EXHIBIT 10.39
BRYLANE INC.
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT
THIS MANAGEMENT STOCK SUBSCRIPTION AGREEMENT (this "Agreement") is
made and entered into as of ____________, 199__ by and between Brylane Inc., a
Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxxx ("Participant"),
pursuant to that certain Brylane Inc. 1996 Senior Management Stock Subscription
Plan (the "Plan").
R E C I T A L S:
---------------
A. Participant previously purchased shares of common stock of VP
Holding Corporation pursuant to the terms of that certain Stock Subscription
Agreement dated as of May 27, 1994 between VP Holding Corporation, a Delaware
corporation ("VP Holding"), and Participant (the "VP Holding Subscription
Agreement").
B. Pursuant to the terms of Section 9(b)(i) of the VP Holding
Subscription Agreement, Participant agreed in connection with the formation of
IPO Corporation (as defined in the VP Holding Subscription Agreement, with the
term IPO Corporation understood to refer to the Company) to exchange the shares
of VP Holding common stock held by Participant for shares of common stock, $0.01
par value per share, of the Company (the "Common Stock") in the same manner as
FSEP (as defined in the VP Holding Subscription Agreement) exchanges its shares
of VP Holding common stock for shares of Common Stock of the Company in
connection with the formation of the Company. Participant further agreed in
Section 9(c) of the VP Holding Subscription Agreement to take such other actions
and to execute such agreements and documents as are necessary or desirable to
consummate such exchange.
C. The Company now desires to issue 30,000 shares of Common Stock to
Participant in exchange for 30,000 shares of VP Holding common stock held by
Participant in the manner contemplated by and required under Section 9(b)(ii) of
the VP Holding Subscription Agreement and based on the same exchange ratio at
which FSEP is exchanging shares of VP Holding common stock it holds for shares
of Common Stock. The date on which such exchange occurs shall be referred to
herein as the "Closing Date," with the exchange to occur concurrently with the
exchange of shares of VP Holding common stock by FSEP.
D. Pursuant to Section 10(h) of the VP Holding Subscription
Agreement, Participant agreed to hold such shares of Common Stock issued in
exchange for the shares of VP Holding common stock held by Participant subject
to the restrictions and interests created by the VP Holding Subscription
Agreement which are restated and set forth in this Agreement.
A G R E E M E N T:
-----------------
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and conditions contained herein, in order to implement the
prior agreements set forth in the VP Holding Subscription Agreement the parties
agree as follows:
1. Exchange of Stock. The Company will issue to Participant in
-----------------
exchange for the shares of VP Holding common stock held by Participant, subject
to the conditions and restrictions contained in this Agreement, 30,000 shares
(individually, a "Share," and collectively, the "Shares") of the Common Stock of
the Company, which for purposes of this Agreement shall be deemed to have been
issued at a price of $10.00 per Share, for an aggregate deemed exchange price of
$300,000 (the "Purchase Price") (as such amounts may be adjusted in connection
with the Initial Public Offering (as defined in the VP Holding Subscription
Agreement) and such adjustments shall apply to the exchange ratio at which FSEP
will exchange shares of VP Holding common stock it holds for shares of Common
Stock). The Purchase Price is equal to the Purchase Price of the VP Holding
common stock held by the Participant which was paid by delivery of cash or
Participant's check in the amount of $300,000. Participant agrees to be bound
by and fully perform all terms and conditions of this Agreement and agrees that
this Agreement constitutes full authorization to VP Holding to transfer the
shares of VP Holding common stock held by the Participant on its books and
records to reflect the Company as the transferee thereof.
2. Restriction on Transfer of the Shares. Participant hereby agrees
-------------------------------------
to execute and comply with the provisions of a reasonable lock-up agreement in
connection with an Initial Public Offering (the "Lock-up Agreement").
