<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 19, 1998
--------------------------
Commission file number: 33-86154
Brylane Inc.
- --------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3794198
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(State or other (I.R.S. Employer
jurisdiction Identification No.)
of incorporation)
463 Seventh Avenue, 21st Floor, New York, New York 10018
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 613-9500
-----------------------------
Not Applicable
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(Former name or former address, if changed since last report.)
Page 1 of 6 Pages
Exhibit index begins at page 6.
<PAGE>
ITEM 5. OTHER EVENTS.
(a) Pursuant to Stock Purchase Agreements dated as of February 19,
1998 (the "Agreements") between Pinault Printemps-Redoute, S.A., a company
organized under the laws of France ("PPR"), and certain shareholders of Brylane
Inc. ("Brylane"), the parent company of Brylane, L.P., FS Equity Partners II,
L.P., FS Equity Partners III, L.P., FS Equity Partners International, L.P., and
M&P Distributing Company (hereinafter referred to as the "Selling
Stockholders") and subject to the terms and conditions contained in the
Agreements, will acquire an aggregate of 6,963,056 shares of Brylane Common
Stock (approximately 40% of Brylane Common Stock currently outstanding) for
$51.00 per share, or an aggregate of approximately $355 million. PPR has agreed
to certain limitations on its rights to acquire additional shares and the
nature of transactions it will conduct with Brylane, as discussed further below.
The Agreements further provide that PPR will purchase, at the price
agreed to with the Selling Stockholders, (i) all shares tendered to PPR (up to a
maximum of 595,195 shares in the aggregate) by stockholders of Brylane
exercising "tag-along rights" (as defined in Brylane's Stockholders Agreement
dated as of February 26, 1997), and (ii) up to an additional 163,900 shares to
be sold by certain specified management stockholders not having tag-along
rights. In addition, pursuant to the Agreement, PPR may, upon consummation of
the transaction, purchase (again at the price agreed to with the Selling
Stockholders) up to 685,584 shares underlying options and convertible preferred
stock previously granted to members of Brylane's management.
The Agreements are conditioned upon, among other things: the
expiration or early termination of the applicable Hart-Scott-Rodino Antitrust
Improvements Act waiting period; execution of a corporate governance agreement
substantially in the form of Exhibit B-1 to the Agreements; execution of an
amendment to the existing trademark license agreement between Brylane and
affiliates of The Limited, Inc. in accordance with the summary of terms,
attached as Exhibit B-2 to the Agreements; and completion of certain agreed upon
arrangements with or for the benefit of the Brylane management. The parties
intend to consummate PPR's acquisition of Brylane's Common Stock as soon as
practicable after the satisfaction or waiver of the conditions set forth in the
Agreements.
Upon completion of the transaction, five representatives of PPR will
join the Brylane Board of Directors, and the five current directors affiliated
with the Selling Stockholders will resign. Peter J. Canzone will continue as
Chairman of the Board, and the Board of Directors will appoint a ninth director
who is an independent director (as defined in the Agreements). Brylane's Bylaws
will be amended by action of the Board of Directors to accommodate this Board
composition, including three independent directors. No change in Brylane's
existing management is contemplated by Brylane.
2
<PAGE>
Upon the consummation of this transaction, Brylane and PPR will enter
into a Governance Agreement substantially in the form filed herewith. The
Governance Agreement provides for certain limitations on PPR during a standstill
period (the "Standstill Period") which terminates at the earlier of three years
or (i) an occurrence of certain events of default on the part of Brylane or a
subsidiary under any debt arrangement, (ii) an acquisition or an announcement of
a tender offer or exchange offer by an entity not affiliated with PPR which
would result in the acquisition of beneficial ownership of more than 20% of the
outstanding voting securities of Brylane, (iii) the commencement of an election
contest or any other action which seeks the removal of Brylane directors from
office, and (iv) the written submission by an entity not affiliated with PPR of
a proposal to Brylane, expressing an interest in pursuing a merger,
consolidation or other business combination of Brylane, sale of all or
substantially all of the assets of Brylane or significant recapitalization or
significant reorganization of Brylane (a "Covered Transaction") (unless such
proposal is rejected by a majority of the independent directors). During the
Standstill Period, without the consent of a majority of the independent
directors, PPR cannot (a) acquire more than approximately 47.5% of the
outstanding Common Stock of Brylane; (b) act in concert with any other person or
group by becoming a member of a 13D Group (as defined in the Governance
Agreement), other than any 13D Group comprised exclusively of PPR and its
affiliates; (c) solicit, encourage or publicly propose to effect any Covered
Transaction; (d) solicit, initiate, encourage or participate in any solicitation
of proxies or become a participant in any election contest, participate in the
call of any special meeting of Brylane shareholders, request any list of Brylane
security holders, participate in the proposal or approval of a shareholder
proposal; or (e) assist, advise, encourage or act in concert with any person
with respect to any of the foregoing. The Governance Agreement also requires
that a majority of the independent directors of Brylane approve certain
specified transactions, including any amendment to Brylane's charter or bylaws
(or other instrument) or the Governance Agreement, which would have the effect
of altering the terms of the Governance Agreement in a manner adverse to non-PPR
stockholders, any disposition of Brylane's assets or other transaction in which
PPR would receive consideration different from that received by other Brylane
stockholders. In addition, PPR has agreed that, for a specified period, Brylane
will have a right of first refusal with respect to opportunities within the U.S.
mail-order business made available to PPR. The Governance Agreement also
provides that for a one-year period, a two-thirds vote of directors is required
to terminate (other than for cause) certain members of management; and other
covenants relating to the composition of the Board and committees thereof.
In addition, upon consummation of the transaction, new employment
agreements with three year terms and substantially similar provisions as the
existing agreements will be entered into with certain members of Brylane
existing management. Employment agreements with three year terms will also be
entered into with certain members of Brylane management who did not previously
have employment agreements. After the consummation of the transaction, Brylane
expects that its performance option plan will be replaced with a plan of
substantially similar economic value based on Brylane's long-term financial
performance and that its performance bonus program will be renewed with
substantially similar terms and economic value.
3
<PAGE>
(b) None.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS.
4.1 Form of Governance Agreement between Brylane Inc.
and Pinault Printemps-Redoute, S.A.
99.1 Stock Purchase Agreement dated as of February 19,
1998 among FS Equity Partners II, L.P., FS Equity
Partners III, L.P., FS Equity Partners
International, L.P. and Pinault Printemps-Redoute,
S.A.
99.2 Stock Purchase Agreement dated as of February 19,
1998 between M&P Distributing Company and Pinault
Printemps-Redoute, S.A.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BRYLANE INC.
Dated: March 4, 1998 By: /s/ Robert A. Pulciani
--------------------------------------
Robert A. Pulciani
Executive Vice President,
Chief Financial Officer, Secretary
and Treasurer
(On behalf of the Registrant and as
the principal financial and
accounting officer of the Registrant)
5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
---------- ---------------------------------------------------
<S> <C>
4.1 Form of Governance Agreement between Brylane Inc. and
Pinault Printemps-Redoute, S.A.
99.1 Stock Purchase Agreement dated as of February 19, 1998
among FS Equity Partners II, L.P., FS Equity Partners
III, L.P., FS Equity Partners International, L.P. and
Pinault Printemps-Redoute, S.A.
99.2 Stock Purchase Agreement dated as of February 19, 1998
between M&P Distributing Company and Pinault
Printemps-Redoute, S.A.
</TABLE>
6
<PAGE>
EXHIBIT 4.1
================================================================================
GOVERNANCE AGREEMENT
by and between
BRYLANE INC.
and
PINAULT PRINTEMPS-REDOUTE, S.A.
dated as of
______________ __, 1998
================================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
ARTICLE 1
Definitions
<S> <C>
Section 1.1 Affiliate................................................ 1
Section 1.2 Agreement................................................ 1
Section 1.3 Beneficially Own......................................... 1
Section 1.4 Board.................................................... 2
Section 1.5 Common Stock............................................. 2
Section 1.6 Company.................................................. 2
Section 1.7 Covered Transaction...................................... 2
Section 1.8 Director................................................. 2
Section 1.9 Early Termination Event.................................. 2
Section 1.10 Group.................................................... 2
Section 1.11 Independent Director..................................... 2
Section 1.12 Investor................................................. 2
Section 1.13 Investor Nominees........................................ 2
Section 1.14 Key Committees........................................... 2
Section 1.15 Material Adverse Effect.................................. 2
Section 1.15 1933 Act................................................. 2
Section 1.16 1934 Act................................................. 3
Section 1.17 person................................................... 3
Section 1.19 Permitted Percentage..................................... 3
Section 1.20 Standstill Period........................................ 3
Section 1.21 Stock Purchase Agreements................................ 3
Section 1.22 13D Group................................................ 3
Section 1.23 Voting Securities........................................ 3
ARTICLE 2
Standstill Provisions
Section 2.1 Standstill Period........................................ 3
Section 2.2 Restrictions During Standstill Period.................... 4
Section 2.3 Waivers of Restrictions.................................. 5
ARTICLE 3
Other Covenants
Section 3.1 Maintenance of Ownership................................. 6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 3.2 Actions Requiring Approval............................... 6
Section 3.3 Indemnification Agreements and Insurance................. 7
ARTICLE 4
Board of Directors
Section 4.1 Investor Nominees........................................ 7
Section 4.2 Committee Representation................................. 8
ARTICLE 5
Representations & Warranties
ARTICLE 6
Miscellaneous
Section 6.1 Counterparts............................................. 9
Section 6.2 Governing Law............................................ 9
Section 6.3 Entire Agreement......................................... 9
Section 6.4 Expenses................................................. 9
Section 6.5 Notices.................................................. 9
Section 6.6 Successors and Assigns................................... 10
Section 6.7 Headings................................................. 10
Section 6.8 Amendments and Waivers................................... 10
Section 6.9 Interpretation; Absence of Presumption................... 11
Section 6.10 Severability............................................. 11
Section 6.11 Further Assurances....................................... 11
Section 6.12 Specific Performance..................................... 11
Section 6.13 Fiduciary Dates.......................................... 11
Section 6.14 Confidentiality; Other Arrangements...................... 11
</TABLE>
-ii-
<PAGE>
THIS GOVERNANCE AGREEMENT (the "Agreement"), dated as of
---------
_________________ __, 1998, is made by and between Brylane Inc., a Delaware
corporation (the "Company"), and Pinault Printemps-Redoute, S.A., a societe
-------
anonyme organized under the laws of France ("Investor").
--------
RECITALS:
WHEREAS, the Investor and The Limited, Inc. ("The Limited") and
-----------
certain affiliates of Freeman Spogli & Co. (collectively, "FS," and together
--
with The Limited, the "Selling Stockholders") have each entered into individual
--------------------
Stock Purchase Agreements, dated as of February ___, 1998 (collectively, the
"Stock Purchase Agreements"), pursuant to which the Selling Stockholders are
- --------------------------
selling, conveying, assigning and transferring, and Investor is purchasing,
certain shares of the common stock, par value $.01 per share, of the Company
(the "Common Stock") on the date hereof; and
------------
WHEREAS, it is a condition to the transactions contemplated by the
Stock Purchase Agreements and the parties believe it to be in their best
interests that they enter into this Agreement to provide for certain rights and
restrictions with respect to the investment by Investor in the Company and the
corporate governance of the Company; and
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein and for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE 1
---------
DEFINITIONS
-----------
As used in this Agreement, the following terms shall have the
following respective meanings:
Section 1.1 "Affiliate" shall have the meaning ascribed thereto in
---------
Rule 12b-2 promulgated under the 1934 Act, and as in effect on the date hereof.
Section 1.2 "Agreement" shall have the meaning set forth in the first
---------
paragraph hereof.
Section 1.3 "Beneficially Own" shall mean, with respect to any
----------------
security, having direct or indirect (including through any Subsidiary or
Affiliate) "beneficial ownership" of such security, as determined pursuant to
Rule 13d-3 under the 1934 Act, including pursuant to any agreement, arrangement
or understanding, whether or not in writing.
Section 1.4 "Board" shall mean the board of directors of the Company.
-----
<PAGE>
Section 1.5 "Common Stock" shall have the meaning set forth in the
------------
second paragraph hereof.
Section 1.6 "Company" shall have the meaning set forth in the first
-------
paragraph hereof.
Section 1.7 "Covered Transaction" shall have the meaning set forth in
-------------------
Section 2.1(iv).
Section 1.8 "Director" shall mean a member of the Board.
--------
Section 1.9 "Early Termination Event" shall have the meaning set forth
-----------------------
in Section 2.1.
Section 1.10 "Group" shall mean a "group" as such term is used in
-----
Section 13(d)(3) of the 1934 Act.
Section 1.11 "Independent Director" shall mean Mr. William C. Johnson,
--------------------
Mr. Peter M. Starrett as well as any individual who is not a member of the
Company's management and is not affiliated with Investor, The Limited, or FS or
any of their respective affiliates (including any individual who in the past
three years has been an officer, employee, consultant or advisor of or to any of
the foregoing).
Section 1.12 "Investor" shall have the meaning set forth in the first
--------
paragraph hereof.
Section 1.13 "Investor Nominees" shall have the meaning set forth
-----------------
in Section 4.1.
Section 1.14 "Key Committees" shall have the meaning set forth in
--------------
Section 4.2.
Section 1.15 "Material Adverse Effect" shall mean a material adverse
-----------------------
effect on the results of operations, condition, financial or otherwise, or on
the earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
Section 1.16 "1933 Act" shall mean the Securities Act of 1933,
--------
as amended.
Section 1.17 "1934 Act" shall mean the Securities Exchange Act of 1934,
--------
as amended.
Section 1.18 "person" shall mean any individual, corporation,
------
partnership, limited liability company, joint venture, trust, unincorporated
organization, other form of business or legal entity or government authority.
Section 1.19 "Permitted Percentage" shall have the meaning set forth
--------------------
in Section 2.2.
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<PAGE>
Section 1.20 "Standstill Period" shall have the meaning set forth in
-----------------
Section 2.1.
Section 1.21 "Stock Purchase Agreements" shall have the meaning set
-------------------------
forth in the second paragraph hereof.
Section 1.22 "13D Group" shall mean any group of persons acquiring,
---------
holding, voting or disposing of Voting Securities which would be required under
Section 13(d) of the 1934 Act and the rules and regulations thereunder (as in
effect, and based on legal interpretations thereof existing, on the date hereof)
to file a statement on Schedule 13D with the Securities and Exchange Commission
as a "person" within the meaning of Section 13(d)(3) of the 1934 Act if such
group beneficially owned Voting Securities representing more than 5% of any
class of Voting Securities then outstanding.
Section 1.23 "Voting Securities" shall mean at any time shares of any
-----------------
class of capital stock of the Company which are then entitled to vote generally
in the election of Directors.
ARTICLE 2
---------
STANDSTILL PROVISIONS
---------------------
Section 2.1 Standstill Period. The "Standstill Period" shall be the
----------------- -------------------
period commencing on the date of Closing and ending on the earlier of (x) the
date that is 36 months from the date thereof, or (y) the earliest of:
(i) the occurrence of any event of default on the part of the
Company or any subsidiary under any debt agreements, instruments, or
arrangements which event of default would reasonably be expected to result
in a Material Adverse Effect and, in the case of a non-monetary event of
default, which event of default cannot be, or is not, cured by the Company
within the applicable cure period under such debt agreement, instrument or
arrangement;
(ii) the acquisition by any person or Group other than Investor or
any Affiliate thereof of, or the announcement or commencement of a tender
or exchange offer by any person or Group other than Investor or any
Affiliate thereof to acquire, Beneficial Ownership of more than 20% of the
outstanding shares of Voting Securities;
(iii) the commencement by any person or Group (not affiliated with
Investor) of an "election contest" (as defined in Section 2.2) or the
seeking through other means of the removal of any Directors from office;
and
(iv) the written submission by any person or Group other than
Investor or any Affiliate thereof of a proposal to the Company (including
to the Board or any agent, representative or Affiliate of the Company) with
respect to, or
-3-
<PAGE>
otherwise expressing an interest in pursuing, a merger, consolidation or
other business combination of the Company, sale of all or substantially
all of the assets of the Company or significant recapitalization or
significant reorganization of the Company (any of the foregoing, a "Covered
-------
Transaction"); provided, however, that the Standstill Period shall not
----------- -------- -------
terminate pursuant to this Section 2.1 (iv) if, as soon as practicable
after receipt of any such proposal, a majority of the Independent Directors
determines that such proposal is not in the best interest of the Company
and its shareholders and for so long as a majority of the Independent
Directors continues to reject such proposal as a result of such
determination.
