Exhibit 10.9

 

FORM OF SUBSCRIPTION AGREEMENT

 

This SUBSCRIPTION AGREEMENT (this “Agreement”) is entered into this 29^th day of October, 2018, by and between Differential Brands Group Inc., a Delaware corporation (the “Company”) and ___________ (the “Subscriber”).

 

WITNESETH:

 

WHEREAS, the Company, Global Brands Group Holding Limited, a Bermuda corporation with limited liability (“GBG Parent”), and GBG USA Inc., a Delaware corporation and wholly-owned subsidiary of GBG Parent (“GBG Seller”), have entered into a Purchase and Sale Agreement, dated as of June 27, 2018 (as supplemented, amended and otherwise modified, the “Purchase Agreement”), providing for, among other things, on the terms and conditions set forth in the Purchase Agreement, the purchase of the Purchased Units and Purchased Assets (each as defined in the Purchase Agreement) from GBG Parent and GBG Seller (or one or more of their respective affiliates) by the Company (the “Acquisition”);

 

WHEREAS, in connection with the Acquisition, the Company is conducting a private offering (the “Offering”) of shares (the “Securities”) of the Company’s common stock, par value $0.10 per share (the “Common Stock”), at a purchase price equal to $8.00 per share (the “Purchase Price”);

 

WHEREAS, as additional consideration for the Subscriber’s purchase of Securities in the Offering, the Company has agreed to provide the Subscriber with certain registration rights with respect to the Securities on the terms set forth in the Registration Rights Agreement attached hereto as Exhibit A (the “Registration Rights Agreement”);¹

 

WHEREAS, the Offering is being made to a limited number of “accredited investors” (as that term is defined by Rule 501(a) of Regulation D (“Regulation D”) promulgated under the Securities Act of 1933 (as amended, the “Securities Act”), by the Securities and Exchange Commission (the “SEC”));

 

WHEREAS, the Subscriber desires to purchase such number of shares of Common Stock as set forth on the signature page hereof and on the terms and conditions set forth herein; and

 

WHEREAS, the Company and the Subscriber are executing and delivering this Agreement, and performing the transactions contemplated hereby including the sale and purchase of the Securities, in reliance upon the exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder.

 

¹ Note: Registration rights references throughout are only included in subscription agreements for affiliates of Ares Capital Corporation.

 

 

NOW, THEREFORE, in consideration of the premises and the mutual representations and covenants hereinafter set forth, the parties hereto do hereby agree as follows:

 

I.

SUBSCRIPTION FOR SHARES AND REPRESENTATIONS BY SUBSCRIBER

 

1.1       Subject to the terms and conditions hereinafter set forth, the Subscriber hereby subscribes for and agrees to purchase from the Company, and the Company agrees to sell to the Subscriber, such number of shares of Common Stock as is set forth on the signature page hereof. At the Closing (as defined below), the Subscriber shall pay the aggregate Purchase Price set forth on the signature page hereto by wire transfer of immediately available funds to the Company (or its designee) as follows:

 

Amount:
Bank:
ABA Number:
Account #:

 

1.2       The Subscriber understands, acknowledges and agrees that (i) the Subscriber is not entitled to cancel, terminate or revoke the Subscriber’s subscription pursuant to this Agreement or any other obligations of the Subscriber hereunder, in each case, without the Company’s prior written consent and (ii) this Agreement and the Subscriber’s obligations hereunder shall survive the death or disability of the Subscriber and shall be binding upon and inure to the benefit of each of the parties and their respective heirs, executors, administrators, successors, legal representatives and permitted assigns.

 

1.3       The Subscriber recognizes that the purchase of the Securities involves a high degree of risk including, but not limited to, the following: (i) an investment in the Company is highly speculative, and only investors who can afford the loss of their entire investment should consider investing in the Company and the Securities; (ii) the Subscriber may not be able to liquidate the Subscriber’s investment in the Securities; (iii) transferability of the Securities may be extremely limited or restricted by applicable law; (iv) in the event of a future disposition of the Securities, the Subscriber could sustain the loss of the Subscriber’s entire investment; and (v) each of the other risks set forth in or incorporated by reference into the “Risk Factors” section(s) of the Company’s periodic and other filings with the SEC, which are incorporated herein by reference.

 

1.4       At the time such Subscriber was offered the Securities, the Subscriber was, and as of the date hereof is, and at the Closing it will be, an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act. The Subscriber hereby represents and warrants to the Company that the Subscriber’s responses to the investor questionnaire attached as Exhibit [A][B] to this Agreement (the “Purchaser Questionnaire”) are true, correct and complete in all respects.

 

 

1.5       The Subscriber hereby acknowledges, represents and warrants that (i) the Subscriber has adequate means of providing for the Subscriber’s current financial needs and contingencies; (ii) the Subscriber has knowledge and experience in business and financial matters, prior investment experience, or employed the services of a “purchaser representative” (as defined in Rule 501 of Regulation D), attorney and/or accountant to read and review all of the documents furnished or made available by the Company to the Subscriber, to evaluate the merits and risks of an investment in the Securities on the Subscriber’s behalf; (iii) the Subscriber is able to bear the economic risk that the Subscriber assumes by investing in the Securities; and (iv) the Subscriber can afford a complete loss of the Subscriber’s investment in the Securities.