3. The Company's Repurchase Obligation.
-----------------------------------
(a) The Company's Repurchase Obligation. Until May 27, 1998, if
-----------------------------------
the Participant ceases to be a member of the Board of Directors of the Company
and/or all of its directly or indirectly majority or wholly owned entities
(individually, a "Subsidiary," and collectively, the "Subsidiaries") due to the
Participant's death or disability, upon the request of the Participant (or his
legal representative), made within 120 days of the effective date of such
termination (the "Termination Date"), the Company shall repurchase all or any
part of
2
the Participant's Shares at a price (the "Repurchase Price") equal to $10.00 per
Share or the Fair Market Value of a Share (as defined below), whichever is
greater, provided that such repurchase is permitted under the debt agreements of
the Company or any of its direct or indirect subsidiaries. If such debt
agreements do not permit such repurchase, the Company's obligations under this
subsection (a) shall continue until 120 days after the date such repurchase
shall be permitted; provided however that notwithstanding the foregoing, all
obligations of the Company under this subsection (a) shall terminate on the
later of May 27, 1998 or the second anniversary of the Termination Date. The
Participant (or his legal representative) shall provide the Company within such
120 day period with a written notice of the Participant's (or his legal
representative's) election to require the Company to repurchase Shares pursuant
to this Section 3(a). Such notice shall specify (i) the number of Shares which
the Participant (or his legal representative) elects to have the Company
repurchase pursuant to this Section 3(a); and (ii) a day which shall not be less
than 20 days and not more than 30 days after the date such notice is delivered,
on which Participant (or his legal representative) shall surrender (if such
surrender has not already occurred) the certificate or certificates representing
the Shares to be repurchased by the Company pursuant to this Section 3(a) (duly
endorsed in blank for transfer) at the principal office of the Company in
exchange for the Company's check, payable to Participant (or Participant's legal
representative) in the amount equal to the Repurchase Price, calculated as
provided in this Section 3(a), multiplied by the number of Shares to be
purchased. At the closing of the Company's purchase of the Shares, the Company
will notify the Participant (or his legal representative) in writing of the
amount of the Repurchase Price.
(b) Company Agreement. The Company hereby agrees that any existing
-----------------
debt agreement that contains provisions with respect to permitted distributions
by Brylane, L.P. (the "Partnership") to the Company to make the repurchase
described in Section 3(a) shall not be amended with respect to such provisions
unless (i) the effect of such amendment is to expand the right of the
Partnership to make such distributions, or (ii) the Partnership is restructuring
its outstanding debt or is in default under any such agreement in which event
the Company shall cause the Partnership to use its reasonable efforts to
maintain a similar provision in any amended agreement. The Company shall cause
the Partnership to use its reasonable best efforts to cause substantially
similar provisions with respect to such permitted distributions to be contained
in the documents executed in connection with refinancing of such indebtedness of
the Partnership outstanding on the date hereof.
(c) Definition of Fair Market Value. As used herein, the "Fair Market
-------------------------------
Value" of a Share shall be determined based on the average of the Quoted Prices
of a share of Common Stock for the five consecutive business days prior to the
Termination Date. The "Quoted Price" of a share of Common Stock shall be the
last reported sales price of the Common Stock as reported by Nasdaq ("Nasdaq"),
or if the Common Stock is listed on a securities exchange, the last reported
sales price of the Common Stock on such exchange (which shall be for
consolidated trading if applicable to such exchange), or if the Common
3
Stock is not so reported or listed, the average of the last reported bid and
asked price of the Common Stock. If at any time the Common Stock is not listed
on any exchange or Nasdaq, the Board of Directors shall determine such Fair
Market Value on the basis of the best available evidence, which determination
shall be final and binding.
4. Investment Representations. Participant represents and warrants
--------------------------
to the Company as follows:
(a) Binding Agreement. This Agreement has been duly and validly
-----------------
executed and delivered by the Participant and this Agreement constitutes a
legal, valid and binding agreement of the Participant, enforceable against the
Participant in accordance with its terms (except as enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
creditors' rights generally or by principles governing the availability of
equitable remedies).
(b) Participant's Own Account. Participant is acquiring the
-------------------------
Shares for Participant's own account and not with a view to or for sale in
connection with any distribution of the Shares. The Participant is a resident of
the State of Connecticut.
(c) Shares Not Registered. Participant understands that the
---------------------
Shares have not been registered under the Act or registered or qualified under
the securities laws of any state and that Participant may not Transfer the
Shares unless they are subsequently registered under the Act and registered or
qualified under applicable state securities laws, or unless an exemption is
available which permits Transfers without such registration and qualification.
Notwithstanding the foregoing, Participant has certain registration rights under
Section 6.
5. Termination. This Agreement shall terminate and be of no force
-----------
and effect if the Company does not complete an Initial Public Offering that
results in (i) receipt by the Company of at least $30,000,000 of gross proceeds
from the sale of newly issued stock or (ii) the sale of newly issued Common
Stock representing at least 20% of the outstanding Common Stock of the Company
(after giving effect to such offering); provided, however, that if the Company
completes an Initial Public Offering that does not satisfy the requirements of
clause (i) or (ii) of this sentence, a new subscription agreement containing all
rights and obligations required to be contained therein pursuant to the VP
Holding Subscription Agreement will be executed by the Company and Participant.
