Form Of Executive Stock Purchase Agreement

Exhibit 10.2


FORM OF EXECUTIVE STOCK PURCHASE AGREEMENT


EXECUTIVE STOCK PURCHASE AGREEMENT dated as of January 22, 1996, by and among GCIH, INC., a Delaware corporation (the "Company"), Gerber Childrenswear, Inc., a Delaware corporation ("GCI"), ______________ (the "Executive") and Citicorp Venture Capital, Ltd., a New York corporation ("CVC").


The Company and the Executive desire to enter into an agreement that will provide for (i) the employment of the Executive as ___________________ of the Company, (ii) the acquisition by the Executive of ________ shares of the Company's Class B Common Stock, par value $0.01 per share (the "Class B Common", and (iii) the acquisition by the Executive of _______ shares of the Company's Series A Preferred Stock, par value $0.01 per share (the "Series A Preferred") upon the terms and conditions set forth herein. All of such shares of Class B Common, Series A Preferred and all shares of capital stock hereafter acquired by the Executive are referred to herein as "Executive Stock."


WHEREAS, the Company was formed for the purpose of acquiring all of the outstanding capital stock of GCI, pursuant to the terms of that certain stock purchase agreement ("Stock Purchase Agreement"), dated as of December 14, 1995, by and among the Company and Gerber Products Company, a Michigan corporation (the "Seller").


The execution and delivery of this Agreement by the Company and the Executive is a condition to the purchase of certain securities of the Company by Citicorp Venture Capital, Ltd., a New York corporation ("CVC"), pursuant to a securities purchase agreement, dated as of the date hereof (the "CVC Securities Purchase Agreement"). Certain provisions of this Agreement are intended for the benefit of, and will be enforceable by, CVC.


NOW, THEREFORE, the parties hereto agree as follows:


1. Definitions. As used herein, the following terms shall have the following meanings.


"Affiliate" shall mean, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, "control" (including, with its correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).


"Board" means the Company's board of directors.


"Book Value" of each share of Vesting Executive Stock shall be equal to the quotient determined by dividing (A) the excess of Company's consolidated assets over its consolidated liabilities as of the end of the fiscal quarter immediately preceding the date of Executive's Termination, determined on a consolidated basis in accordance with GAAP less the liquidation value of all of the Company's outstanding preferred stock, if any by (B) the total number of shares of Common Stock outstanding on a fully-diluted basis (including in such calculation the aggregate 2


conversion price an exercise price of all outstanding convertible securities, options and warrants).


"Business Day" means any day other than a Saturday or Sunday or a day on which commercial banks are required or authorized to close in New York, New York.


"Cause" means (i) a material breach of this Agreement by the Executive that is not susceptible to remedy or cure, or if susceptible to remedy or cure, is not cured or remedied and continues for fifteen (15) Business Days after the Board has given written notice to Executive specifying in reasonable detail the manner in which Executive has breached this Agreement, (ii) the determination by the Board, in the exercise of its reasonable judgment, that the Executive committed a felony, a crime involving moral turpitude or other act causing material harm to the standing and reputation of the Company or its Subsidiaries in each case after notice to Executive and reasonable procedure for Executive to state his case to the Board, (iii) the determination by the Board, in the exercise of its reasonable judgment, that the Executive breached his duty of loyalty to the Company and its Subsidiaries after notice to Executive and reasonable procedure for Executive to state his case to the Board, or (iv) the Executive's continued failure to perform his duties to the Company and its Subsidiaries after written notice and, if susceptible to remedy or cure is not cured or remedied and continues for fifteen (15) Business Days after the Board has given written notice to the Executive specifying in reasonable detail the manner in which the Executive has continued to fail to perform his duties.


"Common Stock" means the Class A Common, the Class B Common, the Class C Common, and the Class D Common, as adjusted for any stock split, stock dividend, share combination, share exchange, recapitalization, merger, consolidation or other reorganization.


"Executive Stock" is defined in the preamble hereto and will include shares of the Company's capital stock issued with respect to Executive Stock by way of a stock split, stock dividend or other recapitalization. Executive Stock will cease to be Executive Stock when transferred pursuant to a Qualified Public Offering or Sale of the Company. Executive Stock will continue to be Executive Stock in the hands of any holder other than the Executive, including all transferees of the Executive (except for the Company and CVC (or its designee)), and except as otherwise provided herein, each such other holder of Executive Stock will succeed to all rights and obligations attributable to the Executive as a holder of Executive Stock hereunder.


"GAAP" means U.S. generally accepted accounting principles, as in effect from time to time and as adopted by the Company with the consent of its independent public accountants, consistently applied.


