Rue 21 2010 Annual Report Download - page 30

seeking to block sales of our products as a violation of the trademarks or proprietary rights of others. Also, others
may assert rights in, or ownership of, our trademarks and other proprietary rights or claim that we are infringing on
their proprietary rights, and we may not be able to successfully resolve these types of conflicts to our satisfaction. In
addition, upon registration of our marks internationally, the laws of certain foreign countries may not protect
proprietary rights to the same extent as do the laws of the United States.
Although we have begun to register our trademarks in some foreign countries, international protection of our
brand image and the use of these marks could be limited. Other entities may have rights to trademarks that contain
portions of our marks or may have registered similar or competing marks for apparel and accessories in foreign
countries in which our vendors source our merchandise. There may also be other prior registrations in other foreign
countries of which we are not aware. Accordingly, it may be possible for others to enjoin the manufacture, sale or
exportation of our branded goods to the United States. If we were unable to reach a licensing arrangement with these
parties, our vendors may be unable to manufacture our products in those countries. Our inability to register our
trademarks or purchase or license the right to use our trademarks or logos in these jurisdictions could limit our
ability to obtain supplies from less costly markets or penetrate new markets should our business plan change to
include selling our merchandise in those jurisdictions outside the United States.
Failure to comply with regulatory requirements could negatively impact our business.
As a public company, we are subject to numerous regulatory requirements. Our policies, procedures and
internal controls are designed to comply with all applicable laws and regulations, including those imposed by the
Sarbanes-Oxley Act of 2002, the Securities Exchange Act of 1934, Payment Card Industry Data Security Standards
(PCI/DSS) and the NASDAQ stock market rules. Failure to comply with such laws and regulations could have a
material adverse impact on our financial condition or the price of our common stock.
Concentration of ownership among our existing executive officers, directors and principal stockholders
may prevent new investors from influencing significant corporate decisions.
Our executive officers, directors and our largest stockholder own, in the aggregate, approximately 38.7% of
our outstanding common stock and will own options that will enable them to own, in the aggregate, approximately
40.1% of our outstanding common stock. As a result, these stockholders will be able to exercise significant
influence over all matters requiring stockholder approval, including the election of directors and approval of
significant corporate transactions and will have significant influence over our management and policies. Two of the
seven members of our board of directors are principals of Apax Partners. Funds advised by Apax Partners can take
actions that have the effect of delaying a change in control of us or discouraging others from making tender offers
for our shares, which could prevent stockholders from receiving a premium for their shares. These actions may be
taken even if other stockholders oppose them. The concentration of voting power among funds advised by Apax
Partners may have an adverse effect on the price of our common stock. The interests of these stockholders may not
be consistent with your interests as a stockholder.
In addition, our amended and restated certificate of incorporation will provide that the provisions of
Section 203 of the Delaware General Corporation Law, or the DGCL, that relate to business combinations with
interested stockholders will apply to us. Section 203 of the DGCL prohibits a publicly held Delaware corporation
from engaging in a business combination transaction with an interested stockholder for a period of three years after
the interested stockholder became such unless the transaction fits within an applicable exemption, such as board
approval of the business combination or the transaction which resulted in such stockholder becoming an interested
stockholder. The provisions of Section 203 of the DGCL may delay, prevent or deter a merger, acquisition, tender
offer or other transaction that might otherwise result in our stockholders receiving a premium over the market price
for their common stock.
Our amended and restated certificate of incorporation provides that the doctrine of corporate opportunity does
not apply to Apax Partners, funds advised by Apax Partners, or any of our directors who are employees of or
affiliated with Apax Partners, acting on Apax Partners’ behalf, or funds advised by Apax Partners, in a manner that
would prohibit them from investing or participating in competing businesses. To the extent they invest in such other
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