 

1.6       The Subscriber hereby (i) acknowledges receipt and careful review of this Agreement and [Exhibit A hereto][the Registration Rights Agreement], and has had access to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, the Company’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2018 and June 30, 2018, and the other periodic, current and other reports filed or furnished by the Company pursuant to the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including pursuant to Sections 13(a) or 15(d) thereof, as publicly filed and available on the website of the SEC and (ii) hereby represents that the Subscriber has been furnished by the Company with all information regarding the Company, the terms and conditions of the Offering and any additional information that the Subscriber has requested or desired to know, and has been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the Company concerning the Company and the terms and conditions of the Offering.

 

1.7 (a) In making the decision to invest in the Securities, the Subscriber has relied solely upon the information provided by the Company in this Agreement, the Purchase Agreement and the Ancillary Agreements (as defined in the Purchase Agreement)[and the Credit Agreement (the “First Lien Credit Agreement”) for the First Lien Term Facility (as defined below)]². To the extent necessary, the Subscriber has retained, at its own expense, and relied upon appropriate professional advice regarding the investment, tax and legal merits and consequences of this Agreement and the purchase of the Securities hereunder. The Subscriber disclaims reliance on any statements made or information provided by any person or entity in the course of Subscriber’s consideration of an investment in the Securities other than this Agreement, the Purchase Agreement, the Ancillary Agreements (as defined in the Purchase Agreement)[, the First Lien Credit Agreement] and the results of Subscriber’s own independent investigation.

 

(b)       The Subscriber represents that (i) the Subscriber did not learn of the Offering by means of any form of general solicitation or general advertising, (ii) the Subscriber did not receive or review any advertisement, article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio, whether closed circuit, or generally available, with respect to the Offering and (iii) the Subscriber did not attend any seminar meeting or industry investor conference whose attendees were invited by any general solicitation or general advertising with respect to the Offering.

 

² Note: References to the First Lien Term Facility or the First Lien Credit Agreement throughout are only included in subscription agreements for affiliates of Ares Capital Corporation.

 

  

1.8       The Subscriber hereby acknowledges that the Offering has not been reviewed by the SEC or any state regulatory authority and that the Offering is intended to be exempt from the registration requirements of Section 5 of the Securities Act pursuant to the exemption therefrom provided by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. The Subscriber understands that the Securities have not been and will not be registered under the Securities Act or under any state securities or “blue sky” laws and agrees not to sell, pledge, assign or otherwise transfer or dispose of the Securities unless and until they are registered under the Securities Act and under any applicable state securities or “blue sky” laws or pursuant to an available exemption therefrom. The Subscriber hereby represents that the Subscriber is purchasing the Securities for the Subscriber’s own account for investment purposes and not with a view toward the resale or distribution to others. The Subscriber, if an entity, further represents that it was not formed for the purpose of purchasing the Securities.

 

1.9       For so long as applicable (including as required by applicable law, rule, regulation, legal process or regulatory or self-regulatory authority), the Subscriber consents to the placement of a legend on any certificate or other document evidencing the Securities (including the provision of notice of such legend if the Securities are uncertificated) that such securities have not been registered under the Securities Act or any state securities or “blue sky” laws and setting forth or referring to the restrictions on transferability and sale thereof contained in this Agreement. The Subscriber is aware that the Company will make or cause to be made a notation in its appropriate records with respect to the restrictions on the transfer and ownership of such Securities. The legend to be placed on each certificate shall be in form substantially similar to the following:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES OR “BLUE SKY LAWS,” AND MAY BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED ONLY PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.”

 

1.10       The Subscriber represents that the Subscriber has full power and authority (corporate, statutory and otherwise) or capacity, as applicable, to execute and deliver this Agreement and to purchase the Securities. This Agreement constitutes the legal, valid and binding obligation of the Subscriber, enforceable against the Subscriber in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies, and to limitations of public policy, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies and to limitations of public policy.

 

1.11       If the Subscriber is a corporation, partnership (general or limited), limited liability company, trust (whether statutory or common law), other legal entity, association, organization, employee benefit plan, individual retirement account, Keogh Plan, or other tax-exempt entity, it is authorized and qualified to invest in the Company and the person signing this Agreement on behalf of it has been duly authorized by it to do so.

 

 

1.12       The execution and delivery by the Subscriber of this Agreement and the performance by the Subscriber of its obligations hereunder and the consummation of the transactions contemplated herein by the Subscriber do not and will not violate, conflict with or result in a breach of (i) with respect to any Subscriber that is not a natural person, any provision of such Subscriber’s organizational documents, or (ii) any applicable law or regulation, in each case, that would materially impair the Subscriber’s ability to consummate the transactions contemplated hereby.