Any event set forth in subsection (i), (ii), (iii) or (iv) of this Section
2.1 shall be an "Early Termination Event."
-----------------------
Section 2.2 Restrictions During Standstill Period. During the
-------------------------------------
Standstill Period, Investor will not, and will use its reasonable best efforts
to cause each of its Affiliates not to, directly or indirectly:
(i) act in concert with any other person or Group by becoming a
member of a 13D Group, other than any 13D Group comprised exclusively of
Investors and one or more of its Affiliates;
(ii) purchase or otherwise acquire shares of capital stock
(including Common Stock or other Voting Securities) (or options, rights or
warrants or other commitments to purchase and securities convertible into
(or exchangeable or redeemable for) shares of such capital stock or other
Voting Securities) as a result of which, after giving effect to such
purchase or acquisition, Investor and its Affiliates will Beneficially Own
more than the percentage of the outstanding shares of Voting Securities
(the "Permitted Percentage" represented by the sum of (i) 6,963,056
--------------------
shares of Common Stock sold pursuant to the Stock Purchase Agreements with
The Limited and FS, (ii) the 595,195 shares of Common Stock subject to tag-
along rights pursuant to that certain Stockholders' Agreement dated as of
February 26, 1997 among certain stockholders of the Company, (iii) the
374,365 shares of Common Stock beneficially owned by TJX and related
parties (including those underlying the convertible note held by TJX), (iv)
the 163,900 shares of Common Stock issued pursuant to certain subscription
agreements, and (v) the shares of Common Stock underlying certain
management options and related securities (i.e., 617,084 performance shares
and 68,500 redeemable preferred shares) (giving effect to the issuance and
exercise of such shares and options) divided by the 18,470,469 then
outstanding shares of Common Stock (which gives effect to the shares of
Common Stock issued upon exercise or conversion of the foregoing
securities);
(iii) solicit, encourage or publicly propose to effect any Covered
Transaction;
-4-
<PAGE>
(iv) solicit, initiate, encourage or participate in any
"solicitation" of "proxies" or become a "participant" in any "election
contest" (as such terms are defined or used in Regulation 14A under the
1934 Act, disregarding clause (iv) of Rule 14a-1(l)(2) and including an
exempt solicitation pursuant to Rule 14a-2(b)(1)); call, or in any way
encourage or participate in a call for, any special meeting of shareholders
of the Company (or take any action with respect to acting by written
consent of the shareholders of the Company); request, or take any action to
obtain or retain any list of holders of any securities of the Company; or
initiate or propose any shareholder proposal or participate in or encourage
the making of, or solicit shareholders of the Company for the approval of,
one or more shareholder proposals; provided, however, that Investor shall
-------- -------
not be prohibited from communicating with a securityholder who is engaged
in any "solicitation" of "proxies" or who is a "participant" in any
"election contest"; or
(v) assist, advise, encourage or act in concert with any person
with respect to, or seek to do, any of the foregoing.
Section 2.3 Waivers of Restrictions. Notwithstanding anything to the
-----------------------
contrary contained herein, the Company may waive any of the foregoing
restrictions during the Standstill Period upon the approval of a majority of
Independent Directors.
ARTICLE 3
---------
OTHER COVENANTS
---------------
Section 3.1 Maintenance of Ownership. (a) From and after the date
------------------------
hereof, Investor shall have the ability to maintain its ownership of up to the
Permitted Percentage of the outstanding shares of Voting Securities through (i)
open market purchases or (ii) purchases of Common Stock directly from the
Company; provided, that any purchases directly from the Company pursuant to
--------
clause (ii) of this Section 3.1(a) shall be subject to the prior approval of a
majority of the Independent Directors.
(b) If, at any time following the termination of the Standstill Period,
Investor acquires more than 65% of the outstanding shares of Voting Securities,
Investor shall (i) commence a tender offer for all of the outstanding shares of
Common Stock held by stockholders other than Investor and its Affiliates at a
price per share equal to at least the greater of (a) the average closing price
of the Common Stock over the prior 365-day period or (b) the then-current market
price or (ii) shall engage in such other transaction approved by a majority of
the Independent Directors.
Section 3.2 Actions Requiring Prior Approval. (a) As long as at least
--------------------------------
two-ninths or an equivalent proportion of the Directors are Investor Nominees,
(i) any transaction with Investor or its Affiliates must be on arm's-length
terms and approved by a majority of the Independent Directors; (ii) any
amendment, repeal or other modification of this Agreement or any other agreement
or instrument of the Company, including the Company's charter or bylaws,
-5-
<PAGE>
which would have the effect of altering the terms of this Agreement in any
manner adverse to the stockholders of the Company (other than Investor) must be
approved by a majority of the Independent Directors; (iii) dispositions, of any
assets of the Company or any business combination, spin-off or other transaction
pursuant to which Investor would receive consideration different from that
received by other holders of Common Stock must be approved by a majority of the
Independent Directors; and (iv) any corporate opportunity (merger or
acquisition) relating to the United States mail order business which Investor or
its Affiliates receives shall first be presented to and considered by the
Company. If, within 20 days of being presented with such opportunity , the
Company chooses not to pursue such opportunity or the Company chooses to pursue
such opportunity and fails to consummate a transaction with respect to such
opportunity within 45 days of being presented with the opportunity, Investor
and/or its Affiliates may pursue such opportunity. In addition, if any Investor
business that is primarily mail order desires to enter the United States mail
order business, then the Company shall be offered a right of first refusal with
respect to such business in the United States. If the Company does not pursue
any corporate opportunity (or Investor business) presented to it, Investor may
then pursue such opportunity. Investor will not interfere with any merger or
acquisition opportunities that the Company receives on its own (other than
through participating in any decision made by the Board). If, within 20 days of
being presented with such opportunity, the Company chooses not to pursue such
opportunity or the Company chooses to pursue such opportunity and fails to
consummate a transaction with respect to such opportunity within 45 days of
being presented with the opportunity, Investor and/or its Affiliates may pursue
such opportunity.
(b) From the date hereof until the first anniversary hereof, none of Mr.
Canzone, Mr. Pulciani, Ms. Garelik, Mr. Rao, Ms. Meyrowitz or Mr. Silbert may be
terminated (other than for "cause" as defined in their respective employment
agreements) without the approval of two-thirds of the Directors then in office.
Section 3.3 Indemnification Agreements and Insurance. (a) Investor
----------------------------------------
shall use its reasonable best efforts to cause the Company to adopt
indemnification agreements with any Independent Directors.
(b) Investor shall use its reasonable best efforts to cause the Company to
maintain the director and officer insurance in place on the date hereof.
ARTICLE 4
---------
BOARD OF DIRECTORS
------------------
Section 4.1 Investor Nominees. The Company shall use its best efforts to
-----------------
have the Board include up to five nominees named by Investor in the slate of
nominees presented by the Board for election at each meeting of stockholders of
the Company at which Directors are to be elected (such nominees who become
Directors, "Investor Directors"); provided, however, if Investor's share
------------------
ownership falls below the percentages indicated below (without Investor buying
-6-
<PAGE>
back up to the applicable percentage within 30 days), Investor agrees that the
number specified of Investor Nominees will resign, and Independent Directors
will be appointed in their places:
<TABLE>
<CAPTION>
Number
of Directors
Ownership Percentage to Resign (Total)
-------------------- -----------------
<S> <C>
40% 1
30% 2
20% 3
</TABLE>
Investor and the Company shall each use their best efforts to assure that at all
times at least three members of the Board will be Independent Directors and that
the Company's Chief Executive Officer will also be a Director. Investor shall
vote all of its shares in favor of the election of its nominees, Independent
Directors and the Chief Executive Officer.
Section 4.2 Committee Representation. During such time as Investor is
------------------------
entitled pursuant to Section 4.1 to have at least two Investor Nominees included
in the slate of nominees, Investor and the Company shall use their best efforts
to assure that each committee of the Board shall include two Independent
Directors; provided that the following committees (the "Key Committees") shall
--------------
have the composition indicated:
Audit Committee: two Independent Directors;
---------------
Compensation Committee: two Investor Nominees, two
----------------------
Independent Directors (Chairman of Compensation Committee to be an
Investor Nominee); and
Strategic Planning Committee: two Investor Nominees; one
----------------------------
Independent Director, the Company's Chief Executive Officer;
Investor and the Company shall use their best efforts to assure that (i) any
members of any Key Committee who are Investor Nominees shall, in the event of
any vacancy in such membership, be replaced by a Director who is an Investor
Nominee elected by a majority of the Directors who are Investor Nominees; (ii)
any members of any Key Committee who are Independent Directors shall, in the
event of any vacancy in such membership, be replaced by an Independent Director
approved by a majority of the Independent Directors on the Board; and (iii) the
composition of any other committees of the Board (other than any committees of
Independent Directors formed to act with respect to any transactions involving
Investor (and/or its Affiliates) and the Company and/or its stockholders) shall
be appropriately reflective of the composition of the Board.
-7-
<PAGE>
ARTICLE 5
---------
REPRESENTATIONS & WARRANTIES
----------------------------
[Reps from both parties as to good standing, due authority, due execution and no
consents or violations]
ARTICLE 6
---------
MISCELLANEOUS
-------------
Section 6.1 Counterparts. This Agreement may be executed in one
------------
or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section, provided receipt of copies of such counterparts is
confirmed.
Section 6.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE
TO THE CHOICE OF LAW PRINCIPLES THEREOF.
Section 6.3 Entire Agreement. This Agreement hereto contains the entire
----------------
agreement between the parties with respect to the subject matter hereof and
there are no agreements, understandings, representations or warranties between
the parties other than those set forth or referred to herein. This Agreement is
not intended to confer upon any person not a party hereto (and their successors
and assigns) any rights or remedies hereunder.
Section 6.4 Expenses. Except as set forth in the Stock Purchase
--------
Agreement, all legal and other costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses.
Section 6.5 Notices. All notices and other communications hereunder
-------
shall be sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by documented overnight delivery service or, to the
extent receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices to the
Company shall be addressed to:
Brylane Inc.
[address]
Attention:
Telecopy Number:
-8-
<PAGE>
with a copy to:
Attention:
Telecopy Number:
or at such other address and to the attention of such other person as the
Company may designate by written notice to Investor. Notices to Investor shall
be addressed to:
Pinault Printemps-Redoute
18, Place Henri Bergson
75381 Paris, France Cedex 08
Attention: Serge Weinberg
Telecopy Number: (331) 44-90-63-92
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: David A. Katz, Esq.
Telecopy Number: (212) 403-2000
Section 6.6 Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of the parties hereto and their respective
successors. Investor may assign its rights and obligations hereunder to one or
more majority-owned, direct or indirect subsidiaries or other affiliates.
Section 6.7 Headings. The Section, Article and other headings contained
--------
in this Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated.
Section 6.8 Amendments and Waivers. This Agreement may not be modified
----------------------
or amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. Either
party hereto may, only by an instrument in writing, waive compliance by the
other party hereto with any term or provision hereof on the part of such other
party hereto to be performed or complied with. The waiver by either party hereto
of a breach of any term or provision hereof shall not be construed as a waiver
of any subsequent breach.
Section 6.9 Interpretation; Absence of Presumption. (a) For the purposes
--------------------------------------
hereof, (i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as the
context requires, (ii) the terms
-9-
<PAGE>
"hereof", "herein", and "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Article, Section and paragraph
references are to the Articles, Sections and paragraphs to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import when
used in this Agreement shall mean "including, without limitation," unless the
context otherwise requires or unless otherwise specified, (iv) the word "or"
shall not be exclusive, and (v) provisions shall apply, when appropriate, to
successive events and transactions.
(b) This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
Section 6.10 Severability. Any provision hereof which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
Section 6.11 Further Assurances. The Company and Investor agree that,
------------------
from time to time, each of them will, and will cause their respective Affiliates
to, execute and deliver such further instruments and take such other action as
may be necessary to carry out the purposes and intents hereof.
Section 6.12 Specific Performance. The Company and Investor each
--------------------
acknowledge that, in view of the uniqueness of arrangements contemplated by this
Agreement, the parties hereto would not have an adequate remedy at law for money
damages in the event that this Agreement were not performed in accordance with
its terms, and therefore agree that the parties hereto shall be entitled to
specific enforcement of the terms hereof in addition to any other remedy to
which the parties hereto may be entitled at law or in equity.
Section 6.13 Fiduciary Duties. Nothing contained in this Agreement shall
----------------
be intended to limit actions taken by any Directors in the exercise of their
fiduciary duties.
Section 6.14 Confidentiality; Other Arrangements. Investor will not, and
-----------------------------------
will use its best efforts to cause the Investor Nominees not to, share
confidential business information which comes into its possession in connection
with its investment in the Company or through the Board. Investor intends,
through its investment in the Company, that Investor and the Company will enter
into mutually advantageous arrangements, providing for the expansion of their
respective businesses.
-10-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties hereto as of the day first above written.
BRYLANE, INC.
By:
----------------------------------
Name:
Title:
PINAULT PRINTEMPS-REDOUTE, S.A.
By:
---------------------------------
Name:
Title:
-11-
<PAGE>
Schedule 6.3(h) to Purchase Agreement
Prior to or concurrent with closing, the Company's Board of Directors:
. shall receive the resignation of the Company directors representing The
Limited and Freeman Spogli effective the following day:
. acting pursuant to Section 223(d) of the Delaware General Corporation
Law, shall fill the vacancies created by such resignations with the PPR
nominees effective the following day; and
. shall amend the Company's by-laws to
1. fix the number of directors at nine ((S) 3,2);
2. include a definition of Independent Director (new by-law or add to
(S) 3.1);*
3. provide that vacancies in the position of Independent Director be
filled by the remaining Independent Directors ((S) 3.5); and
4. provide that during the Standstill Period (as defined in the
Governance Agreement), in addition to the vote required by (S) 3.9 of
the by-laws, the following actions also require approval of a
majority of the Independent Directors:
(i) adoption of annual capital expenditure budgets and
material deviations therefrom;
(ii) any amendment of the Company's certificate of
incorporation or by-laws;
(iii) any sale, lease, transfer or other disposition (other
than in the ordinary course of business consistent with past
practice), in one or more related transactions, of the assets of
the Company or any subsidiary thereof, the book value of which
assets exceeds 25% of the consolidated assets of the Company and
its subsidiaries; and
(iv) any merger, consolidation, liquidation or dissolution of
the Company or any subsidiary thereof, other than any such merger
or consolidation of any subsidiary of the Company with and into
the Company or another wholly owned Subsidiary of the Company.
- --------------------------------
* An Independent Director shall mean Messrs. William C. Johnson and Peter M.
Starrett as well as any individual who is not a member of the Company's
management, and is not affiliated with PPR. The Limited or Freeman Spogli & Co.
or any of their respective affiliates (including any individual who in the past
three years has been an officer, employee, consultant or advisor of or to any of
the foregoing).
<PAGE>
Exhibit 99.1
------------------------------------------
STOCK PURCHASE AGREEMENT
among
FS EQUITY PARTNERS II, L.P.,
FS EQUITY PARTNERS III, L.P.
and
FS EQUITY PARTNERS INTERNATIONAL, L.P.
and
PINAULT PRINTEMPS-REDOUTE, S.A.
