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Exhibit 2.1
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement"), made as of
April 6, 1997, by and among Xx. Xxxxx Xxxxxx, an individual residing in the
State of New York ("Lauren"), RL Holding, L.P., a Delaware limited partnership,
RL Family, L.P., a Delaware limited partnership, GS Capital Partners, L.P., a
Delaware limited partnership ("GSCP"), GS Capital Partners PRL Holding I, L.P.,
a Delaware limited partnership ("Holding I"), GS Capital Partners PRL Holding
II, L.P., a Delaware limited partnership ("Holding II"), Stone Street Fund 1994,
L.P., a Delaware limited partnership ("Stone Street"), Stone Street 1994
Subsidiary Corp., a Delaware corporation and wholly owned subsidiary of Stone
Street ("Stone Street Sub"), and Bridge Street Fund 1994, L.P., a Delaware
limited partnership ("Xxxxxx Xxxxxx") (collectively, the "Subscribers"), and
Xxxx Xxxxx Xxxxxx Corporation, a Delaware corporation (the "Corporation").
W I T N E S S E T H T H A T :
WHEREAS, the Corporation proposes to issue and sell, and the
Subscribers wish to purchase, on the Transfer Closing Date (as defined in that
certain Assignment and Assumption Agreement, dated as of the date hereof, by and
among the Corporation and the Subscribers (the "Assignment and Assumption
Agreement")), shares of Class B Common Stock, par value $.01 per share, of the
Corporation (the "Class B Common Stock") and shares of Class C Common Stock, par
value $.01 per share, of the Corporation (the "Class C Common Stock," and
collectively, with the
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Class B Common Stock and the Class A Common Stock, par value $.01 per share, of
the Corporation ("Class A Common Stock"), the "Common Stock"), as set forth in
Schedule 1 and certain Notes (as defined herein); and
WHEREAS, as consideration for the shares of Common Stock and
the Notes that the Subscribers wish to purchase, the Subscribers propose to
assign, and the Corporation wishes to assume, pursuant to the terms and
conditions of the Assignment and Assumption Agreement, all of the Subscribers'
interests, except for rights to receive allocations and distributions with
respect to the earnings of Fragrances, LLC (as defined below) through the
Transfer Closing Date, in each of Xxxx Xxxxx Lauren Enterprises, L.P., a
Delaware limited partnership ("Enterprises"), Xxxx Xxxxx Xxxxxx, L.P., a
Delaware limited partnership ("Polo"), The Xxxxx Lauren Womenswear Company,
L.P., a Delaware limited partnership ("Womenswear"), The Xxxxx Xxxxxx Womenswear
Company, Inc., a Delaware corporation ("Womenswear Inc."), and RL Fragrances,
LLC, a Delaware limited liability company ("Fragrances, LLC") (collectively, the
"Polo Entities" and the interests of the Subscribers in the Polo Entities, the
"Equity Interests").
NOW THEREFORE, in consideration of good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Upon the terms and subject to the conditions set forth
herein, and in consideration for the Equity Interests, on the Transfer Closing
Date (i) each Subscriber hereby subscribes for such number of shares of Common
Stock as is represented by the percentage of total shares of Common Stock
outstanding immediately after the Reorganization (as defined in the Assignment
and Assumption
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Agreement) represented by the percentage of Common Stock set forth opposite such
Subscriber's name in Schedule 1 hereto, which shares shall be in the form of the
class of Common Stock set forth on Schedule 1 opposite such Assignor's name and
(ii) each Subscriber other than RL Family, L.P. shall receive a promissory note
(collectively, the "Notes"). The Notes shall be non-interest bearing and shall
be payable on the same date as are any dividends declared by the Corporation on
or prior to the Transfer Closing Date but which are payable on a date after the
Transfer Closing Date (the "Deferred Dividend"). The amount of each Note shall
be equal to the product of (a) the number of shares of Common Stock the
respective Subscriber will receive pursuant to this Agreement and (b) an amount
equal to the dividend per share (on a post-split basis) of the Deferred
Dividend; provided that, any Note to be received by Lauren shall be based solely
on the number of shares of Common Stock he will acquire pursuant to the
Reorganization and not be based on any shares he owned prior to Reorganization,
all as noted opposite his name on Schedule 1. Payment therefor will be made by
each Subscriber (upon the issuance of an appropriate certificate or certificates
representing such shares to and in the name of such Subscriber) on the Transfer
Closing Date, pursuant to the Assignment and Assumption Agreement, by transfer
of each Subscriber's respective Equity Interests as set forth opposite such
Subscriber's name in Schedule 1 hereto. The parties intend that the transactions
contemplated by this Paragraph 1 will be treated as a transaction described in
Section 351 of the Internal Revenue Code of 1986, as amended (the "Code"), in
which the Subscribers are a single group of transferors that control the
Corporation within the meaning of Sections 351 and 368(c) of the Code.