"Original Cost" of each share Vesting Executive Stock purchased on the date hereof will be equal to $1.00 per share.


"Permanent Disability" means Executive is unable to perform, by reason of physical or mental incapacity, his duties or obligation under this Agreement, for a period of ninety (90) consecutive days or a total period of one hundred twenty (120) days in any three hundred sixty (360) day period.


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"Person" means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof.


"Qualified Public Offering" means the sale, in an under-written public offering registered under the Securities Act, of shares of the Company's Common Stock having an aggregate value of at least $30 million.


"Registration Rights Agreement" means the Registration Rights Agreement, dated as of the date hereof, by and among the Company, CVC and the Executives and others, as in effect from time to time.


"Sale of the Company" means the sale of the Company, in a single transaction or a series of related transactions, to a third party (which is not an Affiliate of the Approving Stockholders) (a) pursuant to which such third party proposes to acquire all or substantially all of the outstanding Common Stock (whether by merger, consolidation, recapitalization, reorganization, purchase of the outstanding Common Stock or otherwise) or all or substantially all of the consolidated assets of the Company, (b) which has been approved by the Board and holders of a majority of the outstanding shares of Common Stock issued to CVC and its Affiliates, other than Citicorp Mezzanine Partners, L.P., a Delaware limited partnership ("CMP"), voting together as a single class (the "Approving Stockholders"), and (c) pursuant to which all holders of Common Stock receive with respect thereto (whether in such transaction or, with respect to an asset sale, upon a subsequent liquidation) the same form and amount of consideration per share of Common Stock or, if any holders are given an option as to the form and amount of consideration to be received, all holders are given the same option.


"Securities Act" means the Securities Act of 1933, as amended from time to time.


"Stockholders Agreement" means the Stockholders Agreement, dated as of the date hereof, by and among the Company, the Executives, CVC and others, as in effect from time to time.


"Subsidiary" means, with respect to any Person, any corporation, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons shall be allocated a majority of partnership, association or other business entity gains or losses or shall be or control the managing director or general partner of such partnership, association or other business entity.


"Termination Year" means that fiscal year of the Company during which the Employment Period ends pursuant to the terms of Section 7(d) hereof.


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"Vesting Executive Stock" means the _______ shares of Class B Common subject to vesting and stock issued in connection therewith, as adjusted for any stock split, stock dividend, share combination, share exchange, recapitalization, merger, consolidation or other reorganization. Vesting Executive Stock will cease to be Vesting Executive Stock when transferred pursuant to a Public Sale or Sale of the Company. Vesting Executive Stock will continue to be Vesting Executive Stock in the hands of any holder other than the Executive, including all transferees of the Executive (except for the Company and CVC (or its designees)), and except as otherwise provided herein, each such other holder of Vesting Executive Stock will succeed to all rights and obligations attributable to the Executive as a holder of Executive Stock hereunder.


2. Purchase and Sale of Executive Securities.


(a) Upon execution of this Agreement, the Executive will purchase, and the Company will sell (i) ________ shares of Class B Common at a price of $1.00 per share, (ii) ______ shares of Class B Common at a price of $__ per share and (iii) _______ shares of Series A Preferred at a price of $100.00 per share, for a total purchase price of $__________ (the "Purchase Price"). The Company will deliver to the Executive certificates representing such shares, and on the date hereof (the "Purchase Date"), the Executive will deliver to the Company (or its designee) a check or wire transfer of immediately available funds in an amount equal to the Purchase Price less the $______ partial payment previously made by the Executive to the Company. The Purchase Date may be extended at the option of the Company and CVC.


(b) Upon execution of this Agreement, the Executive shall execute and deliver the Stockholders Agreement.


(c) With respect to the Vesting Executive Stock, within 30 days after the Executive purchases any Vesting Executive Stock from the Company, the Executive will make an effective election with the Internal Revenue Service under Section 83(b) of the Internal Revenue Code and the regulations promulgated thereunder in the form of Exhibit A attached hereto.


(d) In connection with the purchase and sale of the Executive Stock hereunder, the Executive represents and warrants to the Company that:


(i) The Executive Stock to be acquired by the Executive pursuant to this Agreement will be acquired for the Executive's own account and not with a view to, or intention of, distribution thereof in violation of the Securities Act, or any applicable state securities laws, and the Executive Stock will not be disposed of in contravention of the Securities Act or any applicable state securities laws.


(ii) No commission, fee or other remuneration is to be paid or given, directly or indirectly, to any Person for soliciting the Executive to purchase the Executive Stock.