------------------------------------------
Dated as of February 19, 1998
------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I THE TRANSACTIONS.......................................................... 1
1.1 Purchase and Sale......................................................... 1
1.2 Purchase Price............................................................ 2
1.3 Closing Matters........................................................... 2
1.4 Time and Place of Closing................................................. 2
1.5 Fees and Expenses......................................................... 3
1.6 Assignment................................................................ 3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PPR..................................... 3
2.1 Organization.............................................................. 3
2.2 Authority................................................................. 3
2.3 No Violation.............................................................. 4
2.4 Brokers................................................................... 4
2.5 Securities Act Representation............................................. 4
2.6 Ownership of Stock........................................................ 4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER.................................. 5
3.1 Title to Shares........................................................... 5
3.2 Authority................................................................. 5
3.3 No Violation.............................................................. 5
3.4 Brokers; Certain Expenses................................................. 6
3.5 No Solicitation........................................................... 6
3.6 Information Concerning Brylane............................................ 6
ARTICLE IV CERTAIN CLOSING CONDITIONS REGARDING BRYLANE.............................. 6
4.1 Good Standing of the Company.............................................. 6
4.2 Authority................................................................. 7
4.3 No Violation.............................................................. 7
4.4 Capitalization............................................................ 7
4.5 No Material Adverse Change in Business.................................... 7
4.6 Financial Statements...................................................... 8
4.7 Registration Statement.................................................... 8
4.8 DGCL Section 203 and State Takeover Laws.................................. 9
ARTICLE V COVENANTS AND AGREEMENTS.................................................. 9
5.1 Efforts to Consummate..................................................... 9
5.2 Consents.................................................................. 9
5.3 Exclusivity............................................................... 10
i
</TABLE>
<PAGE>
TABLE OF CONTENTS (Continued)
<TABLE>
<S> <C>
5.4 Confidentiality........................................................... 10
5.5 Access to Properties and Records.......................................... 11
5.6 Stockholder Litigation.................................................... 11
5.7 Transfer of the Shares.................................................... 11
5.8 Antitrust................................................................. 11
5.9 Notices of Certain Events................................................. 12
ARTICLE VI CONDITIONS PRECEDENT...................................................... 12
6.1 Conditions to Each Party's Obligations.................................... 12
6.2 Conditions to the Obligations of Seller................................... 12
6.3 Conditions to the Obligations of PPR...................................... 13
ARTICLE VII SURVIVAL; INDEMNIFICATION................................................. 14
7.1 Survival of Representations and Warranties and Related Agreements......... 14
7.2 Indemnification for Breach of Representations, Warranties and Covenants... 14
7.3 Indemnification of Seller, etc............................................ 16
ARTICLE VIII TERMINATION OF AGREEMENT.................................................. 17
8.1 Termination............................................................... 17
8.2 Effect of Termination..................................................... 18
8.3 Costs and Expenses........................................................ 18
ARTICLE IX MISCELLANEOUS............................................................. 18
9.1 Notices................................................................... 18
9.2 Headings; Agreement....................................................... 19
9.3 Publicity................................................................. 19
9.4 Entire Agreement.......................................................... 19
9.5 Assignment................................................................ 19
9.6 Counterparts.............................................................. 19
9.7 Amendment................................................................. 19
9.8 Governing Law............................................................. 19
9.9 Third Party Beneficiaries................................................. 19
9.10 Specific Performance...................................................... 20
9.11 Supplements to Schedules.................................................. 20
9.12 Certain Definitions....................................................... 20
</TABLE>
ii
<PAGE>
EXHIBITS
- --------
Exhibit B-1 Form of Corporate Governance Agreement
Exhibit B-2 Term Sheet of Amendments to Trademark Agreement
SCHEDULES
- ---------
Schedule A Selling Stockholders
Schedule 1.1(b) Possible Selling Stockholders Not Party to the Stockholders
Agreement
Schedule 2.3 PPR Consents
Schedule 2.4 Fees Owed by PPR
Schedule 3.3 Seller Consents
Schedule 3.4 Fees Owed by Sellers
Schedule 4.3 Brylane Consents
Schedule 4.4 Capitalization of Brylane at January 31, 1998
Schedule 6.1(d) Term Sheet for Agreements with Brylane Management
Schedule 6.3(h) Board Actions
Schedule 9.1 Address for Notice
iii
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
STOCK PURCHASE AGREEMENT ("Agreement") dated as of February 19, 1998
among the stockholder or stockholders of Brylane Inc., a Delaware corporation
("Brylane") listed on Schedule A to this Agreement (collectively, "Seller") and
Pinault Printemps-Redoute, S.A., a company organized under the laws of France
("PPR").
R E C I T A L S:
- - - - - - - -
A. PPR wishes to purchase from Seller, and Seller desires to sell to
PPR, that number of shares (the "Shares") of the common stock, par value $.01
per share of Brylane (the "Common Stock") listed on Schedule A hereto (adjusted
to give effect to any stock splits, stock, dividends, recapitalizations or
similar transactions declared or occurring between the date hereof and closing)
in consideration of the Purchase Price (as defined below).
B. A committee constituted of Peter M. Starrett, who is an
independent member of the Board of Directors of Brylane (the "Independent
Director") has considered and approved this Agreement, a form of a corporate
governance agreement substantially in the form of Exhibit B-1 hereto (the
"Governance Agreement") to be entered into between Brylane and PPR at the
Closing (as defined below), a term sheet substantially in the form of Exhibit B-
2 hereto (the "TM Amendment Term Sheet") relating to certain amendments to be
made to the Trademark Agreement, dated as of August 20, 1993, as amended (the
"Trademark Agreement"), and the transactions contemplated hereby.
A G R E E M E N T:
- - - - - - - - -
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions contained
herein, the sufficiency of which is hereby acknowledged, and in order to set
forth the terms and conditions of the transactions described herein, the parties
hereby agree as follows:
ARTICLE II
THE TRANSACTIONS
-----------------
II.1 Purchase and Sale.
-----------------
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing, as defined below, PPR shall purchase from Seller, and
Seller shall
<PAGE>
sell to PPR, the Shares of Common Stock set forth opposite Seller's name on
Schedule A to this Agreement.
(b) In addition to the Shares, PPR agrees to purchase, at the Purchase
Price (as defined below), (i) in accordance with the terms of the Stockholders
Agreement (as defined below), all Shares tendered to PPR (up to a maximum of
595,195 shares in the aggregate) by stockholders of Brylane who are parties to
the Stockholders Agreement (as defined below) tendering shares of Common Stock
in exercise of their Tag-Along Rights (as defined in the Stockholders' Agreement
dated as of February 26, 1997 (the "Stockholders Agreement") among certain
Stockholders of the Company) and (ii) up to an additional 163,900 shares to be
sold by certain stockholders listed on Schedule 1.1(b) not having Tag-Along
Rights. The tendering of additional shares of Common Stock shall not reduce the
number of Shares to be purchased from Seller hereunder. No tender of shares of
Common Stock by a person or entity exercising Tag-Along Rights or other selling
stockholder shall be effective unless such person or entity first executes and
delivers to PPR a stock purchase agreement in form reasonably satisfactory to
PPR (consistent, if applicable, with the terms of the Stockholders Agreement)
with respect to the sale by such person or entity and the purchase by PPR of its
shares of Common Stock and otherwise, if applicable, complies with the
applicable terms of the Stockholders Agreement.
1.2 Purchase Price. The purchase price to be paid by PPR to
--------------
Seller for the shares of Common Stock to be sold and purchased hereunder shall
be $51.00 per share of Common Stock; adjusted to give effect to any stock
splits, stock dividends, recapitalizations and similar transactions declared or
occurring between the date hereof and Closing (the "Purchase Price").
1.3 Closing Matters. At the Closing (a) PPR will wire transfer in
---------------
same day funds to accounts set forth in writing by Seller the sums set forth
opposite Seller's name on Schedule A in payment of the Purchase Price for the
----------
shares of Common Stock to be purchased by PPR, and (b) Seller shall deliver a
certificate or certificates to PPR, representing the shares of Common Stock
purchased thereby, duly endorsed for transfer in blank (the "Certificates") with
stock transfer stamps attached.
1.4 Time and Place of Closing. The consummation of the transactions
-------------------------
contemplated by this Agreement (the "Closing") shall take place at 10:00 a.m.
New York time, at the offices of Wachtell, Lipton, Rosen & Katz on the earlier
of (i) the fourth Business Day following the early termination, if any, of the
waiting period under the HSR Act (as defined below) or (ii) the second Business
Day following the expiration of the 30 day waiting period under the HSR Act,
unless under this clause (ii) the expiration of such period occurs on a Friday
in which case the Closing shall take place on the third Business Day following
such expiration (the "Closing Date").
2
<PAGE>
1.5 Fees and Expenses. PPR and Seller shall each be responsible for
-----------------
the fees and expenses incurred by it in connection with the transactions
contemplated hereby, subject to any agreements among Sellers and other
stockholders of Brylane who are selling Common Stock to PPR providing for
sharing of expenses among themselves; provided that Seller shall pay any
transfer tax, if any, incurred in connection with the sale and purchase of the
Shares; and provided further that at the Closing, subject to presentation of
invoices, PPR shall pay up to an aggregate of $4.25 million (including amounts
payable pursuant to Section 1.5 of that certain Stock Purchase Agreement dated
the date hereof (the "M&P SPA") between PPR and M&P Distributing Co.) for
financial advisory services rendered by Lazard Freres & Co. LLC and Merrill
Lynch & Co. to Seller and the other stockholders of Brylane selling shares of
Brylane Common Stock pursuant to the transactions contemplated hereby.
1.6 Assignment. PPR may assign its right to purchase the Shares to
----------
any one or more direct or indirect majority-owned subsidiaries, or affiliates
controlled by PPR; provided that no such assignment shall relieve PPR of its
obligations hereunder to the extent that the assignee fails to fulfill the same.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
OF PPR
------
PPR represents and warrants to Seller as follows:
2.1 Organization. PPR is a societe anonyme duly organized, validly
------------
existing and in good standing under the laws of France.
2.2 Authority. PPR has full corporate power and authority to
---------
execute and deliver this Agreement and the Governance Agreement, and to
consummate the transactions contemplated on its part hereby. The execution,
delivery and performance by PPR of this Agreement and the Governance Agreement
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action on the part of PPR. No other
action on the part of PPR is necessary to authorize the execution and delivery
of this Agreement or the Governance Agreement by PPR or the performance by PPR
of its obligations hereunder or thereunder. This Agreement has been duly
executed and delivered by PPR and constitutes a legal, valid and binding
agreement of PPR, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally and subject to general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law). The Governance Agreement to be executed by PPR
in connection with this Agreement on or prior to the Closing Date will be duly
executed and
3
<PAGE>
delivered by PPR and (assuming due execution and delivery by the other party or
parties thereto) will constitute a legal, valid and binding obligation of PPR,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
creditors' rights generally and subject to general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
2.3 No Violation. The execution and delivery of this Agreement and
------------
the Governance Agreement by PPR, the performance by PPR of its obligations
hereunder and thereunder and the consummation by it of the transactions
contemplated hereby and thereby, will not (a) violate any provision of law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award applicable to PPR, (b) require the consent, waiver, approval, license or
authorization of or any filing by PPR with any governmental authority (other
than a notification form filed under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), any filings required under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and such
consents, waivers, approvals, licenses and authorizations and filings as are set
forth on Schedule 2.3 hereto) or (c) violate, result (with or without notice or
the passage of time, or both) in a breach of or give rise to the right to
accelerate, terminate or cancel any obligation under or constitute (with or
without notice or the passage of time, or both) a default under, any of the
terms or provisions of any charter document or bylaw, agreement, note,
indenture, mortgage, contract, order, judgment, ordinance, regulation or decree
to which PPR is subject or by which PPR is bound and which would have an adverse
effect on the ability of PPR to perform his or its obligations under this
Agreement and the Governance Agreement.
2.4 Brokers. Other than as set forth on Schedule 2.4, PPR has not
-------
paid or become obligated to pay any fee or commission to any broker, finder,
investment banker or other intermediary in connection with this Agreement.
Brylane shall have no liability in respect of the fees and expenses of any such
party.
2.5 Securities Act Representation. PPR is not purchasing shares of
-----------------------------
Common Stock with a view to a distribution or resale of any of such shares in
violation of any applicable securities laws. PPR understands that the Shares
constitute restricted securities, not registered under the Securities Act or any
state securities law, and the certificates issued to PPR representing such
Shares will bear a legend to that effect.
2.6 Ownership of Stock. On the date hereof and the Closing Date,
------------------
PPR does not own any shares of Brylane Common Stock, except to the extent the
PPR may be deemed to beneficially own shares as a result of the execution of
this Agreement and the transactions contemplated hereby.
4
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
OF SELLER
----------
Seller represents and warrants to PPR as follows:
3.1 Title to Shares. Seller has good, valid and marketable title to
---------------
the Shares of Common Stock shown on Schedule A opposite such Seller's name,
free and clear of Encumbrances (as defined below). At the Closing, PPR will
acquire all of Seller's right, title and interest in and to and will have good,
valid and marketable title to the Shares of Common Stock shown on Schedule A
opposite such Seller's name from such Seller, free and clear of any and all
security interests, liens, claims, pledges, encumbrances or other rights or
claims of any other person of any kind or any preemptive or similar rights
(collectively, "Encumbrances"), except as may exist under the Governance
Agreement. The Shares set forth opposite Seller's name on Schedule A constitute
all of the Shares of capital stock of Brylane or its subsidiaries owned or held
by Seller.
3.2 Authority. Seller has full corporate, partnership or other
---------
power and authority to execute and deliver this Agreement and to carry out its
obligations hereunder and to consummate the transactions contemplated on its
part hereby. The execution, delivery and performance by Seller of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate, shareholder, partnership or other
action on the part of Seller, and no other corporate proceedings or other action
on the part of Seller are necessary to authorize the execution and delivery of
this Agreement by Seller or the performance by Seller of its obligations
hereunder and thereunder, including, without limitation, the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Seller and constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally and subject to general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
3.3 No Violation. The execution and delivery of this Agreement by
------------
Seller, the performance by Seller of its obligations hereunder and thereunder
and the consummation by it of the transactions contemplated hereby and thereby
will not (a) violate any provision of law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award applicable to Seller, (b)
require the consent, waiver, approval or authorization of or any filing by
Seller with any governmental authority (other than a notification form filed
under the HSR Act and any filings required under the 1934 Act and such consents,
waivers, approvals, licenses and authorizations and filings as are set forth on
Schedule 3.3 hereto), (c) violate, result (with or without notice or the passage
of time, or both) in a breach of, or give rise to the
5
<PAGE>
right to terminate, accelerate or cancel any obligation under, or constitute
(with or without notice or the passage of time, or both) a default under, any of
the terms or provisions of the organization documents, including certificates of
incorporation, bylaws, partnership agreements and certificate of limited
partnership, as applicable, of Seller or any agreement, note, indenture,
mortgage, contract, order, judgment, ordinance, regulation, decree or other
instrument to which Seller is subject or bound and which would have an adverse
effect on the ability of Seller to perform its obligations hereunder, including
consummation of the transactions contemplated by this Agreement, or (d) result
in the creation or imposition of any tax or Encumbrance on the Shares, except
for transfer taxes, if any, contemplated by Section 1.5 hereof.
3.4 Brokers; Certain Expenses. Except as set forth in Schedule 3.4,
-------------------------
no Seller has become obligated to pay any fee or commission to any broker,
finder, investment banker or other intermediary in connection with any of the
transactions contemplated by this Agreement. Brylane shall have no liability in
respect of the fees and expenses of any such party.
3.5 No Solicitation. Neither Seller, nor anyone acting on its
---------------
behalf, has taken or will take any action, which would subject the sale of the
Shares as contemplated hereby to the registration provisions of the Securities
Act of 1933, as amended ("1933 Act").
3.6 Information Concerning Brylane. To Seller's actual knowledge,
------------------------------
without independent investigation, (i) the information concerning Brylane set
forth in Article IV hereof is true and correct and (ii) the 1998 Registration
Statement (as hereinafter defined) as of February 18, 1998 did not contain any
untrue statement of material fact or omit to state a material fact required to
be stated in the 1998 Registration Statement or necessary to make the statements
therein not misleading.
ARTICLE IV
CERTAIN CLOSING CONDITIONS REGARDING BRYLANE
--------------------------------------------
As a condition to PPR'S obligations under this Agreement as
contemplated by Section 6.3(c) below, the following shall be true and correct in
all material respects on and as of the Closing Date except to the extent any
statement speaks as of a specified date, in which case such statement shall be
true and correct as of such date:
4.1 Good Standing of the Company. Brylane has been duly organized
----------------------------
and is validly existing as a corporation in good standing under the laws of the
State of Delaware and has corporate power and authority to own, lease and
operate its properties and to conduct its business and to enter into and perform
its obligations under the Governance Agreement.
6
<PAGE>
4.2 Authority. Brylane has full corporate power and authority to
---------
execute and deliver the Governance Agreement and to carry out its obligations
thereunder and to consummate the transactions contemplated on its part thereby.
The execution, delivery and performance by Brylane of the Governance Agreement
and the consummation of the transactions contemplated on its part thereby have
been duly authorized by all necessary corporate action, and no other corporate
(or shareholder) proceedings or other similar action on the part of Brylane are
necessary to authorize the execution and delivery of the Governance Agreement by
Brylane or to consummate the transactions contemplated on its part thereby.