6. Registration Rights. If the Participant is otherwise free to
-------------------
transfer the Shares under Section 2 hereof, but the Participant cannot transfer
such Shares in compliance with Rule 144 (due to the imposition of a waiting
period) under the Securities Act of 1933, as amended (the "Act"), then the
Company shall, on the later of (i) 120 days after the consummation of the
Initial Public Offering or (ii) the termination of any lock-up period
4
pursuant to the Lock-up Agreement; provided, however, in no event shall
registration be effected later than the time any of the FSEP shares are first
available for public sale whether pursuant to a filed registration statement or
otherwise, cause the Shares held by the Participant to be registered under the
Act, on a registration statement on Form S-8 (which shall, if necessary to
permit resales of all Shares owned by Participant include a resale prospectus in
appropriate form) or, if unavailable, on Forms S-2 or S-3 (to the extent the
Company qualifies for the use of such forms).
7. Miscellaneous.
-------------
(a) Legends on Certificates. Any and all certificates now or
-----------------------
hereafter issued evidencing the Shares shall have endorsed upon them a legend
substantially as follows:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS UPON TRANSFER AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT IN ACCORDANCE
WITH THE TERMS AND CONDITIONS OF THAT CERTAIN STOCK SUBSCRIPTION
AGREEMENT DATED AS OF ____________, 199__ BY AND BETWEEN BRYLANE INC.,
A DELAWARE CORPORATION, AND THE ORIGINAL PARTICIPANT HEREOF, A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF
BRYLANE INC."
Such certificates shall also bear such legends and shall be subject to such
restrictions on transfer as may be necessary to comply with all applicable
federal and state securities laws and regulations.
(b) Further Assurances. Each party hereto agrees to perform any
------------------
further acts and execute and deliver any documents which may be reasonably
necessary to carry out the intent of this Agreement.
(c) Notices. Except as otherwise provided herein, all notices,
-------
requests, demands and other communications under this Agreement shall be in
writing, and if given by telegram, telecopy or telex, shall be deemed to have
been validly served, given or delivered when sent, if given by personal
delivery, shall be deemed to have been validly served, given or delivered upon
actual delivery and, if mailed, shall be deemed to have been validly served,
given or delivered three Business Days after deposit in the United States mails,
as registered or certified mail, with proper postage prepaid and addressed to
the party
5
or parties to be notified, at the following addresses (or such other address(es)
a party may designate for itself by like notice):
If to the Company:
Brylane Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to Participant:
Xxxxxxx X. Xxxxxxx
X.X. Xxx 0000
Xxxxxx Xxxxx Xx, Xxxxxxxxxx 00000
Federal Express: 0000 Xx Xxxxxxx
Xxxxxx Xxxxx Xx, Xxxxxxxxxx 00000
(d) Amendments. This Agreement may be amended only by a written
----------
agreement executed by both of the parties hereto.
(e) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware.
(f) Disputes. In the event of any dispute among the parties
--------
arising out of this Agreement, the prevailing party shall be entitled to recover
from the nonprevailing party the reasonable expenses of the prevailing party
including, without limitation, reasonable attorneys' fees.
(g) Entire Agreement. This Agreement constitutes the entire
----------------
agreement and understanding among the parties pertaining to the subject matter
hereof and supersedes any and all prior agreements, whether written or oral,
relating hereto.
(h) Recapitalizations or Exchanges Affecting the Company's
------------------------------------------------------
Capital Stock; Issuances of Capital Stock. The provisions of this Agreement
-----------------------------------------
shall apply to any and all shares of capital stock or other securities of the
Company or any successor or assign of the Company which may be issued in respect
of, in exchange for or in substitution of, the Shares by reason of any stock
dividend, stock split, reverse split, recapitalization, reclassification,
combination, merger, consolidation or otherwise, and such shares or other
securities shall be encompassed within the term "Shares" for purposes of this
Agreement. The Company agrees that it shall not issue additional shares of
common stock to FSEP unless
6
the Company's Board of Directors shall have made a good faith determination that
the purchase price for any such shares is equal to the fair market value of such
shares.
(i) No Rights to Continued Service. Nothing in this Agreement
------------------------------
shall affect in any manner whatsoever the rights of the Company (or any other
entity) to terminate Participant's status as a member of the Board of Directors
of the Company or as a member of the Board of Representatives of the Partnership
for any reason, with or without cause.
(j) Disclosure. The Company shall have no duty or obligation to
----------
affirmatively disclose to Participant, and Participant shall have no right to be
advised of, any material information regarding the Partnership, Company or any
of its Subsidiaries at any time prior to, upon or in connection with the
Company's repurchase of the Shares under this Agreement at the cessation or
termination of Participant's service as a member of the Board of Directors of
the Company or as a member of the Board of Representatives of the Partnership.