(iii) The Executive is an executive officer of the Company, is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Executive Stock and has determined that such investment in the Executive Stock is suitable for the Executive, based upon the Executive's financial situation and needs, as well as the Executive's other securities holdings.


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(iv) The Executive qualifies an "accredited investor" within the meaning of Rule 501(a) of Regulation D under the Securities Act.


(v) The Executive:


(A) has not filed a registration statement which is the subject of a currently effective registration stop order entered pursuant to any state's securities law within the last five years;


(B) has not been convicted within the last five years of any felony or misdemeanor in connection with the offer, purchase or sale of any security or any felony involving fraud or deceit, including, but not limited to, forgery, embezzlement, obtaining money under false pretenses, larceny or conspiracy to defraud;


(C) is not currently subject to any state administrative enforcement order or judgment entered by the state securities administrator within the last five years or is subject to any state's administrative enforcement order or judgment in which fraud or deceit, including, but not limited to, making untrue statements of material facts and omitting to state material facts, was found and the order or judgment was entered within the last five years;


(D) is not subject to any state's administrative enforcement order or judgment which prohibits, denies or revokes the use of any exemption from registration in connection with the offer, purchase or sale of securities; or


(E) is not currently subject to any order, judgment or decree of any court of competent jurisdiction, entered within the last five years, temporarily or preliminarily restraining or enjoining such party from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing with the state.


(vi) The Executive is able to bear the economic risk of the Executive's investment in the Executive Stock for an indefinite period of time and the Executive understands that the Executive Stock has not been registered under the Securities Act and cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available.


(vii) The Executive has had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of Executive Stock and has had full access to such other information concerning the Company as the Executive has requested. The Executive has reviewed, or has had an opportunity to review, the following documents: (A) the Stock Purchase Agreement; (B) the Company's Certificate of Incorporation and Bylaws; (C) the loan agreements, notes and related documents with the Company's senior lenders; (D) the loan agreement, notes and related documents with the Company's senior subordinated lender; and (E) all of the materials provided by the Company to any Person providing financing to the Company, including, but not limited to, the Company's pro forma balance sheet, as well as financial projections, estimates, forecasts, budgets, summaries, reports and other related documents.


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(viii) This Agreement constitutes the legal, valid and binding obligation of the Executive, enforceable in accordance with its terms, and the execution, delivery and performance of this Agreement by the Executive does not and will not conflict with, violate or cause a breach of any agreement, contract or instrument to which the Executive is a party or any judgment, order or decree to which the Executive is subject.


(e) As an inducement to the Company to issue the Executive Stock to the Executive, and as a condition thereto, the Executive acknowledges and agrees that neither the issuance of the Executive Stock to the Executive nor any provision contained herein shall entitle the Executive to remain in the employment of the Company and its Subsidiaries or affect the right of the Company to terminate the Executive's employment at any time for any reason.


3. Vesting of Executive Stock. (a) (i) ________ shares of the Class B Common evidenced by certificates and stock issued in connection therewith and acquired by the Executive hereunder and (ii) 1,188.4 shares of Series A Preferred evidenced by certificates and stock issued in connection therewith are fully vested as of the date hereof and are not subject to the terms of Section 4 below. The Vesting Executive Stock originally acquired by the Executive will become vested in accordance with the following schedule if, as of each such date, the Executive is still employed by the Company or its Subsidiaries.


Cumulative Percentage of Shares
of Vesting Executive
Date Stock Which Will Vest - ------------------------------------------------ ------------------------------- First anniversary of the date hereof ("Year 1") 20%


Second anniversary of the date hereof ("Year 2") 40%


Third anniversary of the date hereof ("Year 3") 60%


Fourth anniversary of the date hereof ("Year 4") 80%


Fifth anniversary of the date hereof ("Year 5") 100%


If after the first anniversary of the date hereof, the Executive ceases to be employed by the Company or its Subsidiaries for any reason, including the death or permanent disability of the Executive, the cumulative percentage of the Vesting Executive Stock to become vested will be determined on a pro rata basis according to the number of days elapsed since the prior anniversary date.


(b) Shares of Vesting Executive Stock which have become vested are referred to herein as "Vested Shares," and all other shares of Vesting Executive Stock are referred to herein as "Unvested Shares."


4. Repurchase Option on Vesting Executive Stock. In the event the Executive ceases to be employed by the Company and its Subsidiaries for any reason (the "Termination"), the Vesting Executive Stock (whether held by the Executive or one or more of the Executive's transferees) will be subject to repurchase by the Company and CVC (or its designees) pursuant to the terms and conditions set forth in this Section 4 (the "Repurchase Option").


(a) (i) The purchase price for each ...