4.3 No Violation. The execution, delivery and performance of this
------------
Agreement and the Governance Agreement and the consummation of the transactions
contemplated hereby and thereby will not (a) violate any provision of (i) to the
knowledge of Brylane, law, or (ii) rule, ordinance, regulation, order, writ,
judgment, injunction, decree, determination or award applicable to Brylane or
any of its subsidiaries, (b) require the consent, waiver, approval or
authorization of or any filing by Brylane or any of its subsidiaries with any
governmental authority (other than a notification form filed under the HSR Act
and any filings required under the 1934 Act and such consents, waivers,
approvals, licenses and authorizations and filings as are set forth on Schedule
4.3 hereto), (c) other than as set forth on Schedule 4.3 hereto, violate, result
(with or without notice or the passage of time, or both) in a breach of, or give
rise to the right to terminate, accelerate or cancel any obligation under, or
constitute (with or without notice or the passage of time, or both) a default
under, any of the terms or provisions of the charter or bylaws of Brylane or any
of its subsidiaries or any agreement, contract, note, indenture, mortgage or
other instrument to which Brylane or any of its subsidiaries is subject or bound
and which would have a Material Adverse Effect (as defined below) on Brylane and
its subsidiaries taken as a whole or (d) result in the creation or imposition of
any tax or Encumbrance on the Shares (other than transfer taxes, if any,
contemplated by Section 1.5) or otherwise impair the ability of PPR to exercise
full rights as a stockholder, including with respect to voting and disposition
of the Shares.
4.4 Capitalization. As of January 31, 1998, Brylane has the
--------------
capitalization set forth on Schedule 4.4 hereto. All of the issued and
outstanding capital stock of Brylane has been duly authorized and validly issued
and is fully paid and non-assessable and was not issued in violation of any
preemptive right arising by operation of law, under the charter, by-laws or
other organizational document or any document or under any agreement to which
Brylane or any of its subsidiaries is a party. Since January 31, 1998, Brylane
has not issued any shares of capital stock or options, warrants or similar
rights exercisable for or convertible into shares of capital stock of Brylane,
except upon the exercise of outstanding options or the conversion of (i) shares
of Brylane Series A Convertible Preferred Stock or (ii) that certain Convertible
Subordinated Promissory Note dated February 26, 1997 of Brylane and Brylane,
L.P., and except for grants of options in the ordinary course of business
consistent with past practice.
4.5 No Material Adverse Change in Business. Since November 1, 1997,
--------------------------------------
(A)
7
<PAGE>
there has been no material adverse change in the results of operations,
condition, financial or otherwise, or in the earnings or business prospects of
Brylane and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business (a "Material Adverse Effect"), (B)
there have been no transactions entered into by Brylane or any of its
subsidiaries, other than those in the ordinary course of business, which are
material with respect to Brylane and its subsidiaries considered as one
enterprise, and (C) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock;
provided, that none of the following circumstances relating to, or arising from
or as a result of any of the events specified below with respect to, any
agreement, contract, note, indenture, mortgage, order, writ, judgment,
injunction, decree, determination, award or other instrument identified on
Schedule 4.3 (each a "Consent Item") shall constitute a Material Adverse Effect
hereunder: (i) any violation, breach, right to terminate, accelerate or cancel
any obligation of or under any Consent Item solely arising from or as a result
of the execution, delivery or performance of this Agreement or the Governance
Agreement or any of the transactions contemplated hereby or thereby; (ii) any
failure to obtain a consent or waiver under any Consent Item of or in respect
of, any of the circumstances specified in clause (i); or (iii) any modification
or amendment of any term or provision of any Consent Item made in connection
with the securing of such a consent or waiver.
4.6 Financial Statements. The historical financial statements
--------------------
included in the 1998 Registration Statement (as defined below), together with
the related schedules and notes, present fairly the consolidated financial
position of Brylane and its subsidiaries and Brylane, L.P., a Delaware limited
partnership (the "Partnership") at the dates indicated and the results of their
operations, stockholders' equity and cash flow for the periods specified, except
as otherwise stated in the 1998 Registration Statement (as defined below); all
said financial statements have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved. The supporting schedules to the historical financial
statements included in the 1998 Registration Statement present fairly in
accordance with GAAP the information required to be stated therein. The
selected financial data and the summary financial information included in the
1998 Registration Statement present fairly the information shown therein and
have been compiled on a basis consistent with that of the audited financial
statements included in the 1998 Registration Statement. The pro forma financial
statements and other pro forma financial information and the related notes
thereto included in the 1998 Registration Statement present fairly the
information shown therein, have been prepared in accordance with the SEC's rules
and guidelines with respect to pro forma financial statements and have been
properly compiled on the bases described therein, and, in the opinion of
Brylane, the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein, except as otherwise stated in the 1998
Registration Statement.
4.7 Registration Statement. At the dates of their respective
----------------------
filings, the
8
<PAGE>
Registration Statement on Form S-1 of Brylane filed with the Securities and
Exchange Commission (the "SEC") on February 13, 1998, as amended by Amendment
No. 1 thereto filed with the SEC on February 18, 1998 (collectively, the "1998
Registration Statement") complied in all material respects with the requirements
of the Securities Act and the 1934 Act and the rules and regulations thereunder
and did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
4.8 DGCL Section 203 and State Takeover Laws. Prior to the time
----------------------------------------
this Agreement was executed, the Board of Directors of Brylane and the
Independent Directors have each taken all action necessary to exempt under or
make not subject to (x) Section 203 of the Delaware General Corporation Law and
(y) any other state takeover law or state law that purports to limit or restrict
business combinations or the ability to acquire or vote shares, (i) the
execution of this Agreement and the Governance Agreement and (ii) the
transactions contemplated hereby and thereby. Evidence of such action has been
provided to PPR by Brylane.
ARTICLE V
COVENANTS AND AGREEMENTS
-------------------------
5.1 Efforts to Consummate. Upon the terms and subject to the
---------------------
conditions herein provided, each of PPR and Seller, agrees to use all reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement and the Governance Agreement and the other
transactions contemplated hereby, including (a) to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby, (b) to defend
against any and all claims, actions, suits, proceedings, investigations or
litigation, including, without limitation, any injunctions or other orders or
claims, actions, suits, proceedings or investigations which arise out of or
relate to the transactions contemplated by this Agreement and (c) to fulfill all
conditions on its part to be fulfilled under this Agreement. In case at any
time after the Closing Date any further action is reasonably necessary or
desirable to carry out the purposes of this Agreement or the Governance
Agreement, the proper partners, officers or directors of each party to this
Agreement or the Governance Agreement shall take all such reasonably necessary
action. No party hereto will take any action for the purpose of delaying,
impairing or impeding the receipt of any required consent, authorization, order
or approval or the making of any required filing.
5.2 Consents. (i) Seller and PPR will use all reasonable efforts
--------
to obtain all necessary and material waivers, consents and approvals of all
governmental authorities
9
<PAGE>
necessary to consummate the transactions contemplated by this Agreement and (ii)
PPR and, at the request of PPR or Brylane, Seller, will cooperate in all
reasonable respects in Brylane's efforts to obtain all waivers, consents and
approvals of third parties required due to the transactions contemplated hereby,
whether or not a condition to the consummation of the transactions contemplated
hereby.
5.3 Exclusivity.
-----------
(a) Following the execution of this Agreement, none of FS Equity
Partners II, L.P., a Delaware limited partnership ("FSEP II"), FS Equity
Partners III, L.P., a Delaware limited partnership ("FSEP III"), FS Equity
Partners International, L.P., a Delaware limited partnership ("FSEP
International", FSEP II, FSEP III and The Limited, Inc., a Delaware corporation,
the "Principal Stockholders"), nor the directors, officers, affiliates,
employees, representatives or agents of any of them, shall, directly or
indirectly, engage in any process to sell, or otherwise dispose of any interest
in or encumber any of Shares of Common Stock, to any corporation, partnership,
person, or other entity or group (including, without limitation, any sale in a
public offering, underwritten or otherwise, or other sale to the public market),
or engage in any action in conflict with this Agreement, provided, however, any
Brylane director may participate in any negotiation regarding a merger,
acquisition or other business combination of Brylane and its subsidiaries, as a
whole (collectively, a "Third Party Transaction"), to the extent advised by
outside counsel to the Company that failure to take such action would be a
violation of such director's fiduciary duty under Delaware law and if and only
if, Brylane's entry into such negotiations regarding such Third Party
Transaction has been approved by the Independent Directors. Neither Seller nor
any of its officers, directors, employees, affiliates, representatives or
agents, shall directly or indirectly solicit any Third Party Transaction or
provide any non-public information regarding Brylane to any corporation,
partnership, person or other entity or group. To the extent Seller becomes
aware of a Third Party Transaction or any proposal with respect thereto, it
shall promptly notify PPR.
(b) (i) To the extent Brylane consummates a Third Party
Transaction between the date hereof and the Closing Date which provides a higher
value per Share than the Purchase Price, or (ii) this Agreement is terminated
because the condition set forth in Section 6.2(b) is no longer satisfied or any
other condition is not satisfied as a result of a pending, proposed or
contemplated Third Party Transaction, then, in each case, if PPR does not
acquire the Shares hereunder and Seller sells or exchanges the Shares in a Third
Party Transaction, Seller shall pay to PPR the difference between the fair
market value of the consideration received per Share in the Third Party
Transaction less the Purchase Price for the Shares sold or to be sold hereunder.
5.4 Confidentiality. PPR agrees that all data and information
---------------
obtained by PPR or any of its employees, accountants, counsel and other
representatives (the "PPR Agents") from Brylane or any of its Subsidiaries shall
be held by PPR and any of the PPR
10
<PAGE>
Agents as confidential information in accordance with and subject to the terms
of the Confidentiality Agreement, dated July 14, 1997 (the "Confidentiality
Agreement") between Brylane and PPR. The terms of the Confidentiality Agreement
are herewith incorporated by reference and shall continue in full force and
effect until the Closing Date shall have occurred, and if this Agreement is
terminated or if the Closing shall not have occurred for any reason whatsoever,
the Confidentiality Agreement shall thereafter remain in full force and effect
in accordance with its terms.
5.5 Access to Properties and Records. Seller shall use reasonable
--------------------------------
best efforts to cause Brylane to afford to PPR and any PPR Agents reasonable
access during normal business hours throughout the period prior to the Closing
Date to all of Brylane's and its subsidiaries properties, books, contracts,
commitments and written records (including but not limited to tax returns), and
to make reasonably available its officers, employees and advisers to answer
questions put to them thereby; provided, that such access shall not unreasonably
interfere with the normal business operations of Brylane. PPR agrees that any
such investigations shall be related to this Agreement and the Governance
Agreement and to the transactions contemplated hereby and thereby, and further
agrees to provide Brylane with reasonable notice prior to visiting any such
property for the purpose of any such investigation.
5.6 Stockholder Litigation. Seller shall give PPR the opportunity
----------------------
to participate in the defense or settlement of any stockholder litigation
against the Seller, Brylane or the officers and directors of Brylane relating to
any of the transactions contemplated by this Agreement or the Governance
Agreement; provided, however, that no such settlement shall be agreed to without
PPR=s consent, which consent shall not be unreasonably withheld.
5.7 Transfer of the Shares. During the term of this Agreement,
----------------------
Seller will not sell, transfer, offer to sell, pledge, encumber or otherwise
dispose of or transfer any interest in or create or suffer to exist any
Encumbrance on any of the Shares or enter into any agreement to do so. Seller
shall vote all of its Shares against any Third Party Transaction.
5.8 Antitrust. PPR and Seller, severally, agrees to use all
---------
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary or required by the United States Federal
Trade Commission or the United States Department of Justice in connection with
the expiration or termination of the waiting period under the HSR Act as a
result of the transactions contemplated by this Agreement, provided that no
party will be required to take any action or to do anything in connection with
the foregoing which would have a material adverse effect on their respective
businesses or would materially impair Brylane's and its subsidiaries', taken as
a whole, ownership or operation of a material portion of their business and
assets or PPR's ownership of the Shares or the benefits contemplated hereby.
Each party shall bear its own costs in connection with such filings under the
HSR Act.
11
<PAGE>
5.9 Notices of Certain Events. Seller and PPR shall, upon
-------------------------
obtaining knowledge of any of the following, promptly notify each other of (i)
any notice or other communication from any person alleging that the consent of
such person is or may be required in connection with this Agreement and the
transactions contemplated hereby; (ii) any notice or other communication from
any governmental or regulatory agency or authority in connection with this
Agreement and the transactions contemplated hereby or the Governance Agreement
and the transactions contemplated thereby; and (iii) any actions, suits, claims,
investigations or other judicial proceedings commenced or threatened against
Brylane, Seller or PPR which relates to the consummation of this Agreement and
the transactions contemplated hereby.
ARTICLE VI
CONDITIONS PRECEDENT
--------------------
6.1 Conditions to Each Party's Obligations. The respective
--------------------------------------
obligations of each party to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver of the following
conditions:
(a) Absence of Injunction. No United States or state
---------------------
governmental authority or other agency or commission or United States or state
court or judicial body of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, injunction or
other order (whether temporary, preliminary, or permanent) which is in effect
and has the effect of prohibiting consummation of the transactions contemplated
by this Agreement.
(b) The waiting period under the HSR Act shall have expired or
been terminated.
(c) The Governance Agreement shall have been duly executed and
delivered by each party thereto and shall be in full force and effect.
(d) PPR or Brylane shall have entered into agreements with, and
Brylane shall have adopted performance and equity incentive plans applicable to,
Brylane management containing the terms set forth on Schedule 6.1(d) hereto in a
form reasonably satisfactory to PPR.
6.2 Conditions to the Obligations of Seller. The obligation of
---------------------------------------
Seller to effect the transaction contemplated by this Agreement shall be subject
to the fulfillment or waiver at or prior to the Closing Date of the following
additional conditions:
12
<PAGE>
(a) PPR shall have performed in all material respects its obligations
under this Agreement required to be performed by it on or prior to the Closing
Date pursuant to the terms hereof.
(b) The Independent Director shall not have rescinded, amended,
modified or superseded in any respect his approval of this Agreement, the
Governance Agreement, or the transactions contemplated hereby or thereby.
(c) The Supervisory Board of PPR shall not have rescinded, amended
modified or superseded in any adverse respect its approval of the Governance
Agreement and the transactions contemplated hereby and thereby.
6.3 Conditions to the Obligations of PPR. The obligations of PPR to
------------------------------------
effect the transactions contemplated by this Agreement shall be subject to
the fulfillment or waiver at or prior to the Closing Date of the following
additional conditions:
(a) Seller shall have performed in all material respects its
obligations under this Agreement required to be performed by it on or prior to
the Closing Date pursuant to the terms hereof.
(b) The representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date as if made at and as of such date, except to the extent that any
such representation or warranty is made as of a specified date in which case
such representation or warranty shall have been true and correct in all material
respects as of such date.
(c) The closing conditions relative to Brylane contained in Article IV
of this Agreement shall be true and correct in all material respects at and as
of the Closing Date as if made as of such date, except to the extent that any
such representation or warranty is made as of a specific date in which case such
representation or warranty shall have been true and correct as of such date.
(d) The Independent Director shall not have rescinded, amended,
modified or superseded in any respect his approval of this Agreement, the
Governance Agreement and the transactions contemplated hereby or thereby.
(e) PPR shall have received such other duly and validly executed
documents and instruments in connection with the Closing as are reasonably
requested by it.
(f) Brylane and The Limited, Inc. (or their respective relevant
subsidiaries) shall have entered into amendments to the Trademark License
Agreement dated
13
<PAGE>
August 20, 1993, as amended, implementing the provisions of the TM Amendment
Term Sheet attached hereto.
(g) PPR and Brylane shall have entered into a registration rights
agreement granting to PPR identical registration rights as those contained in
the Registration Rights Agreement, dated as of February 26, 1997, by and among
Brylane, Seller and certain other stockholders of Brylane.
(h) Each director of the Company representing The Limited, Inc. and
Freeman Spogli shall have submitted his resignation to be effective as of the
day following the closing date as contemplated by the Governance Agreement and,
acting pursuant to Section 223(d) of the Delaware General Corporation Law, the
Board shall appoint new directors and shall take the actions specified on
Schedule 6.3(h) hereto to be taken prior to or concurrent with the Closing.
(i) The purchase by PPR, and sale by other stockholders of Brylane, of
shares of Common Stock, which in the aggregate with the Shares being purchased
and sold hereunder would constitute at least 40% of the outstanding shares of
Common Stock, shall be closed currently herewith.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
-------------------------
7.1 Survival of Representations and Warranties and Related
------------------------------------------------------
Agreements. The representations and warranties contained in Articles II and
- ----------
III of this Agreement shall survive the Closing hereunder and shall continue in
effect for two years, notwithstanding any investigation by or on behalf of any
party before or after the Closing.
7.2 Indemnification for Breach of Representations, Warranties and
-------------------------------------------------------------
Covenants.