 

1.13       The Subscriber acknowledges that if the Subscriber is a Registered Representative of a Financial Industry Regulatory Authority (“FINRA”) member firm, the Subscriber must give such firm the notice required by the FINRA’s Rules of Fair Practice, receipt of which must be acknowledged by such firm in the Subscriber’s Purchaser Questionnaire.

 

1.14       The Subscriber agrees not to issue any public statement with respect to the Offering, Subscriber’s investment or proposed investment in the Company or the terms of this Agreement or any other agreement or covenant between them and the Company without the Company’s prior written consent, except such disclosures as may be required under applicable law, rule, regulation, legal process or regulatory or self-regulatory authority.

 

1.15       The Subscriber acknowledges and agrees that (i) certain information made available to the Subscriber by the Company in connection with the Offering is confidential and non-public and (ii) all such information shall be kept in confidence by the Subscriber and neither used by the Subscriber for the Subscriber’s personal benefit (other than in connection with this Agreement) nor disclosed to any third party for any reason; provided, however, that (x) the Subscriber may disclose such information to its affiliates, investment advisers and investment managers, and its and their direct or indirect shareholders, partners or members, current and prospective financing sources, existing and prospective investors, employees, directors, officers, legal counsel, independent auditors, professionals, advisors and other experts or agents of such Subscriber or its affiliates who have been informed of the confidential nature of such information and are or have been advised of their obligation to keep information of this type confidential (provided further that the Subscriber shall be responsible for any breach of the confidentiality obligations set forth herein by any of its affiliates or advisors), (y) the Subscriber may disclose such information as may be required pursuant to law, rule, regulation, legal process or requested by a regulatory or self-regulatory authority having jurisdiction over Subscriber or its representatives or their respective affiliates, and (z) this obligation shall not apply to any such information that (i) is public knowledge and readily accessible at the date hereof, (ii) becomes public knowledge and readily accessible by publication (except as a result of a breach of this provision) after the date hereof or (iii) is received from a third party that is not under any obligation of confidentiality with respect to such information.

 

 

1.16       The Subscriber understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Subscriber’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of such Subscriber set forth herein in order to determine the availability of such exemptions and the eligibility of such Subscriber to acquire the Securities. The Subscriber agrees to promptly supply the Company with such additional information concerning the Subscriber as the Company deems necessary or advisable for purposes of making such determination.

 

1.17       

 

(a)       The Subscriber acknowledges that the Company will inherently know, and have access to, more information about the Company and its business then does the Subscriber. The Subscriber acknowledges that the Company and/or its affiliates may now or at any other time have material, non-public information concerning the Company, its subsidiaries, the Securities and/or the markets in which the Company operates (which may include information relating to the Company’s, its subsidiaries’ and its competitors’ financial condition, future capital expenditures, future prospects, projections, including historic and projected financial and other information, business strategies or litigation, settlement discussions or negotiations, including, without limitation, the Acquisition (all such information is referred to as, the “Undisclosed Information”)) that could affect the value of the Securities and that this information may have not been, and such Undisclosed Information may or may not be, disclosed or otherwise made available to the Subscriber. Subject to applicable law, rule or regulation and to any other obligations of the Company or its affiliates to the Subscriber herein or in any other agreement, the Subscriber acknowledges and agrees that the Company and/or its affiliates shall have no obligation whatsoever to, and that the Company shall have no obligation whatsoever to cause its affiliates to, disclose any such information to the Subscriber.

 

(b)       In knowledge of the foregoing, the Subscriber willingly agrees to purchase the Securities from the Company on the terms set forth herein notwithstanding that (i) Undisclosed Information may exist; and (ii) such Undisclosed Information, if it exists, has not been disclosed by the Company or any of their respective affiliates.

 

(c)       The Subscriber acknowledges that, in connection with the transactions contemplated hereby, there are no, and it is not relying upon any, representations or warranties by or on behalf of the Company or any of its affiliates or representatives except to the extent explicitly set forth herein.

 

(d)       Notwithstanding anything to the contrary in this Agreement or otherwise, the Subscriber retains all of its rights and remedies with respect to claims based on fraud.

 

[1.18

(a)       Prior to the date which is the earlier of (i) twenty-four (24) months following the Closing Date (as defined in the Purchase Agreement) or (ii) such date that Mr. Rabin’s employment with the Company (or any successor thereto) has terminated (the “Restriction Expiration Time”), the Subscriber shall not, directly or indirectly (whether by merger, consolidation or otherwise, and whether by or through one or more Affiliates in any transaction or series of transactions):

 

 

(i)       transfer (except as may be specifically required by court order or by operation of law), grant an option with respect to, sell, exchange, pledge (except for pledges or grants of security interests of Securities (and other interests, rights or obligations hereunder) on customary terms to third parties as security for a bona fide financing of the Subscriber or its Affiliates) or otherwise dispose of, or encumber, any Securities, enter into any short sale (whether or not against the box) or any purchase, sale or grant of any right (including, without limitation, any put or call option) with respect to any security (other than a broad-based market basket or index) that includes, relates to or derives any significant part of its value from the Securities or any other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Securities, or make any offer or enter into any agreement or binding arrangement or commitment providing for any of the foregoing, or publicly disclose the intention to take any of the foregoing actions; or

 

(ii)       grant any proxies or powers of attorney with respect to any Securities, deposit any Securities into a voting trust, or enter into a voting agreement or similar arrangement or commitment with respect to any Securities or make any public announcement that is in any manner inconsistent with the foregoing (clauses (i) and (ii) together, a “Transfer”).

