The consideration in the Going Concern Transaction was comprised of the following:
The foregoing description of the Asset Purchase Agreement and the Going Concern Transaction does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Asset Purchase Agreement filed as Exhibit 2.1 to this Form 8-K. The Asset Purchase Agreement has been included to provide investors with information regarding its terms and is not intended to provide any other factual information about the Sellers or Buyer. The representation, warranties and covenants contained in the Asset Purchase Agreement were made only for purposes of such agreement as of the specific dates therein, were solely for the benefit of the parties to the Asset Purchase Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Asset Purchase Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. For the foregoing reasons, the representations, warranties and covenants should not be relied upon as statements of factual information.
Item 1.02. Termination of a Material Definitive Agreement.
In connection with the Going Concern Transaction, on December 20, 2019, the Company terminated (i) the Amended and Restated Credit Agreement dated March 25, 2016 (as amended on April 7, 2017 and February 1, 2018), among the Company, as Borrower, Mothers Work Canada, Inc. and DM Urban Renewal, LLC, as Guarantors, each lender from time to time party hereto, and Wells Fargo Bank, National Association, as Administrative Agent and Swing Line Lender and Letter of Credit Issuer, with respect to the Companys ABL credit facility (the ABL Credit Facility); and (ii) the Term Loan Credit Agreement dated February 1, 2018, among the Company, as Borrower, Mothers Work Canada, Inc. and DM Urban Renewal, LLC, as Guarantors, each lender from time to time party hereto, and Pathlight Capital LLC, as Administrative Agent, with respect to the Companys term loan credit facility (the Term Loan Credit Facility), and repaid all outstanding amounts due thereunder.
Item 2.01. Completion of Acquisition or Disposition of Assets.
The Going Concern Transaction was completed on December 20, 2019 to and in accordance with the Asset Purchase Agreement and as approved by the Sale Order. The assets acquired by Buyer and consideration described in Item 1.01 above and in the Asset Purchase Agreement attached hereto as Exhibit 2.1 are incorporated by reference herein.
The proceeds from the Going Concern Transaction were primarily used to repay in full borrowings under the Companys ABL Credit Facility and Term Loan Credit Facility.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
In connection with the Going Concern Transaction, on December 20, 2019, Lisa Gavales resigned as the Chair of the Office of the Chief Executive Officer. Following her resignation, Ms. Gavales will continue as a director of the Company and Dave J. Helkey, the Companys Chief Financial and Operating Officer, will be taking over the duties of Ms. Gavales. Mr. Helkeys title and compensation will not change upon his assumption of Ms. Gavales duties.
Forward-Looking Statements
This Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company cautions that such forward-looking statements contained in this Form 8-K or made from time to time by management of the Company, including those regarding the Going Concern Transactions, Bankruptcy Petitions and resulting proceeding in Bankruptcy Court and delisting from NASDAQ, involve risks and uncertainties, and are subject to change based on various important factors. The following factors, among others, could affect the Companys ability to realize such savings and could cause actual results to differ materially from those expressed or implied in any such forward-looking statements: the Companys ability to consummate a plan of reorganization; risks attendant to the bankruptcy process, including the effects thereof on the Companys business and on the interests of various constituents, the length of time that the Company might be required to operate in bankruptcy and the continued availability of operating capital during the pendency of such proceedings; risk associated with third party motions in any bankruptcy case; increased costs to execute the reorganization; the strength or weakness of the retail industry in general and of apparel purchases in particular, our ability to successfully manage our various business initiatives, our ability to successfully manage our real estate relationships, overall economic conditions and other factors affecting consumer confidence, demographics and other macroeconomic factors that may impact the level of spending for apparel (such as fluctuations in pregnancy rates and birth rates), our ability to develop and source merchandise and other factors set forth in the Companys periodic filings with the U.S. Securities and Exchange Commission, or in materials incorporated therein by reference. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and persons reading this release are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this Form 8-K. The Company assumes no obligation to update or revise the information contained in this release (whether as a result of new information, future events or otherwise), except as required by applicable law.
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