- ---------
(a) After the Closing Date, Seller agrees to indemnify and
hold harmless PPR, and each officer, director, partner, shareholder or employee
of PPR and the officers, directors, partners and each shareholder or partner,
affiliates, advisors, and representatives of the PPR (the "PPR Indemnified
Parties") against any and all liabilities, damages, losses, costs or expenses
whatsoever, including reasonable fees of counsel and expenses of investigation
("Losses" and individually "Loss") suffered or received by any PPR Indemnified
Party after the Closing arising out of or resulting from any breach of any
representation or warranty or non-performance of any covenant made by Seller
under this Agreement, provided, however, that the indemnification obligation
under this paragraph shall
14
<PAGE>
not apply to any additional Losses that exceed the net proceeds from this
Agreement to Seller as shown on the attached Schedule A.
(b) After the Closing Date, PPR agrees to indemnify and hold harmless
Seller and each officer, director, partner, shareholder or employee of Seller,
the officers, directors, partners and employees of each such shareholder or
partner, affiliates, advisors and representatives of Seller (the "Seller
Indemnified Parties") against any and all Losses suffered or incurred after the
Closing by any Seller Indemnified Party arising out of or resulting from any
breach of any representation or warranty or non-performance of any covenant made
by PPR under this Agreement.
(c) If a third party asserts a claim against any indemnified party for
which indemnification would be available under Sections 7.2 and 7.3 hereof (an
"Indemnification Claim"), the indemnified party shall promptly give notice of
such Indemnification Claim, describing such Indemnification Claim with
reasonable specificity, to the indemnifying party; provided, however, that the
failure to give such notice shall not affect the right of the indemnified party
to indemnification hereunder except to the extent that such failure prejudices
the ability of the indemnifying party to defend any Indemnification Claim or
take any other remedial action. The indemnifying party shall be entitled to
assume the defense of such Indemnification Claim, including the employment of
counsel reasonably satisfactory to the indemnified party; provided, however,
that if the indemnified party reasonably determines in good faith that its
interests with respect to such Indemnification Claim cannot appropriately be
represented by the indemnifying party, such indemnified party shall have the
right to assume control of the defense of such Indemnification Claim and to have
its expenses reimbursed promptly with respect to such Indemnification Claim. In
addition, in the event that such indemnifying party, within a reasonable time
after notice of any such Indemnification Claim, fails to defend any indemnified
party, such indemnified party will (upon further notice to such indemnifying
party) have the right to undertake its defense of such Indemnification Claim for
the account of such indemnifying party and to have its expenses reimbursed
promptly with respect to such Indemnification Claim. Regardless of which party
is controlling the defense of any Indemnification Claim, both the indemnifying
party and the indemnified party shall act in good faith and no settlement of
such Indemnification Claim may be agreed to without the written consent of the
indemnifying party, which consent shall not be unreasonably withheld. The
controlling party shall deliver, or cause to be delivered, to the other party
copies of all correspondence, pleadings, motions, briefs, appeals or other
written statements relating to or submitted in connection with the defense of
any such Indemnification Claim, and timely notices of any hearing or other court
proceeding relating to such Indemnification Claim. Notwithstanding the
foregoing, in any matter the indemnifying party shall not be liable for the fees
and expenses of more than one counsel for all indemnified parties under this
Agreement in addition to local counsel.
15
<PAGE>
7.3 Indemnification of Seller, etc.
------------------------------
(a) From and after the date hereof, in addition to any
indemnification available to any person from Brylane or any of its subsidiaries,
PPR shall (in each case to the fullest extent permitted by applicable law but
only in the amounts specified in Section 7.3(c) below) indemnify, defend and
hold harmless each Seller Indemnified Party against any and all losses, damages,
costs, expenses, liabilities or judgments, or amounts that are paid in
settlement of, or in connection with, any claim, action, suit, proceeding or
investigation based on or arising out of this Agreement or the Governance
Agreement and the transactions and circumstances contemplated hereby and thereby
(collectively, the "Seller Indemnified Liabilities") whether asserted or claimed
at or after the date hereof or the Closing Date, and PPR shall pay expenses in
advance of the final disposition of any such action or proceeding to each Seller
Indemnified Party to the fullest extent permitted by law; provided, however,
that the indemnification provided for under this Section 7.3 shall not be
available to any Seller Indemnified Party with respect to any Seller Indemnified
Liability to the extent that such Seller Indemnified Liability is finally
determined by a non-appealable judgment of a court of competent jurisdiction to
have resulted primarily from the gross negligence, bad faith or willful
misconduct of such Seller Indemnified Party.
(b) Without limiting the foregoing, in the event any such
claim, action, suit, proceeding or investigation is brought against any Seller
Indemnified Party (whether arising before or after the Closing Date), (i) any
counsel retained by the Indemnified Parties for any period after the Closing
Date shall be reasonably satisfactory to PPR (it being agreed that Richards,
Layton & Finger; Davis, Polk & Wardwell and Riordan & McKinzie are acceptable to
PPR); (ii) after the Closing Date, PPR shall pay all reasonable fees and
expenses of counsel for the Seller Indemnified Parties promptly as statements
therefor are received; and (iii) after the Closing Date, PPR shall use all
reasonable efforts to assist in the vigorous defense of any such matter,
provided that PPR shall not be liable for any settlement of any claim effected
without its written consent, which consent, however, shall not be unreasonably
withheld. All such costs shall be deemed to be Seller Indmenified Liabilities
for purposes of clause (c) below. Any Seller Indemnified Party wishing to claim
indemnification under this Section 7.3, upon learning of any such claim, action,
suit, proceeding or investigation, shall notify PPR (but the failure so to
notify the PPR shall not relieve such entity from any liability which it may
have under this Section 7.3 except to the extent such failure materially
prejudices PPR). Notwithstanding the foregoing, in any matter the indemnifying
party shall not be liable for the fees and expenses of more than one counsel for
all Seller Indemnified Parties under this Agreement in addition to local
counsel.
(c) PPR's obligation to indemnify the Seller Indemnified Parties under
this Section 7.3, together with the indemnified parties under Section 7.3 of the
M&P SPA (collectively, the "FS and M&P Parties"), shall be limited in the
aggregate to (i) 100% of the first $1,000,000 of Seller Indemnified Liabilities
incurred by all FS and M&P Parties for
16
<PAGE>
which indemnification is available under this Section 7.3 and under the
comparable provisions of the M&P SPA and (ii) 50% of any additional Seller
Indemnified Liabilities incurred by the FS and M&P Parties above such $1,000,000
threshold.
(d) In addition, PPR shall not, and it and its officers, directors,
employees, agents, or representatives shall not, cause Brylane to take, or cause
to be taken, at any time, any action to modify or terminate the indemnification
arrangements or limitation of liability provisions contained in the Certificate
of Incorporation or Bylaws of any of Brylane or its subsidiaries or in any
indemnification agreements entered into by any of Brylane or its subsidiaries,
in each case as in effect as of the date hereof in a manner that would adversely
affect the Seller Indemnified Parties in each case as in effect as of the date
hereof. In addition, Brylane shall continue for at least five years to maintain
director and officers liability insurance coverage with respect to actions
occurring prior to Closing for the Seller Indemnified Parties currently carried
by Brylane's directors and officers insurance policies in an amount (and with
deductibles) at least as favorable as those currently available under the
coverage in place as of the date hereof; provided, that, in no event shall
Brylane be requested to pay more than 150% of the current annual premiums to
maintain such coverage.
(e) This Section 7.3 shall survive the closing of all of the
-----------
transactions contemplated hereby, is intended to benefit Seller and each of the
Indemnified Parties (each of whom shall be entitled to enforce this Section 7.3
against PPR), constitutes a material part of the consideration given Seller for
the Shares, and shall be binding on all successors and assigns of PPR.
ARTICLE IX
TERMINATION OF AGREEMENT
-------------------------
8.1 Termination. This Agreement may be terminated at any time
-----------
prior to the Closing Date by written notice to the other parties hereto, as
follows, and in no other manner:
(a) By mutual agreement of Seller on the one hand, and PPR, on
the other hand.
(b) By PPR or Seller if any permanent injunction or other order
of a court or other governmental authority, preventing consummation of the
transactions contemplated hereby, shall become final and non-appealable.
(c) By PPR or Seller if the Closing has not occurred by April
30, 1998 (provided, that the right to terminate pursuant to this clause (c)
shall not be available to any party whose failure or whose affiliate's failure
to perform any material covenant or
17
<PAGE>
obligation under this Agreement has been the cause of or resulted in the failure
of the Closing to occur by such date).
(d) By Seller if there has been a material misrepresentation, breach
of warranty or breach of covenant on the part of PPR in any of the
representations, warranties or covenants under this Agreement which breach is
not curable, or, if curable, is not cured within 30 days after written notice of
such breach is given to PPR.
(e) By PPR if (i) there has been a material misrepresentation, breach
of warranty or breach of covenant on the part of Seller in any of its
representations, warranties or covenants under this Agreement or (ii) if any of
the Closing Conditions of Brylane contained in Article IV are not true and
correct in any material respect which breach, lack of truthfulness or
correctness, as the case may be, is not curable, or if curable, is not cured
within 30 days after written notice thereof is given to Seller.
(f) By PPR in the event that on or after the date all conditions to
closing contained in Sections 6.1, 6.2 and 6.3 (other than Sections 6.3(e), (g),
(h) and (i)) have been satisfied or waived, PPR is not in a position to purchase
at least 40% in the aggregate of Brylane's outstanding Common Stock pursuant to
this Agreement, the M&P SPA and the transactions contemplated by Section 1.1(b)
hereof, or any combination thereof.
8.2 Effect of Termination. In the event that this Agreement shall be
---------------------
terminated pursuant to Section 8.1, all further obligations of the parties
hereto under this Agreement shall terminate without further liability or
obligation of either party to another, including liability for damages,
provided, that such termination shall not relieve any party hereto from
liability for breach of this Agreement, and provided, further, that the parties
-------- -------
shall remain obligated under Sections 5.3(b) and 5.4.
8.3 Costs and Expenses. Upon termination of this Agreement, all
------------------
expenses incurred in connection with the transactions contemplated herein,
including but not limited to legal and accounting expenses, shall be borne by
the respective party incurring such expenses.
ARTICLE IX
MISCELLANEOUS
-------------
9.1 Notices. All notices and other communications given or made
-------
pursuant hereto shall be in writing and shall be deemed to have been given or
made if in writing and delivered personally, sent by commercial carrier or
registered or certified mail (postage prepaid, return receipt requested) or
transmitted by facsimile (with receipt confirmed) to the parties at the
following addresses and numbers listed on Schedule 9.1 hereto or at such other
18
<PAGE>
addresses as shall be furnished by the parties by like notice, and such notice
or communication shall be deemed to have been given or made as of the date
actually received.
9.2 Headings; Agreement. The headings contained in this Agreement
-------------------
are inserted for convenience only and do not constitute a part of this
Agreement. The term "Agreement" for purposes of representations and warranties
hereunder shall be deemed to include any Exhibits and Schedules hereto.
9.3 Publicity. Except as required by law or regulation or the rules
---------
of any stock exchange, so long as this Agreement is in effect, PPR and Seller
shall not, and shall cause their affiliates (including Brylane) not to, issue or
cause the publication of any press release or other announcement with respect to
the transactions contemplated by this Agreement or the Governance Agreement
without the consent of the other parties, which consent shall not be
unreasonably withheld or delayed.
9.4 Entire Agreement. This Agreement (including any Schedules and
----------------
Exhibits hereto) constitutes the entire agreement among the parties and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
9.5 Assignment. This Agreement and all of the provisions hereof
----------
shall be binding upon and inure to the benefits of the parties hereto and their
respective successors and permitted assigns. Subject to Section 1.6, neither
this Agreement nor any of the rights, interests or obligations shall be assigned
by any of the parties hereto without the prior written consent of the other
parties.
9.6 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
9.7 Amendment. This Agreement may not be amended except by an
---------
instrument in writing signed on behalf of each of the parties hereto.
9.8 Governing Law. The validity and interpretation of this
-------------
Agreement shall be governed by the laws of the State of New York, without
reference to the conflict of laws principles thereof.
9.9 Third Party Beneficiaries. This Agreement is not intended to
-------------------------
confer upon any other person other than the Parties hereto any rights or
remedies hereunder.
9.10 Specific Performance. The parties hereto shall acknowledge
--------------------
that, in view of the uniqueness of the parties hereto, the parties hereto would
not have an adequate
19
<PAGE>
remedy at law for money damages in the event that this Agreement were not
performed in accordance with its terms, and therefore agree that the parties
shall be entitled to specific enforcement of the terms hereof in addition to any
other remedy to which the parties hereto may be entitled at law or in equity.
9.11 Supplements to Schedules. Seller may from time to time through
------------------------
the date which is ten days after the date hereof supplement Schedule 4.3
attached hereto; provided that PPR may reject any item set forth in any such
supplement, if such item is reasonably likely to be material and adverse to
Brylane and its subsidiaries taken as a whole.
9.12 Certain Definitions.
-------------------
(a) The term "Seller" as used herein means only the parties
named on Schedule A hereto, and no other Brylane stockholder party to any other
agreement with PPR.
(b) The term "Business Day" as used herein means a day on which
banks are open for business both in New York State, U.S.A. and in Paris, France.
20
<PAGE>
IN WITNESS WHEREOF, PPR and Seller have caused this Agreement to be
signed by a duly authorized officer, general partner or other duly authorized
person, all as of the date first written above.
PINAULT PRINTEMPS-REDOUTE, S.A.,
a company organized under the laws of France
By: /s/ Serge Weinberg
----------------------------------------
Name: Serge Weinberg
---------------------------------
Its: Chief Executive Officer
---------------------------------
FS EQUITY PARTNERS II, L.P.,
a California limited partnership
By: Freeman Spogli & Co.
Its: General Partner
By: /s/ John M. Roth
-----------------------------------
Name: John M. Roth
Its: General Partner
21
<PAGE>
FS EQUITY PARTNERS III, L.P.,
a Delaware limited partnership
By: FS Capital Partners, L.P.
Its: General Partner
By: FS Holdings, Inc.
Its: General Partner
By: /s/ John M. Roth
--------------------------------
Name: John M. Roth
Its: Vice President
FS EQUITY PARTNERS INTERNATIONAL, L.P.,
a Delaware limited partnership
By: FS&Co. International, L.P.
Its: General Partner
By: FS International Holdings Limited
Its: General Partner
By: /s/ John M. Roth
--------------------------------------
Name: John M. Roth
Its: Vice President
22
<PAGE>
EXHIBIT B-2
BRYLANE TRADEMARK AGREEMENT AMENDMENT
SUMMARY OF TERMS
-------------------------------------
Term of Agreement
- -----------------
The Limited acknowledges that PPR's current activities are not competitive with
those of The Limited. Therefore, PPR's investment in Brylane contemplated by
the Stock Purchase Agreement will not trigger an early termination of the
Trademark License Agreement.
Use of Trademarks
- -----------------
The Limited acknowledges that, through the Fall 1998 media buy, Brylane may
continue to use licensed trademarks in a manner substantially identical to the
manner in which such trademarks have been used by Brylane prior to February 18,
1998 (including, without limitation, with respect to the size and location of
trademarks within Brylane catalogs); provided that, in addition to the
--------
limitations set forth in the preceding portion of this sentence, such trademarks
may be used only in connection with those categories of merchandise with respect
to which such trademarks have been used prior to February 18, 1998. The rights
granted pursuant to the immediately preceding sentence are in addition to those
expressly granted to Brylane under the Trademark License Agreement.
Waiver
- ------
The Limited waives any claims, if any, it may have against Brylane for breach,
if any, of the Trademark License Agreement solely to the extent such breaches
arise by virtue of Brylane's use (in accordance with the preceding paragraph)
prior to the closing date of licensed trademarks in connection with the sale of
menswear, lingerie and shoes. The grant of the waiver contemplated by this
paragraph does not constitute an admission by Brylane that any breach of the
Trademark License Agreement has occurred.
Transitional Matters
- --------------------
The Limited acknowledges that Brylane may use the licensed trademarks together
with other Brylane trademarks for the purpose of transitioning away from the use
of the licensed trademarks; provided that Brylane obtains The Limited's prior
--------
consent to any such use (which consent shall not be unreasonably withheld). It
is understood that The Limited's interest in this regard is to ensure that the
licensed trademarks are not used in any manner that creates customer confusion
(vis-a-vis The Limited's retail stores) or that in any manner disparages, or
adversely impacts the goodwill associated with the licensed trademarks.
<PAGE>
Exhibit 99.2
_______________________________________
STOCK PURCHASE AGREEMENT
between
M&P DISTRIBUTING CO.
and
PINAULT PRINTEMPS-REDOUTE, S.A.