(k) Successors and Assigns. The Company may assign with absolute
----------------------
discretion any or all of its rights and/or obligations and/or delegate any of
its duties under this Agreement to any of its affiliates, successors and/or
assigns and this Agreement shall inure to the benefit of, and be binding upon,
such respective affiliates, successors and/or assigns of the Company in the same
manner and to the same extent as if such affiliates, successors and/or assigns
were original parties hereto. For purposes of this Agreement, the term "Shares"
shall include shares of capital stock or other securities of the Company or any
successor or assign of the Company which are issued in respect of, in exchange
for or in substitution of the Shares by reason of any stock dividend, stock
split, reverse split, recapitalization, reclassification, combination, merger,
exchange or consolidation. Unless specifically provided herein to the contrary,
Participant may not assign any or all of its rights and/or obligations and/or
delegate any or all its duties under this Agreement without the prior written
consent of the Company. Upon an assignment of any or all of Participant's
rights and/or obligations and/or a delegation of any or all of its duties under
this Agreement in accordance with the terms of this Agreement, this Agreement
shall inure to the benefit of, and be binding upon, Participant's respective
affiliates, successors and/or assigns in the same manner and to the same extent
as if such affiliates, successors and/or assigns were original parties hereto.
(l) Headings. Introductory headings at the beginning of each
--------
section and subsection of this Agreement are solely for the convenience of the
parties and shall not be deemed to be a limitation upon or description of the
contents of any such section and subsection of this Agreement.
(m) Counterparts. This Agreement may be executed in two
------------
counterparts, each of which shall be deemed an original and both of which, when
taken together, shall constitute one and the same Agreement.
7
8. Representations, Warranties and Covenants of the Company.
--------------------------------------------------------
(a) Organization and Related Matters. The Company is duly
--------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has all necessary corporate power and authority to own its
properties and assets and to carry on its businesses as now conducted and is
duly qualified or licensed to do business as a foreign corporation in good
standing in all jurisdictions in which the character or the location of the
assets owned or leased by it or the nature of the business conducted by it
requires licensing or qualifications. True, correct and complete copies of the
charter documents of the Company and the Plan as in effect on the date hereof
have been delivered to the Participant. The Company beneficially owns all of the
outstanding partnership interests of the Partnership.
(b) Capitalization. As of the date hereof, the authorized
--------------
capital stock of the Company consists of 40,000,000 shares of common stock,
$0.01 par value (the "Common Stock"), of which _______ shares are issued and
outstanding, and 1,000,000 shares of preferred stock, $0.01 par value of which
no shares are issued and outstanding. All Shares issued to the Participant
hereunder will be validly issued, fully paid, nonassessable and free of
preemptive rights. There are no options, warrants, calls, subscriptions or other
rights or other agreements, arrangements or commitments of any nature obligating
the Company to issue, transfer or sell any shares of Common Stock, except as
otherwise provided in (i) this Agreement, (ii) the Plan and the 1996 Stock
Subscription Plan, (iii) the Brylane Inc. 1996 Performance Stock Option Plan and
(iv) the 1996 Stock Option Plan.
(c) Authority Relative to This Agreement. The Company has all
------------------------------------
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Company's Board of Directors
and no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated.
This Agreement has been duly and validly executed and delivered by the Company
and this Agreement constitutes a legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms (except as
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting creditors' rights generally or by principles governing
the availability of equitable remedies).
(d) Consents and Approvals; No Violation. No order, permit,
------------------------------------
consent, approval, license, authorization or validation or, and no registration,
filing of notice with, any governmental entity is necessary to authorize or
permit, or is required in connection with, the execution, delivery or
performance of this Agreement or the consummation by the Company of the
transactions contemplated hereby (assuming the truth of Participant's
representations in Section 4 hereof). Neither the execution, delivery nor
consummation of this Agreement nor compliance by the Company with any of the
provisions
8
hereof will (i) violate, conflict with or result in any breach of any provision
of the Company's charter documents, (ii) result in a violation or breach or
termination of, or constitute a default under, any material agreement to which
the Company is subject, or (iii) violate any judgment, order, writ, injunction,
decree, award, statute, rule or regulation to which the Company is subject
(assuming the truth of the Participant's representations in Section 4).
(e) Exchange Ratio. The Company shall issue shares of Common
--------------
Stock to Participant based on the same exchange ratio at which FSEP is
exchanging shares of VP Holding common stock it holds for shares of Common
Stock.
(f) Same Number and Kind of Securities. The Company hereby agrees
----------------------------------
that with respect to its formation as the IPO Corporation, all stockholders of
VP Holding including the Participant, any management stockholder of VP Holding,
FSEP and any limited partner of FSEP (subsequent to any distribution by FSEP to
its limited partners) shall receive the same number and kind of securities of
the Company for each share of VP Holding common stock.
(g) Tax Effects. The Company will consider the tax effects on the
-----------
Participant of any exchange for or conversion of shares of VP Holding common
stock into shares of Common Stock.
9
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
THE COMPANY:
BRYLANE INC.,
a Delaware corporation
By: _____________________________
Its: _________________________
PARTICIPANT:
__________________________________
Xxxxxxx X. Xxxxxxx
10