 

(b)       Notwithstanding the restrictions set forth in Section 1.18(a) above or Sections 1.18(d) and (e) below, the Subscriber may (i) distribute Securities to its partners, members or other equity holders or transfer Securities to any Affiliate of the Subscriber or any investment fund or account managed, advised or sub-advised by the Subscriber or its Affiliates or other entity controlled by the Subscriber; (ii) transfer Securities (including pursuant to a bona fide gift) to an immediate family member or a trust for the direct or indirect benefit of the undersigned and/or the immediate family of the undersigned or to any corporation, partnership, limited liability company or other entity all of the beneficial ownership interests of which are held exclusively by the undersigned and/or one or more family members of the undersigned in a transaction not involving a disposition for value; and (iii) Mr. Rabin may sell (and/or the Company may withhold) Securities necessary to cover tax obligations upon an exercise or upon vesting of Securities; provided, that it shall be a condition to the transfer or distribution pursuant to clauses (i) and (ii) that the transferee or distributee execute an agreement, in form and substance satisfactory to the Corporation, stating that the transferee or distributee is receiving and holding such Securities subject to the provisions of this Section 1.18 and that the transferee or distributee agrees to be bound by the terms and conditions of this Section 1.18.

 

(c)       For purposes of this Agreement, “Affiliate” means (i) any Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such other Person, (ii) any executive officer, managing member, director, general partner, investment adviser or management company of such other Person, (iii) any legal entity for which such Person acts as executive officer, managing member, director, general partner or with whom such Person shares an investment adviser or management company and (iv) any fund or managed account that is managed, advised or sub-advised by the management company or investment adviser of the Subscriber, and “control” for these purposes means the direct or indirect power to direct or cause the direction of the management and policies of another Person, whether by operation of law or regulation, through ownership of securities, as trustee or executor or in any other manner, and “Person” for these purposes means an individual, a partnership, a corporation, a limited liability company, 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).]³

 

³ Note: this portion included in Jason Rabin’s subscription agreement and in the subscription agreements of affiliates of Ares Capital Corporation. Underlined items within this section are not included in the subscription agreements of affiliates of Ares Capital Corporation.

 

 

(d)       [HPS First Lien Lock-Up. Until the earliest of (i) October 29, 2021, (ii) the date the First Lien Term Loan Facility is paid in full, (iii) the first date that HPS and its Affiliates collectively hold less than an aggregate principal amount of $125,000,000 of term loans under the First Lien Term Loan Facility and (iv) such date that Mr. Rabin’s employment with the Company (or any successor thereto) has terminated, Mr. Rabin agrees he will not Transfer any Securities without the prior written consent of HPS; provided, however, on and after the Restriction Expiration Time, Mr. Rabin may (w) participate in any registered offering of Securities in which other shareholders of the Company are participating and/or (x) otherwise Transfer an aggregate of up to 2,896,875 Securities (as adjusted for stock splits, recapitalizations, etc.) without the consent of HPS; provided, further, the Restriction Expiration Time may not be amended without the prior written consent of HPS. For avoidance of doubt, nothing herein shall interfere with any permitted Transfer under Section 1.18(b) and such permitted Transfers shall not apply to the percentage referenced in the prior sentence.

 

(e)       Ares First Lien Lock-Up. Until the earliest of (i) October 29, 2021, (ii) the date the First Lien Term Loan Facility is paid in full, (iii) the first date that Ares and its Affiliates collectively hold less than an aggregate principal amount of $125,000,000 of term loans under the First Lien Term Loan Facility and (iv) such date that Mr. Rabin’s employment with the Company (or any successor thereto) has terminated, Mr. Rabin agrees he will not Transfer any Securities without the prior written consent of Ares; provided, however, on and after the Restriction Expiration Time, Mr. Rabin may (w) participate in any registered offering of Securities in which other shareholders of the Company are participating and/or (x) otherwise Transfer an aggregate of up to 2,896,875 Securities (as adjusted for stock splits, recapitalizations, etc.) without the consent of Ares; provided, further, the Restriction Expiration Time may not be amended without the prior written consent of Ares. For avoidance of doubt, nothing herein shall interfere with any permitted Transfer under Section 1.18(b) and such permitted Transfers shall not apply to the percentage referenced in the prior sentence.