_______________________________________
Dated as of February 19, 1998
_______________________________________
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
ARTICLE I THE TRANSACTIONS....................................................... 1
1.1 Purchase and Sale......................................................... 1
1.2 Purchase Price............................................................ 2
1.3 Closing Matters........................................................... 2
1.4 Time and Place of Closing................................................. 2
1.5 Fees and Expenses......................................................... 3
1.6 Assignment................................................................ 3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PPR.................................. 3
2.1 Organization.............................................................. 3
2.2 Authority................................................................. 3
2.3 No Violation.............................................................. 4
2.4 Brokers................................................................... 4
2.5 Securities Act Representation............................................. 4
2.6 Ownership of Stock........................................................ 4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER............................... 5
3.1 Title to Shares........................................................... 5
3.2 Authority................................................................. 5
3.3 No Violation.............................................................. 5
3.4 Brokers; Certain Expenses................................................. 6
3.5 No Solicitation........................................................... 6
ARTICLE IV CERTAIN CLOSING CONDITIONS REGARDING BRYLANE........................... 6
4.1 Good Standing of the Company.............................................. 6
4.2 Authority................................................................. 6
4.3 No Violation.............................................................. 7
4.4 Capitalization............................................................ 7
4.5 No Material Adverse Change in Business.................................... 7
4.6 Financial Statements...................................................... 8
4.7 Registration Statement.................................................... 8
4.8 DGCL Section 203 and State Takeover Laws.................................. 9
ARTICLE V COVENANTS AND AGREEMENTS............................................... 9
5.1 Efforts to Consummate..................................................... 9
5.2 Consents.................................................................. 9
5.3 Exclusivity............................................................... 10
5.4 Confidentiality........................................................... 10
</TABLE>
i
<PAGE>
TABLE OF CONTENTS (Continued)
<TABLE>
<CAPTION>
<S> <C>
5.5 Access to Properties and Records.......................................... 11
5.6 Stockholder Litigation.................................................... 11
5.7 Transfer of the Shares.................................................... 11
5.8 Antitrust................................................................. 11
5.9 Notices of Certain Events................................................. 11
ARTICLE VI CONDITIONS PRECEDENT................................................... 12
6.1 Conditions to Each Party's Obligations.................................... 12
6.2 Conditions to the Obligations of Seller................................... 12
6.3 Conditions to the Obligations of PPR...................................... 13
ARTICLE VII SURVIVAL; INDEMNIFICATION.............................................. 14
7.1 Survival of Representations and Warranties and Related Agreements......... 14
7.2 Indemnification for Breach of Representations, Warranties and Covenants... 14
7.3 Indemnification of Seller, etc............................................ 15
ARTICLE VIII TERMINATION OF AGREEMENT............................................. 17
8.1 Termination............................................................... 17
8.2 Effect of Termination..................................................... 18
8.3 Costs and Expenses........................................................ 18
ARTICLE IX MISCELLANEOUS......................................................... 18
9.1 Notices.................................................................. 18
9.2 Headings; Agreement...................................................... 18
9.3 Publicity................................................................ 19
9.4 Entire Agreement......................................................... 19
9.5 Assignment............................................................... 19
9.6 Counterparts............................................................. 19
9.7 Amendment................................................................ 19
9.8 Governing Law............................................................ 19
9.9 Third Party Beneficiaries................................................ 19
9.10 Specific Performance. The parties hereto................................ 19
9.11 Supplements to Schedules................................................. 19
9.12 Certain Definitions...................................................... 20
</TABLE>
ii
<PAGE>
EXHIBITS
- --------
Exhibit B-1 Form of Corporate Governance Agreement
Exhibit B-2 Term Sheet of Amendments to Trademark Agreement
SCHEDULES
- ---------
Schedule A Selling Stockholders
Schedule 1.1(b) Possible Selling Stockholders Not Party to the Stockholders
Agreement
Schedule 2.3 PPR Consents
Schedule 2.4 Fees Owed by PPR
Schedule 3.3 Seller Consents
Schedule 3.4 Fees Owed by Sellers
Schedule 4.3 Brylane Consents
Schedule 4.4 Capitalization of Brylane at January 31, 1998
Schedule 6.1(d) Term Sheet for Agreements with Brylane Management
Schedule 6.3(h) Board Actions
Schedule 9.1 Address for Notice
iii
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
STOCK PURCHASE AGREEMENT ("Agreement") dated as of February 19, 1998
among the stockholder or stockholders of Brylane Inc., a Delaware corporation
("Brylane") listed on Schedule A to this Agreement ("Seller") and Pinault
Printemps-Redoute, S.A., a company organized under the laws of France ("PPR").
R E C I T A L S:
- - - - - - - -
A. PPR wishes to purchase from Seller, and Seller desires to sell to
PPR, that number of shares (the "Shares") of the common stock, par value $.01
per share of Brylane (the "Common Stock") listed on Schedule A hereto (adjusted
to give effect to any stock splits, stock, dividends, recapitalizations or
similar transactions declared or occurring between the date hereof and closing)
in consideration of the Purchase Price (as defined below).
B. A committee constituted of Peter M. Starrett, who is an
independent member of the Board of Directors of Brylane (the "Independent
Director") has considered and approved this Agreement, a form of a corporate
governance agreement substantially in the form of Exhibit B-1 hereto (the
"Governance Agreement") to be entered into between Brylane and PPR at the
Closing (as defined below), a term sheet substantially in the form of Exhibit B-
2 hereto (the "TM Amendment Term Sheet") relating to certain amendments to be
made to the Trademark Agreement, dated as of August 20, 1993, as amended (the
"Trademark Agreement"), and the transactions contemplated hereby.
A G R E E M E N T:
- - - - - - - - -
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions contained
herein, the sufficiency of which is hereby acknowledged, and in order to set
forth the terms and conditions of the transactions described herein, the parties
hereby agree as follows:
ARTICLE I
THE TRANSACTIONS
-----------------
1.1 Purchase and Sale.
-----------------
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing, as defined below, PPR shall purchase from Seller, and
Seller shall
<PAGE>
sell to PPR, the Shares of Common Stock set forth opposite Seller's name on
Schedule A to this Agreement.
(b) In addition to the Shares, PPR agrees to purchase, at the Purchase
Price (as defined below), (i) in accordance with the terms of the Stockholders
Agreement (as defined below), all Shares tendered to PPR (up to a maximum of
595,195 shares in the aggregate) by stockholders of Brylane who are parties to
the Stockholders Agreement (as defined below) tendering shares of Common Stock
in exercise of their Tag-Along Rights (as defined in the Stockholders' Agreement
dated as of February 26, 1997 (the "Stockholders Agreement") among certain
Stockholders of the Company) and (ii) up to an additional 163,900 shares to be
sold by certain stockholders listed on Schedule 1.1(b) not having Tag-Along
Rights. The tendering of additional shares of Common Stock shall not reduce the
number of Shares to be purchased from Seller hereunder. No tender of shares of
Common Stock by a person or entity exercising Tag-Along Rights or other selling
stockholder shall be effective unless such person or entity first executes and
delivers to PPR a stock purchase agreement in form reasonably satisfactory to
PPR (consistent, if applicable, with the terms of the Stockholders Agreement)
with respect to the sale by such person or entity and the purchase by PPR of its
shares of Common Stock and otherwise, if applicable, complies with the
applicable terms of the Stockholders Agreement.
1.2 Purchase Price. The purchase price to be paid by PPR to
--------------
Seller for the shares of Common Stock to be sold and purchased hereunder shall
be $51.00 per share of Common Stock; adjusted to give effect to any stock
splits, stock dividends, recapitalizations and similar transactions declared or
occurring between the date hereof and Closing (the "Purchase Price").
1.3 Closing Matters. At the Closing (a) PPR will wire transfer in
---------------
same day funds to accounts set forth in writing by Seller the sums set forth
opposite Seller's name on Schedule A in payment of the Purchase Price for the
----------
shares of Common Stock to be purchased by PPR, and (b) Seller shall deliver a
certificate or certificates to PPR, representing the shares of Common Stock
purchased thereby, duly endorsed for transfer in blank (the "Certificates") with
stock transfer stamps attached.
1.4 Time and Place of Closing. The consummation of the
-------------------------
transactions contemplated by this Agreement (the "Closing") shall take place at
10:00 a.m. New York time, at the offices of Wachtell, Lipton, Rosen & Katz on
the earlier of (i) the fourth Business Day following the early termination, if
any, of the waiting period under the HSR Act (as defined below) or (ii) the
second Business Day following the expiration of the 30 day waiting period under
the HSR Act, unless under this clause (ii) the expiration of such period occurs
on a Friday in which case the Closing shall take place on the third Business Day
following such expiration (the "Closing Date").
2
<PAGE>
1.5 Fees and Expenses. PPR and Seller shall each be responsible
-----------------
for the fees and expenses incurred by it in connection with the transactions
contemplated hereby, subject to any agreements among Sellers and other
stockholders of Brylane who are selling Common Stock to PPR providing for
sharing of expenses among themselves; provided that Seller shall pay any
transfer tax, if any, incurred in connection with the sale and purchase of the
Shares; and provided further that at the Closing, subject to presentation of
invoices, PPR shall pay up to an aggregate of $4.25 million (including amounts
payable pursuant to Section 1.5 of that certain Stock Purchase Agreement dated
the date hereof (the "FS SPA") among PPR and FS Equity Partners II, L.P., FS
Equity Partners III, L.P. and FS Equity Partners International, L.P.) for
financial advisory services rendered by Lazard Freres & Co. LLC and Merrill
Lynch & Co. to Seller and the other stockholders of Brylane selling shares of
Brylane Common Stock pursuant to the transactions contemplated hereby.
1.6 Assignment. PPR may assign its right to purchase the Shares
----------
to any one or more direct or indirect majority-owned subsidiaries, or affiliates
controlled by PPR; provided that no such assignment shall relieve PPR of its
obligations hereunder to the extent that the assignee fails to fulfill the same.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
OF PPR
------
PPR represents and warrants to Seller as follows:
2.1 Organization. PPR is a societJ anonyme duly organized,
------------
validly existing and in good standing under the laws of France.
2.2 Authority. PPR has full corporate power and authority to
---------
execute and deliver this Agreement and the Governance Agreement, and to
consummate the transactions contemplated on its part hereby. The execution,
delivery and performance by PPR of this Agreement and the Governance Agreement
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action on the part of PPR. No other
action on the part of PPR is necessary to authorize the execution and delivery
of this Agreement or the Governance Agreement by PPR or the performance by PPR
of its obligations hereunder or thereunder. This Agreement has been duly
executed and delivered by PPR and constitutes a legal, valid and binding
agreement of PPR, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally and subject to general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law). The Governance Agreement to be executed by PPR
in
3
<PAGE>
connection with this Agreement on or prior to the Closing Date will be duly
executed and delivered by PPR and (assuming due execution and delivery by the
other party or parties thereto) will constitute a legal, valid and binding
obligation of PPR, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally and subject to general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
2.3 No Violation. The execution and delivery of this Agreement
------------
and the Governance Agreement by PPR, the performance by PPR of its obligations
hereunder and thereunder and the consummation by it of the transactions
contemplated hereby and thereby, will not (a) violate any provision of law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award applicable to PPR, (b) require the consent, waiver, approval, license or
authorization of or any filing by PPR with any governmental authority (other
than a notification form filed under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), any filings required under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and such
consents, waivers, approvals, licenses and authorizations and filings as are set
forth on Schedule 2.3 hereto) or (c) violate, result (with or without notice or
the passage of time, or both) in a breach of or give rise to the right to
accelerate, terminate or cancel any obligation under or constitute (with or
without notice or the passage of time, or both) a default under, any of the
terms or provisions of any charter document or bylaw, agreement, note,
indenture, mortgage, contract, order, judgment, ordinance, regulation or decree
to which PPR is subject or by which PPR is bound and which would have an adverse
effect on the ability of PPR to perform his or its obligations under this
Agreement and the Governance Agreement.
2.4 Brokers. Other than as set forth on Schedule 2.4, PPR has
-------
not paid or become obligated to pay any fee or commission to any broker, finder,
investment banker or other intermediary in connection with this Agreement.
Brylane shall have no liability in respect of the fees and expenses of any such
party.
2.5 Securities Act Representation. PPR is not purchasing shares
-----------------------------
of Common Stock with a view to a distribution or resale of any of such shares in
violation of any applicable securities laws. PPR understands that the Shares
constitute restricted securities, not registered under the Securities Act or any
state securities law, and the certificates issued to PPR representing such
Shares will bear a legend to that effect.
2.6 Ownership of Stock. On the date hereof and the Closing Date,
------------------
PPR does not own any shares of Brylane Common Stock, except to the extent the
PPR may be deemed to beneficially own shares as a result of the execution of
this Agreement and the transactions contemplated hereby.
4
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
OF SELLER
---------
Seller represents and warrants to PPR as follows:
3.1 Title to Shares. Seller has good, valid and marketable title
---------------
to the Shares of Common Stock shown on Schedule A opposite such Seller's name,
free and clear of Encumbrances (as defined below). At the Closing, PPR will
acquire all of Seller's right, title and interest in and to and will have good,
valid and marketable title to the Shares of Common Stock shown on Schedule A
opposite such Seller's name from such Seller, free and clear of any and all
security interests, liens, claims, pledges, encumbrances or other rights or
claims of any other person of any kind or any preemptive or similar rights
(collectively, "Encumbrances"), except as may exist under the Governance
Agreement. The Shares set forth opposite Seller=s name on Schedule A constitute
all of the Shares of capital stock of Brylane or its subsidiaries owned or held
by Seller.
3.2 Authority. Seller has full corporate, partnership or other
---------
power and authority to execute and deliver this Agreement and to carry out its
obligations hereunder and to consummate the transactions contemplated on its
part hereby. The execution, delivery and performance by Seller of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate, shareholder, partnership or other
action on the part of Seller, and no other corporate proceedings or other action
on the part of Seller are necessary to authorize the execution and delivery of
this Agreement by Seller or the performance by Seller of its obligations
hereunder and thereunder, including, without limitation, the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Seller and constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally and subject to general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
3.3 No Violation. The execution and delivery of this Agreement by
------------
Seller, the performance by Seller of its obligations hereunder and thereunder
and the consummation by it of the transactions contemplated hereby and thereby
will not (a) violate any provision of law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award applicable to Seller, (b)
require the consent, waiver, approval or authorization of or any filing by
Seller with any governmental authority (other than a notification form filed
under the HSR Act and any filings required under the 1934 Act and such consents,
waivers, approvals, licenses and authorizations and filings as are set forth on
Schedule 3.3 hereto), (c) violate, result (with or without notice or the passage
of time, or both) in a breach of, or give rise to the right to
5
<PAGE>
terminate, accelerate or cancel any obligation under, or constitute (with or
without notice or the passage of time, or both) a default under, any of the
terms or provisions of the organization documents, including certificates of
incorporation, bylaws, partnership agreements and certificate of limited
partnership, as applicable, of Seller or any agreement, note, indenture,
mortgage, contract, order, judgment, ordinance, regulation, decree or other
instrument to which Seller is subject or bound and which would have an adverse
effect on the ability of Seller to perform its obligations hereunder, including
consummation of the transactions contemplated by this Agreement, or (d) result
in the creation or imposition of any tax or Encumbrance on the Shares, except
for transfer taxes, if any, contemplated by Section 1.5 hereof.
3.4 Brokers; Certain Expenses. Except as set forth in Schedule
-------------------------
3.4, no Seller has become obligated to pay any fee or commission to any broker,
finder, investment banker or other intermediary in connection with any of the
transactions contemplated by this Agreement. Brylane shall have no liability in
respect of the fees and expenses of any such party.
3.5 No Solicitation. Neither Seller, nor anyone acting on its
---------------
behalf, has taken or will take any action, which would subject the sale of the
Shares as contemplated hereby to the registration provisions of the Securities
Act of 1933, as amended ("1933 Act").
ARTICLE IV
CERTAIN CLOSING CONDITIONS REGARDING BRYLANE
--------------------------------------------
As a condition to PPR's obligations under this Agreement as
contemplated by Section 6.3(c) below, the following shall be true and correct in
all material respects on and as of the Closing Date except to the extent any
statement speaks as of a specified date, in which case such statement shall be
true and correct as of such date:
4.1 Good Standing of the Company. Brylane has been duly organized
----------------------------
and is validly existing as a corporation in good standing under the laws of the
State of Delaware and has corporate power and authority to own, lease and
operate its properties and to conduct its business and to enter into and perform
its obligations under the Governance Agreement.