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2. The shares of Common Stock subscribed for hereunder (the
"Shares") shall be issued on the Transfer Closing Date and, when issued, shall
be fully paid and non-assessable and the certificates therefor shall so state.
3.
3.1 The Corporation represents and warrants to the
Subscribers that:
(a) the Corporation has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware;
(b) the Corporation has all requisite power
and authority (corporate or otherwise) to enter into this
Agreement; and
(c) the compliance by the Corporation with
all provisions of this Agreement will not conflict with or
result in a breach of violation of any understanding or
agreement to which the Corporation is bound or subject and
will not result in any violation of the Certificate of
Incorporation or By-laws of the Corporation or any statute,
order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Corporation or any of its
properties and no consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the consummation
by the Corporation of the transactions contemplated by this
Agreement.
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3.2 The Corporation represents and warrants to GSCP,
Holding I, Holding II, Stone Street, Stone Street Sub and Bridge Street
that:
(a) the Corporation has not, prior to the
Transfer Closing Date, engaged in any business other than
holding partnership interests in, and serving as general
partner of, each of Enterprises and Polo, being party to
contracts relating to the Reorganization, being parties to
contracts related to the acquisition of Xxxx Xxxxx Xxxxxx
Retail Corp., a Delaware corporation ("Polo Retail Corp."),
being parties to a Merger Agreement dated April 3, 1997 with
Xxxx Xxxxx Lauren Corporation, a New York corporation (the
"Predecessor"), effecting the merger contemplated by such
agreement and, prior to October 31, 1994, through the
Predecessor, operating the Polo/Xxxxx Xxxxxx business;
(b) the Corporation has no liabilities or
obligations of any kind (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to
become due) other than (i) as general partner of Enterprises
and Polo, (ii) pursuant to contracts relating to the
Reorganization and to the acquisition of Polo Retail Corp.,
(iii) those resulting from operations by the Predecessor of
the Polo/Xxxxx Lauren business prior to October 31, 1994 and
as general partner of Enterprises and Polo on or after such
date and (iv) pursuant to that certain Call Agreement dated
October 17, 1995 among the Predecessor, Polo, Womenswear and
the CIT Group/Commercial Services, Inc. (the "Call
Agreement");
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(c) Womenswear Inc. has not, prior to the
Transfer Closing Date, engaged in any business other than
holding partnership interests in, and serving as general
partner of, Womenswear; and
(d) Womenswear Inc. has no liabilities or
obligations of any kind (whether accrued, absolute,
contingent, unliquidated, or otherwise, whether due or to
become due) other than as general partner of Womenswear.