 

For purposes of this Agreement, “First Lien Term Loan Facility” means the commitment by Ares Capital Corporation (“Ares”), Ares Commercial Finance and HPS Investment Partners, LLC (“HPS”), subject to certain terms and conditions, to provide to the Corporation, through one or more funds managed or advised by Ares Capital Corporation and HPS Investment Partners, LLC or its affiliates, collectively, a $645,000,000 first lien term loan credit facility and revolving loans up to $150,000,000. HPS and Ares shall be deemed third-party beneficiaries to this Agreement.]⁴

 

II.       REPRESENTATIONS BY AND COVENANTS OF THE COMPANY

 

The Company hereby represents and warrants to the Subscriber, as of the date of this Agreement (other than representations and warranties that relate to a specific date, which are given as of such date) as follows:

 

⁴ Note: This portion included in Jason Rabin’s subscription agreement only.

 

 

2.1       Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority to own and use its properties and assets as currently owned and conduct its business as currently conducted. The Company is not in violation of any of the provisions of the Company’s Certificate of Incorporation (as amended, the “COI”), or the Company’s Bylaws (as amended, the “Bylaws,” and collectively with the COI, the “Charter Documents”). The Company is duly qualified to conduct business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not have a material adverse effect on the legal and valid issuance of the Securities or the business and operations of the Company or the business and operations of the Company.

 

2.2       Authorization; Enforceability. The Company has all corporate right, power and authority to enter into, execute and deliver this Agreement and each other agreement, document, instrument and certificate to be executed by the Company in connection with the consummation of the transactions contemplated hereby, and to perform fully its obligations hereunder and thereunder. All corporate action on the part of the Company necessary for the (i) authorization execution, delivery and performance of this Agreement by the Company; and (ii) authorization, sale, issuance and delivery of the Securities has been taken. This Agreement has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies, and to limitations of public policy. The Securities are duly authorized and, when issued and paid for in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and nonassessable.

 

2.3       No Conflict; Governmental Consents.

 

(a)       The execution and delivery by the Company of this Agreement, the issuance and sale of the Securities and the consummation of the other transactions contemplated hereby do not and will not (i) result in the violation of any law, statute, rule, regulation, order, writ, injunction, judgment or decree of any court or governmental authority to or by which the Company is bound including without limitation all foreign, federal, state and local laws applicable to the Company, except in each case as would not have a material adverse effect on the legal and valid issuance of the Securities or (ii) conflict with or violate any provision of the Charter Documents.

 

(b)       Subject to the approval of the transactions contemplated by this Agreement by GBG Parent, no consent, approval, authorization or other order of any governmental authority is required to be obtained by the Company in connection with the authorization, execution, delivery and performance of this Agreement or in connection with the authorization, issue and sale of the Securities, except such post-sale filings as may be required to be made with the SEC, FINRA, NASDAQ and with any state or foreign blue sky or securities regulatory authority.

 

 

2.4       Anti-Corruption. The Company and its affiliates and their respective directors, officers, employees and agents are now, and at all times have been, in compliance with all applicable anti-bribery and anti-corruption laws, and will remain in compliance with all such laws. None of the Company, any of its affiliates or any of their respective directors, officers, employees or agents has: (i) authorized, offered or given anything of value, directly or indirectly, to any person in violation of any applicable anti-bribery or anti-corruption laws, (ii) authorized, offered or made any contribution, payment or gift of funds or property to any person, including any official, employee or agent of any governmental authority, or anyone else acting in an official capacity, or (iii) authorized, offered or made any contribution to any political party, official of a political party or candidate for public office, in either case, where either the payment or the purpose of such contribution, payment or gift was, is, or would be prohibited under the U.S. Foreign Corrupt Practices Act of 1977 or the rules and regulations promulgated thereunder or under any other applicable laws of any relevant jurisdiction covering a similar subject matter applicable to the Company or any of its affiliates and their respective operations. In addition, the Company and its affiliates have adopted, implemented, and maintained policies and procedures designed to ensure compliance with applicable anti-bribery and anti-corruption laws.

 

2.5       Company SEC Reports. As of their respective dates, the Company SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC promulgated thereunder, and none of the Company SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.⁵

 

[2.6      Registration Rights.

 

(a)       Right to Piggyback. Whenever the Company proposes to register any of its securities under the Securities Act (for its own account or for the account of any other Person), and the registration form proposed to be used may be used to register the resale of Securities (each, a “Piggyback Registration”), the Company shall give prompt written notice (in any event at least ten (10) Business Days prior to the anticipated filing date of the registration statement relating to such registration (the “Registration Statement”)) to the Subscriber of its intention to effect such a registration and shall use its reasonable best efforts to include in such registration all Securities with respect to which the Company has received a written request from the Subscriber for inclusion therein within five (5) Business Days following the Subscriber’s receipt of the Company’s notice. If the Subscriber proposes to distribute its securities through a Piggyback Registration that involves an underwriter(s), it shall enter into an underwriting agreement in reasonable and customary form with the underwriter(s) selected by the Company for such Piggyback Registration, provided that with respect to such underwriting agreement or any other documents reasonably required under such agreement, (i) the Subscriber shall not be required to make any representation or warranty with respect to or on behalf of the Company or any other stockholder of the Company and (ii) the Subscriber shall complete and execute all questionnaires, powers-of-attorney, indemnities, opinions and other documents reasonably required under the terms of such underwriting agreement.  For the avoidance of doubt, the Subscriber may not request that a Piggyback Registration involve the use of an underwriter. If at any time after giving notice of its intention to register any Company securities pursuant to this Section 2.6 and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register such securities, the Company shall give notice to the Subscriber (if participating in such Piggyback Registration) and, thereupon, shall be relieved of its obligation to register any Securities in connection with such registration.