4.2 Authority. Brylane has full corporate power and authority to
---------
execute and deliver the Governance Agreement and to carry out its obligations
thereunder and to consummate the transactions contemplated on its part thereby.
The execution, delivery and performance by Brylane of the Governance Agreement
and the consummation of the transactions contemplated on its part thereby have
been duly authorized by all necessary corporate action, and no other corporate
(or shareholder) proceedings or other similar action on the part of Brylane are
necessary to authorize the execution and delivery of the Governance
6
<PAGE>
Agreement by Brylane or to consummate the transactions contemplated on its part
thereby.
4.3 No Violation. The execution, delivery and performance of this
------------
Agreement and the Governance Agreement and the consummation of the transactions
contemplated hereby and thereby will not (a) violate any provision of (i) to the
knowledge of Brylane, law, or (ii) rule, ordinance, regulation, order, writ,
judgment, injunction, decree, determination or award applicable to Brylane or
any of its subsidiaries, (b) require the consent, waiver, approval or
authorization of or any filing by Brylane or any of its subsidiaries with any
governmental authority (other than a notification form filed under the HSR Act
and any filings required under the 1934 Act and such consents, waivers,
approvals, licenses and authorizations and filings as are set forth on Schedule
4.3 hereto), (c) other than as set forth on Schedule 4.3 hereto, violate, result
(with or without notice or the passage of time, or both) in a breach of, or give
rise to the right to terminate, accelerate or cancel any obligation under, or
constitute (with or without notice or the passage of time, or both) a default
under, any of the terms or provisions of the charter or bylaws of Brylane or any
of its subsidiaries or any agreement, contract, note, indenture, mortgage or
other instrument to which Brylane or any of its subsidiaries is subject or bound
and which would have a Material Adverse Effect (as defined below) on Brylane and
its subsidiaries taken as a whole or (d) result in the creation or imposition of
any tax or Encumbrance on the Shares (other than transfer taxes, if any,
contemplated by Section 1.5) or otherwise impair the ability of PPR to exercise
full rights as a stockholder, including with respect to voting and disposition
of the Shares.
4.4 Capitalization. As of January 31, 1998, Brylane has the
--------------
capitalization set forth on Schedule 4.4 hereto. All of the issued and
outstanding capital stock of Brylane has been duly authorized and validly issued
and is fully paid and non-assessable and was not issued in violation of any
preemptive right arising by operation of law, under the charter, by-laws or
other organizational document or any document or under any agreement to which
Brylane or any of its subsidiaries is a party. Since January 31, 1998, Brylane
has not issued any shares of capital stock or options, warrants or similar
rights exercisable for or convertible into shares of capital stock of Brylane,
except upon the exercise of outstanding options or the conversion of (i) shares
of Brylane Series A Convertible Preferred Stock or (ii) that certain Convertible
Subordinated Promissory Note dated February 26, 1997 of Brylane and Brylane,
L.P., and except for grants of options in the ordinary course of business
consistent with past practice.
4.5 No Material Adverse Change in Business. Since November 1,
--------------------------------------
1997, (A) there has been no material adverse change in the results of
operations, condition, financial or otherwise, or in the earnings or business
prospects of Brylane and its subsidiaries considered as one enterprise, whether
or not arising in the ordinary course of business (a "Material Adverse Effect"),
(B) there have been no transactions entered into by Brylane or any of its
subsidiaries, other than those in the ordinary course of business, which are
material with respect to Brylane and its subsidiaries considered as one
enterprise, and (C) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
7
<PAGE>
stock; provided, that none of the following circumstances relating to, or
arising from or as a result of any of the events specified below with respect
to, any agreement, contract, note, indenture, mortgage, order, writ, judgment,
injunction, decree, determination, award or other instrument identified on
Schedule 4.3 (each a "Consent Item") shall constitute a Material Adverse Effect
hereunder: (i) any violation, breach, right to terminate, accelerate or cancel
any obligation of or under any Consent Item solely arising from or as a result
of the execution, delivery or performance of this Agreement or the Governance
Agreement or any of the transactions contemplated hereby or thereby; (ii) any
failure to obtain a consent or waiver under any Consent Item of or in respect
of, any of the circumstances specified in clause (i); or (iii) any modification
or amendment of any term or provision of any Consent Item made in connection
with the securing of such a consent or waiver.
4.6 Financial Statements. The historical financial statements
--------------------
included in the 1998 Registration Statement (as defined below), together with
the related schedules and notes, present fairly the consolidated financial
position of Brylane and its subsidiaries and Brylane, L.P., a Delaware limited
partnership (the "Partnership") at the dates indicated and the results of their
operations, stockholders' equity and cash flow for the periods specified, except
as otherwise stated in the 1998 Registration Statement (as defined below); all
said financial statements have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved. The supporting schedules to the historical financial
statements included in the 1998 Registration Statement present fairly in
accordance with GAAP the information required to be stated therein. The
selected financial data and the summary financial information included in the
1998 Registration Statement present fairly the information shown therein and
have been compiled on a basis consistent with that of the audited financial
statements included in the 1998 Registration Statement. The pro forma financial
statements and other pro forma financial information and the related notes
thereto included in the 1998 Registration Statement present fairly the
information shown therein, have been prepared in accordance with the SEC's rules
and guidelines with respect to pro forma financial statements and have been
properly compiled on the bases described therein, and, in the opinion of
Brylane, the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein, except as otherwise stated in the 1998
Registration Statement.
4.7 Registration Statement. At the dates of their respective
----------------------
filings, the Registration Statement on Form S-1 of Brylane filed with the
Securities and Exchange Commission (the "SEC") on February 13, 1998, as amended
by Amendment No. 1 thereto filed with the SEC on February 18, 1998
(collectively, the "1998 Registration Statement") complied in all material
respects with the requirements of the Securities Act and the 1934 Act and the
rules and regulations thereunder and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
8
<PAGE>
4.8 DGCL Section 203 and State Takeover Laws. Prior to the time
----------------------------------------
this Agreement was executed, the Board of Directors of Brylane and the
Independent Directors have each taken all action necessary to exempt under or
make not subject to (x) Section 203 of the Delaware General Corporation Law and
(y) any other state takeover law or state law that purports to limit or restrict
business combinations or the ability to acquire or vote shares, (i) the
execution of this Agreement and the Governance Agreement and (ii) the
transactions contemplated hereby and thereby. Evidence of such action has been
provided to PPR by Brylane.
ARTICLE V
COVENANTS AND AGREEMENTS
-------------------------
5.1 Efforts to Consummate. Upon the terms and subject to the
---------------------
conditions herein provided, each of PPR and Seller, agrees to use all reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement and the Governance Agreement and the other
transactions contemplated hereby, including (a) to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby, (b) to defend
against any and all claims, actions, suits, proceedings, investigations or
litigation, including, without limitation, any injunctions or other orders or
claims, actions, suits, proceedings or investigations which arise out of or
relate to the transactions contemplated by this Agreement and (c) to fulfill all
conditions on its part to be fulfilled under this Agreement. In case at any
time after the Closing Date any further action is reasonably necessary or
desirable to carry out the purposes of this Agreement or the Governance
Agreement, the proper partners, officers or directors of each party to this
Agreement or the Governance Agreement shall take all such reasonably necessary
action. No party hereto will take any action for the purpose of delaying,
impairing or impeding the receipt of any required consent, authorization, order
or approval or the making of any required filing.
5.2 Consents. (i) Seller and PPR will use all reasonable efforts
--------
to obtain all necessary and material waivers, consents and approvals of all
governmental authorities necessary to consummate the transactions contemplated
by this Agreement and (ii) PPR and, at the request of PPR or Brylane, Seller,
will cooperate in all reasonable respects in Brylane=s efforts to obtain all
waivers, consents and approvals of third parties required due to the
transactions contemplated hereby, whether or not a condition to the consummation
of the transactions contemplated hereby.
5.3 Exclusivity.
-----------
9
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(a) Following the execution of this Agreement, neither The Limited,
Inc., a Delaware corporation ("The Limited," together with FS Equity Partners
II, L.P., a Delaware limited partnership, FS Equity Partners III, L.P., a
Delaware limited partnership, FS Equity Partners International, L.P., a Delaware
limited partnership, the "Principal Stockholders"), nor the directors, officers,
affiliates, employees, representatives or agents of any of them, shall, directly
or indirectly, engage in any process to sell, or otherwise dispose of any
interest in or encumber any of Shares of Common Stock, to any corporation,
partnership, person, or other entity or group (including, without limitation,
any sale in a public offering, underwritten or otherwise, or other sale to the
public market), or engage in any action in conflict with this Agreement,
provided, however, any Brylane director may participate in any negotiation
regarding a merger, acquisition or other business combination of Brylane and its
subsidiaries, as a whole (collectively, a "Third Party Transaction"), to the
extent advised by outside counsel to the Company that failure to take such
action would be a violation of such director's fiduciary duty under Delaware law
and if and only if, Brylane's entry into such negotiations regarding such Third
Party Transaction has been approved by the Independent Directors. Neither
Seller nor any of its officers, directors, employees, affiliates,
representatives or agents, shall directly or indirectly solicit any Third Party
Transaction or provide any non-public information regarding Brylane to any
corporation, partnership, person or other entity or group. To the extent Seller
becomes aware of a Third Party Transaction or any proposal with respect thereto,
it shall promptly notify PPR.
(b) (i) To the extent Brylane consummates a Third Party Transaction
between the date hereof and the Closing Date which provides a higher value per
Share than the Purchase Price, or (ii) this Agreement is terminated because the
condition set forth in Section 6.2(b) is no longer satisfied or any other
condition is not satisfied as a result of a pending, proposed or contemplated
Third Party Transaction, then, in each case, if PPR does not acquire the Shares
hereunder and Seller sells or exchanges the Shares in a Third Party Transaction,
Seller shall pay to PPR the difference between the fair market value of the
consideration received per Share in the Third Party Transaction less the
Purchase Price for the Shares sold or to be sold hereunder.
5.4 Confidentiality. PPR agrees that all data and information
---------------
obtained by PPR or any of its employees, accountants, counsel and other
representatives (the "PPR Agents") from Brylane or any of its Subsidiaries shall
be held by PPR and any of the PPR Agents as confidential information in
accordance with and subject to the terms of the Confidentiality Agreement, dated
July 14, 1997 (the "Confidentiality Agreement") between Brylane and PPR. The
terms of the Confidentiality Agreement are herewith incorporated by reference
and shall continue in full force and effect until the Closing Date shall have
occurred, and if this Agreement is terminated or if the Closing shall not have
occurred for any reason whatsoever, the Confidentiality Agreement shall
thereafter remain in full force and effect in accordance with its terms.
10
<PAGE>
5.5 Access to Properties and Records. Seller shall use reasonable
--------------------------------
best efforts to cause Brylane to afford to PPR and any PPR Agents reasonable
access during normal business hours throughout the period prior to the Closing
Date to all of Brylane's and its subsidiaries properties, books, contracts,
commitments and written records (including but not limited to tax returns), and
to make reasonably available its officers, employees and advisers to answer
questions put to them thereby; provided, that such access shall not unreasonably
interfere with the normal business operations of Brylane. PPR agrees that any
such investigations shall be related to this Agreement and the Governance
Agreement and to the transactions contemplated hereby and thereby, and further
agrees to provide Brylane with reasonable notice prior to visiting any such
property for the purpose of any such investigation.
5.6 Stockholder Litigation. Seller shall give PPR the opportunity
----------------------
to participate in the defense or settlement of any stockholder litigation
against the Seller, Brylane or the officers and directors of Brylane relating to
any of the transactions contemplated by this Agreement or the Governance
Agreement; provided, however, that no such settlement shall be agreed to without
PPR's consent, which consent shall not be unreasonably withheld.
5.7 Transfer of the Shares. During the term of this Agreement,
----------------------
Seller will not sell, transfer, offer to sell, pledge, encumber or otherwise
dispose of or transfer any interest in or create or suffer to exist any
Encumbrance on any of the Shares or enter into any agreement to do so. Seller
shall vote all of its Shares against any Third Party Transaction.
5.8 Antitrust. PPR and Seller, severally, agrees to use all
---------
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary or required by the United States Federal
Trade Commission or the United States Department of Justice in connection with
the expiration or termination of the waiting period under the HSR Act as a
result of the transactions contemplated by this Agreement, provided that no
party will be required to take any action or to do anything in connection with
the foregoing which would have a material adverse effect on their respective
businesses or would materially impair Brylane's and its subsidiaries', taken as
a whole, ownership or operation of a material portion of their business and
assets or PPR's ownership of the Shares or the benefits contemplated hereby.
Each party shall bear its own costs in connection with such filings under the
HSR Act.
5.9 Notices of Certain Events. Seller and PPR shall, upon
-------------------------
obtaining knowledge of any of the following, promptly notify each other of (i)
any notice or other communication from any person alleging that the consent of
such person is or may be required in connection with this Agreement and the
transactions contemplated hereby; (ii) any notice or other communication from
any governmental or regulatory agency or authority in connection with this
Agreement and the transactions contemplated hereby or the Governance Agreement
and the transactions contemplated thereby; and (iii) any actions, suits, claims,
investigations or other judicial proceedings commenced or threatened against
Brylane, Seller or PPR which relates to the consummation of this Agreement and
the transactions contemplated hereby.
11
<PAGE>
ARTICLE VI
CONDITIONS PRECEDENT
--------------------
6.1 Conditions to Each Party's Obligations. The respective
--------------------------------------
obligations of each party to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver of the following
conditions:
(a) Absence of Injunction. No United States or state governmental
---------------------
authority or other agency or commission or United States or state court or
judicial body of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, injunction or other order
(whether temporary, preliminary, or permanent) which is in effect and has the
effect of prohibiting consummation of the transactions contemplated by this
Agreement.
(b) The waiting period under the HSR Act shall have expired or
been terminated.
(c) The Governance Agreement shall have been duly executed and
delivered by each party thereto and shall be in full force and effect.
(d) PPR or Brylane shall have entered into agreements with, and
Brylane shall have adopted performance and equity incentive plans applicable to,
Brylane management containing the terms set forth on Schedule 6.1(d) hereto in a
form reasonably satisfactory to PPR.
6.2 Conditions to the Obligations of Seller. The obligation of
---------------------------------------
Seller to effect the transaction contemplated by this Agreement shall be subject
to the fulfillment or waiver at or prior to the Closing Date of the following
additional conditions:
(a) PPR shall have performed in all material respects its
obligations under this Agreement required to be performed by it on or prior to
the Closing Date pursuant to the terms hereof.
(b) The Independent Director shall not have rescinded, amended,
modified or superseded in any respect his approval of this Agreement, the
Governance Agreement, or the transactions contemplated hereby or thereby.
(c) The Supervisory Board of PPR shall not have rescinded,
amended modified or superseded in any adverse respect its approval of the
Governance Agreement and the transactions contemplated hereby and thereby.
12
<PAGE>
6.3 Conditions to the Obligations of PPR. The obligations of PPR
------------------------------------
to effect the transactions contemplated by this Agreement shall be subject to
the fulfillment or waiver at or prior to the Closing Date of the following
additional conditions:
(a) Seller shall have performed in all material respects its
obligations under this Agreement required to be performed by it on or prior to
the Closing Date pursuant to the terms hereof.
(b) The representations and warranties of Seller contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing Date as if made at and as of such date, except to the extent that
any such representation or warranty is made as of a specified date in which case
such representation or warranty shall have been true and correct in all material
respects as of such date.
(c) The closing conditions relative to Brylane contained in
Article IV of this Agreement shall be true and correct in all material respects
at and as of the Closing Date as if made as of such date, except to the extent
that any such representation or warranty is made as of a specific date in which
case such representation or warranty shall have been true and correct as of such
date.
(d) The Independent Director shall not have rescinded, amended,
modified or superseded in any respect his approval of this Agreement, the
Governance Agreement and the transactions contemplated hereby or thereby.
(e) PPR shall have received such other duly and validly executed
documents and instruments in connection with the Closing as are reasonably
requested by it.
(f) Brylane and The Limited, Inc. (or their respective relevant
subsidiaries) shall have entered into amendments to the Trademark License
Agreement dated August 20, 1993, as amended, implementing the provisions of the
TM Amendment Term Sheet attached hereto.
(g) PPR and Brylane shall have entered into a registration rights
agreement granting to PPR identical registration rights as those contained in
the Registration Rights Agreement, dated as of February 26, 1997, by and among
Brylane, Seller and certain other stockholders of Brylane.