3.3 RL Family, L.P. represents and warrants to the
Corporation that Fragrances, LLC (i) owns (a) all of the limited
partnership interests in The Polo/Lauren Company, L.P., (b) all right,
title and interest in and to the "Marks," "Registrations,"
"Trademarks," rights of the Licensor under the "License Agreement" and
the "Licensing Property" conveyed pursuant to (and as defined in) the
Assignment and Assumption Agreement (the "Fragrance Assignment and
Assumption Agreement") dated April 2, 1997, by and between a trust with
Xxxx X. Xxxxxx and Xxxxx Xxxxxx acting on its behalf as trustees
created pursuant to a Trust Agreement, dated September 21, 1976, by and
among Xxxxx Lauren, Xxxxx Xxxxxx and Xxxx X. Xxxxx and Fragrances, LLC,
and all other assets being transferred to Fragrances, LLC pursuant to
the Fragrance Assignment and Assumption Agreement and (c) no other
assets, (ii) has no liabilities or obligations of any kind (whether
accrued, absolute, contingent, unliquidated or otherwise, whether due
or to become due) other than those assumed pursuant to the Fragrance
Assignment and Assumption Agreement and (iii) owns (a) the
Registrations and the right to receive all royalties to the extent
payable under the License Agreement, (b) all
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of the limited partnership interests in The Polo/Lauren Company, L.P.
and (c) the right to receive all distributions to the extent payable
with respect to such limited partnership interests, in each case, free
and clear of all liens and encumbrances which would materially
interfere with its right to receive such royalties and distributions.
4. Each Subscriber represents and warrants, severally but not
jointly, that:
4.1 such Subscriber has full right, power and
authority to execute this Agreement, and the execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby will not violate any law, rule or regulation binding upon such
Subscriber, require the approval or consent of any governmental or
regulatory body, except for consents required pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder (the "HSR Act") or the
consent of any other person, conflict with or result in any breach or
violation of any of the terms and conditions of, or constitute (or with
notice or lapse of time or both constitute) a default under, any
certificate of incorporation, certificate of formation, by-law,
partnership agreement, statute, regulation, order, judgement, or decree
applicable to the Subscriber, or violate any understanding or agreement
to which such Subscriber is bound or subject;
4.2 (i) in the case of a corporate Subscriber, such
corporate Subscriber is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and
(ii) in the case of a Subscriber that is a limited partnership, such
limited partnership Subscriber is a limited
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partnership duly organized and validly existing under the laws of the
jurisdiction of its formation;
4.3 such Subscriber or such Subscriber's
representatives has had an opportunity to ask questions of and receive
answers from officers of the Corporation, or a person or persons acting
on its behalf, concerning the terms and conditions of this investment.
4.4 such Subscriber is an "accredited investor" as
such term is defined in Regulation 501 promulgated under the Act and
has such knowledge and experience in financial and business matters to
evaluate the risks of investment in the Corporation; and
4.5 the Shares are being purchased by such Subscriber
for the Subscriber's own sole benefit and account for investment and
not with a view to, or for resale in connection with, a public offering
or distribution thereof other than in the Offering.
5. Each Subscriber acknowledges that such Subscriber has been
advised that the Shares have not been registered under the Act and, accordingly,
that such Subscriber may not be able to sell or otherwise dispose of the Shares
when such Subscriber wishes to do so.
6. Each Subscriber agrees that:
6.1 the Shares will not be resold (a) without
registration thereof under the Act (unless an exemption from such
registration is available) or (b) in violation of any law; and
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6.2 the certificate or certificates representing the
Shares may be impressed with a legend indicating that the Shares are
not registered under the Act and reciting that transfer thereof is
restricted.
7. Each party agrees and consents to a stock split with
respect to outstanding shares of Class B Common Stock and the conversion of the
outstanding Class A Common Stock into Class B Common Stock, in each case by the
Corporation one day prior to the Transfer Closing Date such that upon the
consummation of the transactions contemplated by this Agreement, (i) Lauren
shall be the record owner of 55.2112% of shares of Common Stock to be
outstanding immediately after the Reorganization in the form of Class B Common
Stock, and (ii) each of the Assignors shall be the record owner of the
percentage of shares of Common Stock to be outstanding immediately after the
Reorganization as set forth on Schedule 1 hereto, which shares of Common Stock
shall be in the form of the class of Common Stock as set forth on Schedule 1
opposite such Assignor's name. Lauren as sole stockholder of the Corporation
prior to the Transfer Closing Date agrees and consents to effect the necessary
stockholder action to cause such recapitalization, all as described in the draft
preliminary prospectus (the "Draft Preliminary Prospectus") provided to the
parties hereto prior to the execution of this Agreement and prepared in
connection with the Offering (as defined in the Assignment and Assumption
Agreement).