 

⁵ Note: Section 2.5 is not included in the subscription agreements of affiliates of Ares Capital Corporation.

 

 

(b)       Reduction of Offering. If the managing underwriter(s) for a Piggyback Registration that is to be an underwritten offering advises the Company that in their opinion the dollar amount or number of Common Stock or other securities which the Company desires to sell, taken together with Common Stock or other securities, if any, as to which registration has been demanded pursuant to written contractual arrangements with third parties, if any, the Securities as to which registration has been requested under this Section 2.6, and the Common Stock or other securities as to which registration has been requested pursuant to the written contractual piggyback registration rights of other stockholders of the Company, exceeds the maximum dollar amount or maximum number of securities that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of securities, as applicable, the “Maximum Threshold”), then the Company shall include in any such registration:

 

(i)       If the registration is undertaken for the Company’s account:  (A) first, the Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Threshold, and (ii)  second, to the extent that the Maximum Threshold has not been reached under the foregoing clause (A), the Securities and the Common Stock or other securities proposed to be sold for the account of other Persons that the Company is obligated to register pursuant to any written contractual piggyback registration or other rights with such Persons and that can be sold without exceeding the Maximum Threshold (pro rata in accordance with the number of Securities and Common Stock or other securities which the Subscriber and other Persons have requested be included in such underwritten offering, regardless of the number of Securities and Common Stock or other securities held by the Subscriber or other Person), and

 

(ii)       If the registration is a “demand” registration undertaken at the demand of one or more Persons other than the Company and the Subscriber, (A)  first, the Common Stock or other securities for the account of such demanding Persons that can be sold without exceeding the Maximum Threshold; (B)  second, to the extent that the Maximum Threshold has not been reached under the foregoing clause (A), the Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Threshold; and (C)  third, to the extent that the Maximum Threshold has not been reached under the foregoing clauses (A) and (B), the Securities and the Common Stock or other securities proposed to be sold for the account of other Persons that the Company is obligated to register pursuant to any written contractual piggyback registration or other rights with such Persons and that can be sold without exceeding the Maximum Threshold (pro rata in accordance with the number of Securities and Common Stock or other securities which the Subscriber and other Persons have requested be included in such underwritten offering, regardless of the number of Securities and Common Stock or other securities held by the Subscriber or other Person).

 

 

(c)       Selection of Underwriters. If any Piggyback Registration is an underwritten primary offering, the investment banker(s) and manager(s) for the offering shall be selected by the Company in its sole discretion.

 

(d)       Provision of Information; Subscriber Obligations. If the Subscriber has requested that any Securities be registered pursuant to this Section 2.6, it shall deliver to the Company such requisite information with respect to itself and its Securities as the Company may reasonably request for inclusion in the Registration Statement (and the prospectus included therein) as is necessary to comply with all applicable rules and regulations of the SEC, and will promptly notify the Company of the happening of any event as a result of which any information set forth in the Registration Statement furnished by or regarding the Subscriber, its Securities or its plan of distribution contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading. The Subscriber covenants and agrees that, in the event the Company informs the Subscriber in writing that it does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Subscriber is required to deliver a prospectus in connection with any disposition of Securities, it will comply with the prospectus delivery requirements of the Securities Act as applicable to it (unless an exemption therefrom is available) in connection with sales of Securities pursuant to the Registration Statement, and shall sell the Securities only in accordance with a method of distribution described in the Registration Statement.

 

(e)       Blackout Periods and Market Stand-Off. Notwithstanding anything herein to the contrary:

 

(i)       The Company shall have the right to suspend the use of a Registration Statement for a period of not greater than forty-five (45) consecutive days and for not more than ninety (90) days in any twelve (12) month period (“Blackout Period”), if, in the good faith opinion of the Company’s Board of Directors (the “Board”), after consultation with counsel, material, nonpublic information exists, including, without limitation, the proposed acquisition or divestiture of assets by the Company, a strategic alliance or a financing transaction involving the Company or the existence of pending material corporate developments, the public disclosure of which would be necessary to cause the Registration Statement to be materially true and to contain no material misstatements or omissions, and in each such case, where, in the good faith opinion of the Board, such disclosure would be reasonably likely to have a material adverse effect on the Company or on the proposed transaction. The Company must give the Subscriber notice promptly upon knowledge that a Blackout Period (without indicating the nature of such Blackout Period) may occur and prompt written notice if a Blackout Period will occur. Upon the conclusion of a Blackout Period, the Company shall provide the Subscriber written notice that the Registration Statement is again available for use.