(h) Each director of the Company representing The Limited, Inc.
and Freeman Spogli shall have submitted his resignation to be effective as of
the day following the closing date as contemplated by the Governance Agreement
and, acting pursuant to Section 223(d) of the Delaware General Corporation Law,
the Board shall appoint new directors and
13
<PAGE>
shall take the actions specified on Schedule 6.3(h) hereto to be taken prior to
or concurrent with the Closing.
(i) The purchase by PPR, and sale by other stockholders of
Brylane, of shares of Common Stock, which in the aggregate with the Shares being
purchased and sold hereunder would constitute at least 40% of the outstanding
shares of Common Stock, shall be closed currently herewith.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
-------------------------
7.1 Survival of Representations and Warranties and Related
------------------------------------------------------
Agreements. The representations and warranties contained in Articles II and
- ----------
III of this Agreement shall survive the Closing hereunder and shall continue in
effect for two years, notwithstanding any investigation by or on behalf of any
party before or after the Closing.
7.2 Indemnification for Breach of Representations, Warranties and
-------------------------------------------------------------
Covenants. .
- ---------
(a) After the Closing Date, Seller agrees to indemnify and hold
harmless PPR, and each officer, director, partner, shareholder or employee of
PPR and the officers, directors, partners and each shareholder or partner,
affiliates, advisors, and representatives of the PPR (the "PPR Indemnified
Parties") against any and all liabilities, damages, losses, costs or expenses
whatsoever, including reasonable fees of counsel and expenses of investigation
("Losses" and individually "Loss") suffered or received by any PPR Indemnified
Party after the Closing arising out of or resulting from any breach of any
representation or warranty or non-performance of any covenant made by Seller
under this Agreement, provided, however, that the indemnification obligation
under this paragraph shall not apply to any additional Losses that exceed the
net proceeds from this Agreement to Seller as shown on the attached Schedule A.
(b) After the Closing Date, PPR agrees to indemnify and hold
harmless Seller and each officer, director, partner, shareholder or employee of
Seller, the officers, directors, partners and employees of each such shareholder
or partner, affiliates, advisors and representatives of Seller (the "Seller
Indemnified Parties") against any and all Losses suffered or incurred after the
Closing by any Seller Indemnified Party arising out of or resulting from any
breach of any representation or warranty or non-performance of any covenant made
by PPR under this Agreement.
14
<PAGE>
(c) If a third party asserts a claim against any indemnified
party for which indemnification would be available under Sections 7.2 and 7.3
hereof (an "Indemnification Claim"), the indemnified party shall promptly give
notice of such Indemnification Claim, describing such Indemnification Claim with
reasonable specificity, to the indemnifying party; provided, however, that the
failure to give such notice shall not affect the right of the indemnified party
to indemnification hereunder except to the extent that such failure prejudices
the ability of the indemnifying party to defend any Indemnification Claim or
take any other remedial action. The indemnifying party shall be entitled to
assume the defense of such Indemnification Claim, including the employment of
counsel reasonably satisfactory to the indemnified party; provided, however,
that if the indemnified party reasonably determines in good faith that its
interests with respect to such Indemnification Claim cannot appropriately be
represented by the indemnifying party, such indemnified party shall have the
right to assume control of the defense of such Indemnification Claim and to have
its expenses reimbursed promptly with respect to such Indemnification Claim. In
addition, in the event that such indemnifying party, within a reasonable time
after notice of any such Indemnification Claim, fails to defend any indemnified
party, such indemnified party will (upon further notice to such indemnifying
party) have the right to undertake its defense of such Indemnification Claim for
the account of such indemnifying party and to have its expenses reimbursed
promptly with respect to such Indemnification Claim. Regardless of which party
is controlling the defense of any Indemnification Claim, both the indemnifying
party and the indemnified party shall act in good faith and no settlement of
such Indemnification Claim may be agreed to without the written consent of the
indemnifying party, which consent shall not be unreasonably withheld. The
controlling party shall deliver, or cause to be delivered, to the other party
copies of all correspondence, pleadings, motions, briefs, appeals or other
written statements relating to or submitted in connection with the defense of
any such Indemnification Claim, and timely notices of any hearing or other court
proceeding relating to such Indemnification Claim. Notwithstanding the
foregoing, in any matter the indemnifying party shall not be liable for the fees
and expenses of more than one counsel for all indemnified parties under this
Agreement in addition to local counsel.
7.3 Indemnification of Seller, etc.
------------------------------
(a) From and after the date hereof, in addition to any
indemnification available to any person from Brylane or any of its subsidiaries,
PPR shall (in each case to the fullest extent permitted by applicable law but
only in the amounts specified in Section 7.3(c) below) indemnify, defend and
hold harmless each Seller Indemnified Party against any and all losses, damages,
costs, expenses, liabilities or judgments, or amounts that are paid in
settlement of, or in connection with, any claim, action, suit, proceeding or
investigation based on or arising out of this Agreement or the Governance
Agreement and the transactions and circumstances contemplated hereby and thereby
(collectively, the "Seller Indemnified Liabilities") whether asserted or claimed
at or after the date hereof or the Closing Date, and PPR shall pay expenses in
advance of the final disposition of any such action or proceeding to
15
<PAGE>
each Seller Indemnified Party to the fullest extent permitted by law; provided,
however, that the indemnification provided for under this Section 7.3 shall not
be available to any Seller Indemnified Party with respect to any Seller
Indemnified Liability to the extent that such Seller Indemnified Liability is
finally determined by a non-appealable judgment of a court of competent
jurisdiction to have resulted primarily from the gross negligence, bad faith or
willful misconduct of such Seller Indemnified Party.
(b) Without limiting the foregoing, in the event any such claim,
action, suit, proceeding or investigation is brought against any Seller
Indemnified Party (whether arising before or after the Closing Date), (i) any
counsel retained by the Indemnified Parties for any period after the Closing
Date shall be reasonably satisfactory to PPR (it being agreed that Richards,
Layton & Finger; Davis, Polk & Wardwell and Riordan & McKinzie are acceptable to
PPR); (ii) after the Closing Date, PPR shall pay all reasonable fees and
expenses of counsel for the Seller Indemnified Parties promptly as statements
therefor are received; and (iii) after the Closing Date, PPR shall use all
reasonable efforts to assist in the vigorous defense of any such matter,
provided that PPR shall not be liable for any settlement of any claim effected
without its written consent, which consent, however, shall not be unreasonably
withheld. All such costs shall be deemed to be Seller Indmenified Liabilities
for purposes of clause (c) below. Any Seller Indemnified Party wishing to claim
indemnification under this Section 7.3, upon learning of any such claim, action,
suit, proceeding or investigation, shall notify PPR (but the failure so to
notify the PPR shall not relieve such entity from any liability which it may
have under this Section 7.3 except to the extent such failure materially
prejudices PPR). Notwithstanding the foregoing, in any matter the indemnifying
party shall not be liable for the fees and expenses of more than one counsel for
all Seller Indemnified Parties under this Agreement in addition to local
counsel.
(c) PPR's obligation to indemnify the Seller Indemnified Parties
under this Section 7.3, together with the indemnified parties under Section 7.3
of the FS SPA (collectively, the "M&P and FS Parties"), shall be limited in the
aggregate to (i) 100% of the first $1,000,000 of Seller Indemnified Liabilities
incurred by all M&P and FS Parties for which indemnification is available under
this Section 7.3 and under the comparable provisions of the FS SPA and (ii) 50%
of any additional Seller Indemnified Liabilities incurred by the M&P and FS
Parties above such $1,000,000 threshold.
(d) In addition, PPR shall not, and it and its officers,
directors, employees, agents, or representatives shall not, cause Brylane to
take, or cause to be taken, at any time, any action to modify or terminate the
indemnification arrangements or limitation of liability provisions contained in
the Certificate of Incorporation or Bylaws of any of Brylane or its subsidiaries
or in any indemnification agreements entered into by any of Brylane or its
subsidiaries, in each case as in effect as of the date hereof in a manner that
would adversely affect the Seller Indemnified Parties in each case as in effect
as of the date hereof. In addition, Brylane shall continue for at least five
years to maintain director and officers liability insurance
16
<PAGE>
coverage with respect to actions occurring prior to Closing for the Seller
Indemnified Parties currently carried by Brylane's directors and officers
insurance policies in an amount (and with deductibles) at least as favorable as
those currently available under the coverage in place as of the date hereof;
provided, that, in no event shall Brylane be requested to pay more than 150% of
the current annual premiums to maintain such coverage.
(e) This Section 7.3 shall survive the closing of all of the
-----------
transactions contemplated hereby, is intended to benefit Seller and each of the
Indemnified Parties (each of whom shall be entitled to enforce this Section 7.3
against PPR), constitutes a material part of the consideration given Seller for
the Shares, and shall be binding on all successors and assigns of PPR.
ARTICLE VIII
TERMINATION OF AGREEMENT
-------------------------
8.1 Termination. This Agreement may be terminated at any time
-----------
prior to the Closing Date by written notice to the other parties hereto, as
follows, and in no other manner:
(a) By mutual agreement of Seller on the one hand, and PPR, on
the other hand.
(b) By PPR or Seller if any permanent injunction or other order
of a court or other governmental authority, preventing consummation of the
transactions contemplated hereby, shall become final and non-appealable.
(c) By PPR or Seller if the Closing has not occurred by
April 30, 1998 (provided, that the right to terminate pursuant to this clause
(c) shall not be available to any party whose failure or whose affiliate=s
failure to perform any material covenant or obligation under this Agreement has
been the cause of or resulted in the failure of the Closing to occur by such
date).
(d) By Seller if there has been a material misrepresentation,
breach of warranty or breach of covenant on the part of PPR in any of the
representations, warranties or covenants under this Agreement which breach is
not curable, or, if curable, is not cured within 30 days after written notice of
such breach is given to PPR.
(e) By PPR if (i) there has been a material misrepresentation,
breach of warranty or breach of covenant on the part of Seller in any of its
representations, warranties or covenants under this Agreement or (ii) if any of
the Closing Conditions of Brylane contained in Article IV are not true and
correct in any material respect which breach, lack of truthfulness
17
<PAGE>
or correctness, as the case may be, is not curable, or if curable, is not cured
within 30 days after written notice thereof is given to Seller.
(f) By PPR in the event that on or after the date all
conditions to closing contained in Sections 6.1, 6.2 and 6.3 (other than
Sections 6.3(e), (g),(h) and (i)) have been satisfied or waived, PPR is not in
a position to purchase at least 40% in the aggregate of Brylane=s outstanding
Common Stock pursuant to this Agreement, the FS SPA and the transactions
contemplated by Section 1.1(b) hereof, or any combination thereof.
8.2 Effect of Termination. In the event that this Agreement shall
---------------------
be terminated pursuant to Section 8.1, all further obligations of the parties
hereto under this Agreement shall terminate without further liability or
obligation of either party to another, including liability for damages,
provided, that such termination shall not relieve any party hereto from
liability for breach of this Agreement, and provided, further, that the parties
-------- -------
shall remain obligated under Sections 5.3(b) and 5.4.
8.3 Costs and Expenses. Upon termination of this Agreement, all
------------------
expenses incurred in connection with the transactions contemplated herein,
including but not limited to legal and accounting expenses, shall be borne by
the respective party incurring such expenses.
ARTICLE IX
MISCELLANEOUS
-------------
9.1 Notices. All notices and other communications given or made
-------
pursuant hereto shall be in writing and shall be deemed to have been given or
made if in writing and delivered personally, sent by commercial carrier or
registered or certified mail (postage prepaid, return receipt requested) or
transmitted by facsimile (with receipt confirmed) to the parties at the
following addresses and numbers listed on Schedule 9.1 hereto or at such other
addresses as shall be furnished by the parties by like notice, and such notice
or communication shall be deemed to have been given or made as of the date
actually received.
9.2 Headings; Agreement. The headings contained in this Agreement
-------------------
are inserted for convenience only and do not constitute a part of this
Agreement. The term "Agreement" for purposes of representations and warranties
hereunder shall be deemed to include any Exhibits and Schedules hereto.
9.3 Publicity. Except as required by law or regulation or the
---------
rules of any stock exchange, so long as this Agreement is in effect, PPR and
Seller shall not, and shall cause their affiliates (including Brylane) not to,
issue or cause the publication of any press release or other announcement with
respect to the transactions contemplated by this Agreement or the
18
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Governance Agreement without the consent of the other parties, which consent
shall not be unreasonably withheld or delayed.
9.4 Entire Agreement. This Agreement (including any Schedules and
----------------
Exhibits hereto) constitutes the entire agreement among the parties and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
9.5 Assignment. This Agreement and all of the provisions hereof
----------
shall be binding upon and inure to the benefits of the parties hereto and their
respective successors and permitted assigns. Subject to Section 1.6, neither
this Agreement nor any of the rights, interests or obligations shall be assigned
by any of the parties hereto without the prior written consent of the other
parties.
9.6 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
9.7 Amendment. This Agreement may not be amended except by an
---------
instrument in writing signed on behalf of each of the parties hereto.
9.8 Governing Law. The validity and interpretation of this
-------------
Agreement shall be governed by the laws of the State of New York, without
reference to the conflict of laws principles thereof.
9.9 Third Party Beneficiaries. This Agreement is not intended to
-------------------------
confer upon any other person other than the Parties hereto any rights or
remedies hereunder.
9.10 Specific Performance. The parties hereto shall acknowledge
--------------------
that, in view of the uniqueness of the parties hereto, the parties hereto would
not have an adequate remedy at law for money damages in the event that this
Agreement were not performed in accordance with its terms, and therefore agree
that the parties shall be entitled to specific enforcement of the terms hereof
in addition to any other remedy to which the parties hereto may be entitled at
law or in equity.
9.11 Supplements to Schedules. Seller may from time to time
------------------------
through the date which is ten days after the date hereof supplement Schedule 4.3
attached hereto; provided that PPR may reject any item set forth in any such
supplement, if such item is reasonably likely to be material and adverse to
Brylane and its subsidiaries taken as a whole.
9.12 Certain Definitions.
-------------------
19
<PAGE>
(a) The term "Seller" as used herein means only the parties
named on Schedule A hereto, and no other Brylane stockholder party to any
other agreement with PPR.
(b) The term "Business Day" as used herein means a day on
which banks are open for business both in New York State, U.S.A. and in
Paris, France.
20
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IN WITNESS WHEREOF, PPR and Seller have caused this Agreement to be
signed by a duly authorized officer, general partner or other duly authorized
person, all as of the date first written above.
PINAULT PRINTEMPS-REDOUTE, S.A.,
a company organized under the laws of France
By: /s/Serge Weinberg
---------------------------------------
Name: Serge Weinberg
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Its: Chief Executive Officer
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M&P DISTRIBUTING CO.,
a Nevada corporation
By: /s/John N. Brewer
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Name: John N. Brewer
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Its: Assistant Secretary
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21
<PAGE>
EXHIBIT B-2
BRYLANE TRADEMARK AGREEMENT AMENDMENT
SUMMARY OF TERMS
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Term of Agreement
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The Limited acknowledges that PPR's current activities are not competitive with
those of The Limited. Therefore, PPR's investment in Brylane contemplated by
the Stock Purchase Agreement will not trigger an early termination of the
Trademark License Agreement.
Use of Trademarks
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The Limited acknowledges that, through the Fall 1998 media buy, Brylane may
continue to use licensed trademarks in a manner substantially identical to the
manner in which such trademarks have been used by Brylane prior to February 18,
1998 (including, without limitation, with respect to the size and location of
trademarks within Brylane catalogs); provided that, in addition to the
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limitations set forth in the preceding portion of this sentence, such trademarks
may be used only in connection with those categories of merchandise with respect
to which such trademarks have been used prior to February 18, 1998. The rights
granted pursuant to the immediately preceding sentence are in addition to those
expressly granted to Brylane under the Trademark License Agreement.
Waiver
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The Limited waives any claims, if any, it may have against Brylane for breach,
if any, of the Trademark License Agreement solely to the extent such breaches
arise by virtue of Brylane's use (in accordance with the preceding paragraph)
prior to the closing date of licensed trademarks in connection with the sale of
menswear, lingerie and shoes. The grant of the waiver contemplated by this
paragraph does not constitute an admission by Brylane that any breach of the
Trademark License Agreement has occurred.
Transitional Matters
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The Limited acknowledges that Brylane may use the licensed trademarks together
with other Brylane trademarks for the purpose of transitioning away from the use
of the licensed trademarks; provided that Brylane obtains The Limited's prior
--------
consent to any such use (which consent shall not be unreasonably withheld). It
is understood that The Limited's interest in this regard is to ensure that the
licensed trademarks are not used in any manner that creates customer confusion
(vis-a-vis The Limited's retail stores) or that in any manner disparages, or
adversely impacts the goodwill associated with the licensed trademarks.