8. This Agreement may not be amended, supplemented or
discharged, and no provision hereof may be modified or waived, except expressly
by an instrument in writing signed by all of the parties. No waiver of any
provision hereof by any party shall be deemed a waiver by any other party nor
shall any waiver by any party be deemed a continuing waiver of any matter by
such party.
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9. The parties mutually covenant and agree to cooperate with
each other and promptly to take such other action and to execute and deliver, or
cause to be executed or delivered, such other and further documents as may be
reasonable and necessary to give effect to this Agreement and to the
Reorganization as described in the Draft Preliminary Prospectus.
10. If any provision hereof or any application thereof shall
be invalid or unenforceable, the remainder hereof and any other application of
such provision shall not be affected thereby.
11. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
12. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of New York.
13. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
14. The obligation of each of the parties to enter into and
complete the transactions contemplated by this Agreement is subject to the
fulfillment of the following conditions:
14.1 all of the Subscribers shall have simultaneously
assigned, transferred and set over their respective partnership
interests in Enterprises, Polo and Womenswear and their respective
equity interests in Womenswear Inc. and Fragrances, LLC (as set forth
in Schedule 1) simultaneously with or prior to the closing of the
transaction contemplated in this Agreement and all
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conditions to closing set forth in Section 11 of the Assignment and
Assumption Agreement shall have been satisfied;
14.2 all filings required to be made prior to the
Transfer Closing Date with, and all consents, approvals, permits and
authorizations required to be obtained prior to the Transfer Closing
Date from, governmental entities, including, without limitation, any
such filings under the HSR Act, in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby by the Corporation and the Subscribers will have
been made or obtained (as the case may be) and all HSR Act waiting
periods shall have expired or been terminated;
14.3 except for (a) liabilities or obligations
incurred pursuant to the declaration of any Deferred Dividend, (b)
liabilities or obligations incurred pursuant to the declaration of any
dividend by Womenswear Inc. on or prior to the Transfer Closing Date
but which is payable on a date after the Transfer Closing Date which
represents a good faith estimate of Womenswear Inc.'s undistributed
earnings through the Transfer Closing Date as determined for United
States Federal income tax purposes, and (c) amounts payable to RL
Family, L.P. by Fragrances, LLC equal to the undistributed earnings of
Fragrances, LLC through the Transfer Closing Date as determined for
United States Federal income tax purposes, the representations and
warranties of the Corporation and each of the Subscribers shall be true
and correct as of the Transfer Closing Date as if made at such time;
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14.4 the Corporation shall have circulated a
preliminary prospectus for the initial public offering of its shares of
Class A Common Stock;
14.5 the Corporation shall have delivered to the
Subscribers a certificate executed by its Secretary certifying a true
and complete copy of its Certificate of Incorporation and By-Laws,
which shall be in a form consistent with the description thereof in the
Draft Preliminary Prospectus; and
14.6 the Subscribers and the Corporation shall have
duly executed and delivered the Stockholders Agreement referenced in
Section 12 of the Assignment and Assumption Agreement.
15. The parties agree that no distribution shall be made by
Enterprises, Polo or Womenswear from and after April 3, 1997 and on or before
the Transfer Closing Date unless such distribution is made consistent with the
past practice of the distributing entity (except that distributions that would
in the ordinary course of business have been made within 60 days after the
Transfer Closing Date can be made one day prior to the Transfer Closing Date)
and is not funded from indebtedness other than indebtedness incurred in the
ordinary course of business and consistent with the past practice of the
distributing entity.
16. The parties agree that any liability of RL Family, L.P. to
the Corporation for any breach of its representations contained in Section 3.3
shall be limited to the shares of Class B Common Stock issued by the Corporation
to RL Family, L.P. pursuant to this Agreement and the Assignment and Assumption
Agreement in consideration of the transfer by RL Family, L.P. to the Corporation
of
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its interests in Fragrances, LLC, and any proceeds received by RL Family, L.P.
upon any subsequent sale of such shares.