 

 

(ii)       The Subscriber agrees that in connection with any public offering of the Company's equity securities, or any securities convertible into or exchangeable or exercisable for such securities, and upon the request of the managing underwriter(s) in such offering, the Subscriber shall not, without the prior written consent of the Company and such underwriter(s), during the period commencing on the date that is ten (10) days prior to the consummation of such offering and continuing until sixty (60) days after the commencement of such offering, (i) offer, pledge, sell, contract to sell, grant any option or contract to purchase, purchase any option or contract to sell, hedge the beneficial ownership of or otherwise dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into, exercisable for or exchangeable for shares of Common Stock (whether such shares or any such securities are then owned by the Subscriber or are thereafter acquired), or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise; provided, that the foregoing provisions of this Section 2.6(e)(ii) shall not apply to sales of Securities to be included in such offering pursuant to Section 2.6(a). The Subscriber agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the managing underwriter which are consistent with the foregoing or which are necessary to give further effect thereto.

 

(f)       Expenses. The Company shall not be liable for any selling commissions, discounts or brokerage fees relating to the Securities and any fees or other out-of-pocket expenses of the Subscriber other than registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and independent certified public accountants, underwriters (excluding fees, discounts and commissions) and other persons retained by the Company.]⁶

 

III.       CLOSING; TERMINATION.

 

3.1       The Company shall hold a closing (“Closing”) with respect to any Securities for which subscriptions have been accepted on the date hereof concurrently with the Closing (as defined in the Purchase Agreement).

 

3.2       Evidence of delivery of uncertificated shares of Common Stock by book-entry representing the Common Stock purchased by the Subscriber pursuant to this Agreement will be provided to the Subscriber as soon as practicable following the Closing. The Subscriber hereby authorizes and directs the Company to deliver such evidence to the Subscriber’s address indicated on the signature page hereto.

 

3.3       This Agreement shall be terminated and the transactions contemplated hereby shall be abandoned immediately and automatically upon the Purchase Agreement being validly terminated in accordance with Article VII thereof; provided, however, that Sections 4.1, 4.2, 4.5, 4.6, 4.11 and 4.12 shall survive termination of this Agreement.

 

⁶ Note: Included in only Jason Rabin’s subscription agreement.

 

 

3.4       The Subscriber’s obligation to consummate the transactions contemplated hereby, pay the aggregate Purchase Price set forth on the Subscriber’s signature page hereto and purchase at the Closing such number of shares of Common Stock as is set forth on the Subscriber’s signature page hereto shall be subject (i) to the substantially concurrent consummation of the Closing (as defined under the Purchase Agreement) [(ii) to the substantially concurrent consummation of the $685,000,000 first lien term loan credit facility (the “First Lien Term Loan Facility”) contemplated by that certain Commitment Letter, dated as of June 26, 2018, between the Company and Ares Capital Management LLC and HPS Investment Partners, LLC (the “Debt Commitment Letter”), (iii) to the substantially concurrent execution and delivery by the Company of the Registration Rights Agreement by the parties thereto and (iv)]⁷ to the substantially concurrent conversion or exchange of all of the shares of the Company’s preferred stock held by affiliates of Tengram Capital Partners, LP, which represent all of the issued and outstanding shares of the Company’s preferred stock, into Common Stock.

 

IV.

MISCELLANEOUS

 

4.1       Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified mail, return receipt requested, delivered by hand against written receipt therefor, or sent in portable document format (“pdf”) via electronic mail, addressed as follows:

 

if to the Company, to it at:

Differential Brands Group Inc.

1231 South Gerhant Avenue

Commerce, CA 30022

Attention: Lori Nembirkow, Senior Vice President, Legal & Compliance

E-mail: lori@differentialbrandsgroup.com

 

With a copy to (which shall not constitute notice):

Tengram Capital Partners

600 Fifth Avenue, 27th Floor

New York, NY 10020

Attention: General Counsel

E-mail: atarshis@tengramcapital.com

and

 

Dechert LLP

1095 Avenue of the Americas

New York, New York 10036

Attention:  Nazim Zilkha and Gareth Clark

E-mail:  nzilkha@dechert.com and gareth.clark@dechert.com

 

if to the Subscriber, to the Subscriber’s address indicated on the signature page of this Agreement.

 

⁷ Note: Bracketed language only included in the subscription agreements of affiliates of Ares Capital Corporation.

