholders: The Lock-Up Agreement contains customary representations and warranties of the Supporting Shareholders including, without limitation, representations and warranties as to: (a) sole right to sell and ownership of the Subject Shares, free and clear of encumbrances; (b) absence of any breach; (c) absence of required consent; (d) authority, execution, delivery and enforceability of the Lock-Up Agreement; (e) absence of claims against the Supporting Shareholder; and (f) the residency of the Supporting Shareholders.

     Representations and Warranties of the Offeror: The Lock-Up Agreement also contains customary representations and warranties of the Offeror including, without limitation, representations and warranties as to: (a) due incorporation and existence of Limited Brands and Bidco; (b) authority, execution, delivery and enforceability of the Lock-Up Agreement; (c) absence of any conflict or breach; and (d) availability to the Offeror of sufficient funds or adequate arrangements for financing in place to satisfy the Offered Consideration.

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     Termination of the Lock-Up Agreement: The Lock-Up Agreement may be terminated by either party upon written notice if the SV Shares have not been taken up and paid for by the Offeror by June 30, 2007. The Lock-Up Agreement may also be terminated earlier by the Offeror upon written notice if: (a) the Support Agreement is terminated for any reason; (b) any of the Supporting Shareholders is in material default of any covenant or obligation under the Lock-Up Agreement or if any representation or warranty of any of the Supporting Shareholders under the Lock-Up Agreement shall have been or subsequently becomes untrue or incorrect in any material respect.

     The Lock-Up Agreement may be terminated earlier by the Supporting Shareholders upon written notice if: (a) the Offeror is in material default of certain covenants under the Lock-Up Agreement; (b) the Offeror fails, in a material respect, to make the Offer in accordance with the requirements of the Support Agreement; (c) the Offeror modifies or waives any term or condition of the Offer in a manner contrary to the provisions of the Support Agreement; or (d) any representation or warranty of the Offeror under the Lock-Up Agreement shall have been or subsequently becomes untrue or incorrect in any material respect, provided that the Supporting Shareholders have notified the Offeror in writing of any of the foregoing events and the same has not been cured by the Offeror within 10 days of the date such notice was received by the Offeror. Any termination of the Lock-Up Agreement in accordance with the termination provisions of the Lock-Up Agreement shall render the provisions of the Lock-Up Agreement of no further force and effect, provided, however, that, except in the case of a termination by the Supporting Shareholders as outlined in the preceding paragraph, certain covenants of the Supporting Shareholders, including covenants restricting their ability to sell the Subject Shares or solicit other Acquisition Proposals, will survive until June 30, 2007, notwithstanding such termination.

This excerpt taken from the LTD 8-K filed Nov 17, 2006.
“Lock-Up Agreement”) dated the date hereof with each of the individuals, partnerships and corporations listed on Schedule C (collectively, the

EXCERPTS ON THIS PAGE:

8-K
Nov 28, 2006
8-K
Nov 17, 2006

"Lock-Up Agreement" elsewhere:

Sonic Automotive (SAH)
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