17. This Agreement may be terminated at the election of any of
the Subscribers or the Corporation if the Transfer Closing Date has not occurred
on or prior to August 31, 1997.
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the day and year first above written.
CORPORATION:
XXXX XXXXX XXXXXX CORPORATION
By:______________________________________
Name:
Title:
SUBSCRIBERS:
XXXXX LAUREN
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RL HOLDING, L.P.
By: RL HOLDING GROUP, INC.,
its general partner
By:______________________________
Name: Xxxxx Xxxxxx
Title:
RL FAMILY, L.P.
By:______________________________________
Name: Xxxxx Xxxxxx
Title: General Partner
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GS CAPITAL PARTNERS, L.P.
By:________________________________________
Name:
Title:
GS CAPITAL PARTNERS PRL HOLDING I, L.P.
By:________________________________________
Name:
Title:
GS CAPITAL PARTNERS PRL HOLDING II, L.P.
By:________________________________________
Name:
Title:
XXXXX XXXXXX XXXX 0000, X.X.
By:________________________________________
Name:
Title:
STONE STREET 1994 SUBSIDIARY CORP.
By:________________________________________
Name:
Title:
XXXXXX XXXXXX XXXX 0000, X.X.
By:________________________________________
Name:
Title:
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SCHEDULE 1
PERCENTAGE OF TOTAL COMMON
STOCK OF XXXX XXXXX XXXXXX
CORPORATION TO BE OUTSTANDING
IMMEDIATELY AFTER THE
REORGANIZATION
NAME OF ASSIGNOR Equity Interests (INCLUDING CLASS OF STOCK)
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Xx. Xxxxx Xxxxxx (i) 5.1053% limited partnership 55.2112% as Class B Common
interest of Enterprises Stock (including 50.192% owned
(ii) 100% common stock of immediately prior to
Womenswear Inc. Reorganization and 5.0192%
acquired pursuant to
Reorganization)
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RL Holding, L.P. 15.3947% limited partnership 15.0376%, as Class B Common
interest of Enterprises Stock
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RL Family, L.P. 100% membership interest of 1.75%, as Class B Common
Fragrances, LLC Stock
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GS Capital Partners, L.P. (i) 15.0717% limited 14.8079%, as Class C Common
partnership interest of Stock
Enterprises
(ii) 0.2108% limited
partnership interest of Polo
(iii) 0.2108% limited
partnership interest of
Womenswear
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GS Capital Partners PRL (i) 6.6808% limited partnership 6.5639%, as Class C Common
Holding I, L.P. interest of Enterprises Stock
(ii) 0.0935% limited
partnership interest of Polo
(iii) 0.0935% limited
partnership interest of
Womenswear
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GS Capital Partners PRL (i) 5.1641% limited partnership 5.0737%, as Class C Common
Holding II, L.P. interest of Enterprises Stock
(ii) 0.0722% limited
partnership interest of Polo
(iii) 0.0722% limited
partnership interest of
Womenswear
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Stone Street Fund 1994, L.P. (i) 0.73560% limited 0.7227%, as Class C Common
partnership interest of Stock
Enterprises
(ii) 0.103% limited partnership
interest of Polo
(iii) 0.0103% limited
partnership interest of
Womenswear
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SCHEDULE 1
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(Continued)
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PERCENTAGE OF TOTAL COMMON
STOCK OF XXXX XXXXX XXXXXX
CORPORATION TO BE OUTSTANDING
IMMEDIATELY AFTER THE
REORGANIZATION
NAME OF ASSIGNOR Equity Interests (including class of stock)
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Stone Street 1994 Subsidiary (i) 0.03790% limited 0.0372%, as Class C Common
Corp. partnership interest of Stock
Enterprises (ii) 0.0005% limited
partnership interest of Polo
(iii) 0.0005% limited
partnership interest
of Womenswear
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Bridge Street 1994, L.P. (i) 0.80990% limited 0.7957%, as Class C Common
partnership interest of Stock
Enterprises
(ii) 0.0113% limited
partnership interest of Polo
(iii) 0.0113% limited
partnership interest of
Womenswear
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