FRAN Francescas Holdings Corporation

As previously reported, on December 3, 2020, Francesca’s Holdings Corporation (the “Company”) and each of its subsidiaries (together with the Company, the “Debtors”) commenced voluntary cases (the “Chapter 11 Cases”) for relief under chapter 11 of title 11 of the United States Code, §§ 101-1532, et seq. (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Chapter 11 Cases are being jointly administered under the caption In re: Francesca’s Holdings Corporation, et al., Case No. 20-13076 (BLS). The Debtors also filed a motion seeking authorization to pursue a bidding and sale process under section 363 of the Bankruptcy Code, which was approved by the Bankruptcy Court in an order entered on January 4, 2021.

On January 7, 2021, the Debtors entered into a “stalking horse” Asset Purchase Agreement (the “Asset Purchase Agreement”) with Francesca’s Acquisition, LLC, a Delaware limited liability company (“Francesca’s Acquisition”), Tiger Capital Group, LLC, a Delaware limited liability company (“Tiger” and, together with Francesca’s Acquisition, “Buyer”), and TerraMar Capital, LLC, a Delaware limited liability company. Upon the terms and subject to the conditions set forth in the Asset Purchase Agreement, Francesca’s Acquisition will acquire the Acquired Assets (as defined in the Asset Purchase Agreement) for a cash purchase price of $17,360,000, subject to certain adjustments, and assume certain contracts, leases and other Assumed Liabilities (as defined in the Asset Purchase Agreement). Each party’s obligation to consummate the transactions contemplated by the Asset Purchase Agreement (the “Transactions”) is subject to customary closing conditions, and subject to the Bankruptcy Court-supervised auction described below. In addition, the Company (on behalf of itself and the other Debtors) will enter into an Agency Agreement with Tiger, pursuant to which Tiger will act as the Company’s agent for the purpose of conducting store closing sales at certain of the Company’s locations. If the Transactions are consummated, the stores to be closed will be determined by the Buyer subject to the outcome of negotiations with landlords in the Chapter 11 Cases, among other factors, and subject to the terms of the Asset Purchase Agreement.

The proposed sale will be conducted through a Bankruptcy Court-supervised process pursuant to Bankruptcy Court-approved bidding procedures, and is subject to the receipt of higher or better offers from competing bidders at an auction, approval of the sale by the Bankruptcy Court, and the satisfaction of certain conditions. As the stalking horse bidder, Buyer’s offer to purchase the Acquired Assets and assume the Assumed Liabilities (as illustrated by the terms and conditions of the Asset Purchase Agreement) would be the standard against which any other qualifying bids would be evaluated.

The Asset Purchase Agreement contains certain customary representations and warranties made by each party, which are qualified by the confidential disclosures provided to Buyer in connection with the Asset Purchase Agreement. The Company and Buyer have agreed to various customary covenants, including, among others, covenants regarding the conduct of the Company’s business prior to the consummation of the Transactions (the “Closing”). A portion of the purchase price will be placed in escrow at Closing to serve as a source of funds for, among other things, a working capital purchase price adjustment, the satisfaction of certain cure costs associated with contracts and leases assigned to Buyer and taxes allocated to the Company. Within three business days following the execution of the Asset Purchase Agreement, Buyer will deposit $850,000 (the “Performance Deposit”) with a third party escrow agent, which amount will be credited against the purchase price payable by Buyer at the Closing. If the Asset Purchase Agreement is terminated, the Performance Deposit will be returned to Buyer except in certain circumstances relating to certain breaches by Buyer of the Asset Purchase Agreement or the failure of Buyer to consummate the Transactions when otherwise required.

The Asset Purchase Agreement provides Buyer with certain bid protections that remain subject to the approval of the Bankruptcy Court. In particular, if the Asset Purchase Agreement is terminated for certain reasons, including if the Company enters into a definitive agreement with respect to, or consummates, an Alternative Transaction (as defined in the Asset Purchase Agreement), or if the Bankruptcy Court enters an order approving an Alternative Transaction, the Company may be required to reimburse Buyer for its reasonable expenses up to $350,000 and pay Buyer a termination fee of $693,000.

The foregoing description of the Asset Purchase Agreement is qualified in its entirety by reference to the Asset Purchase Agreement, which is filed as Exhibit 2.1 hereto and incorporated by reference herein. The Asset Purchase Agreement has been incorporated herein by reference to provide information regarding the terms of the Asset Purchase Agreement and is not intended to modify or supplement any factual disclosures about the Company in any public reports filed with the Securities and Exchange Commission by the Company. In particular, the assertions embodied in the representations, warranties and covenants contained in the Asset Purchase Agreement were made only for purposes of the Asset Purchase Agreement as of the specific dates therein, were solely for the benefit of the parties to the Asset Purchase Agreement, and may be subject to limitations agreed upon by the contracting parties, including being qualified by information in confidential disclosure schedules provided by the Company to Buyer in connection with the signing of the Asset Purchase Agreement. These disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Asset Purchase Agreement. Moreover, the representations and warranties in the Asset Purchase Agreement were used for the purpose of allocating risk between the Company and Buyer, rather than establishing matters of fact. Accordingly, the representations and warranties in the Asset Purchase Agreement may not constitute the actual state of facts with respect to the Company and Buyer. The representations and warranties set forth in the Asset Purchase Agreement may also be subject to a contractual standard of materiality different from that generally applicable to investors under federal securities laws. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Asset Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.