 

 

4.2       Notices hereunder shall be deemed to have been given or delivered (i) on the third (3rd) business day following the date of postmark in the case of delivery by registered or certified mail, (ii) on the date of delivery in the case of delivery by hand or (iii) on the date of delivery if delivered by electronic mail; provided that if such e-mail is received after 4:00 p.m. Eastern Time on a business day or at any time on a non-business day, such notice shall be deemed delivered on the following business day. Except as otherwise provided herein, this Agreement shall not be changed, modified or amended except by a writing signed by the Company and the Subscriber, and this Agreement may not be discharged except by performance in accordance with its terms or by a writing signed by the Company and the Subscriber. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. The Subscriber hereby consents to receive any notice given by the Company pursuant to the Delaware General Corporation Law or the Charter Documents by means of electronic transmission in accordance with the Delaware General Corporation Law at any address for electronic transmission furnished by the Subscriber to the Company, including at the electronic mail address indicated on the signature page of this Agreement. The Subscriber agrees to update the Company as promptly as practicable in the event of any change in Subscriber’s address for receipt of any such notice by electronic transmission.

 

4.3        This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Subscriber may not assign this Agreement or any rights or obligations hereunder, other than to the Subscriber’s Affiliates or any investment fund or account managed, advised or sub-advised by the Subscriber or its Affiliates, without the prior written consent of the Company; provided, that no such assignment shall relieve the Subscriber of its obligations hereunder.

 

4.4        This Agreement, together with the exhibits hereto, contains the entire understanding of the parties with respect to the subject matter hereof and supersedes and cancels all prior and contemporaneous agreements and understandings, oral or written, with respect to such matters.

 

4.5       Any action, arbitration, claim, hearing, litigation or suit (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before any federal, state, local or foreign government or any court of competent jurisdiction, administrative or regulatory body, agency, bureau, or commission in any domestic or foreign jurisdiction, any appropriate division of any of the foregoing or any arbitrator, or other legal action (each, a “Proceeding”) relating to this Agreement or the transactions contemplated hereby shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles of conflicts of law thereof that would require the applications of the laws of another jurisdiction. The parties agree that any Proceeding brought by or against such party in connection with this Agreement shall be brought solely in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware). Each party expressly and irrevocably consents and submits to the jurisdiction and venue of each such court in connection with any Proceeding, including to enforce any settlement, order or award, and such party agrees to accept service of process by the other party or any of its agents in connection with any such Proceeding. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY PROCEEDING INSTITUTED BY OR AGAINST SUCH PARTY IN RESPECT OF ITS RIGHTS OR OBLIGATIONS HEREUNDER.

 

 

4.6       If any provision of this Agreement, or the application of such provision to any person or circumstance, shall be held invalid by a court of competent jurisdiction, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those to which it is held invalid by such court, shall not be affected thereby.

 

4.7       Subject to applicable statute of limitations, the representations and warranties contained herein shall survive the Closing and the delivery of the Securities

 

4.8       The parties hereto agrees to execute and deliver all such further documents, agreements and instruments and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

 

4.9       This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts together shall constitute one and the same instrument. Delivery of executed signature pages hereof by facsimile transmission or pdf shall constitute effective and binding execution and delivery of this Agreement.

 

4.10       Nothing in this Agreement shall create or be deemed to create any rights or remedies in any person or entity that is not a party to this Agreement.

 

4.11        The Company and the Subscriber agree that in the event of any breach or threatened breach by the Subscriber of any covenant, obligation or other provision set forth in this Agreement, the Company shall be entitled (in addition to any other remedy that may be available to it) to seek (i) a decree or order of specific performance or mandamus to enforce the observance and performance of such covenant, obligation or other provision and (ii) an injunction restraining such breach or threatened breach.

 

4.12       Any reference in this Agreement to gender shall include all genders, and the words imparting the singular number only shall include the plural and vice versa. The division into sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement and all references in this Agreement to any “article,” “section,” “schedule” or “exhibit” are to the corresponding article, section, schedule or exhibit of or to this Agreement unless explicitly stated otherwise. Words such as “herein,” “hereinafter,” “hereof,” “hereto” and “hereunder” refer to this Agreement as a whole and not merely to any particular provision of this Agreement. The word “including” and any variation thereof means “including without limitation” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it. All references to currency, monetary values and dollars set forth herein shall, unless otherwise indicated, mean U.S. dollars and all payments hereunder shall be made in U.S. dollars. All references to any period of days are to the relevant number of calendar days unless otherwise specified. Each party hereto has participated in the drafting of this Agreement, which each such party acknowledges is the result of negotiations among such parties (as sophisticated persons) and, consequently, this Agreement shall be interpreted without reference to any laws to the effect that any ambiguity in a document be construed against the drafter. References to agreements and other documents shall be deemed to include all amendments, modifications and supplements thereto. References to acts and statutes shall include the rules and regulations promulgated thereunder, and any reference to any acts, statutes, rules and regulations shall refer to the same as amended from time to time.

 

 

[4.13       Any amendment, modification or waiver to this Agreement shall require the prior written consent of GSO Capital Partners LP, provided, such consent shall not be unreasonably withheld or delayed, and GSO Capital Partners LP shall be a third party beneficiary to this Agreement.]⁸

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

⁸ Note: Included only in Jason Rabin’s subscription agreement.

 

 

SHARES OF COMMON STOCK BEING SUBSCRIBED FOR: ________________

 

PURCHASE PRICE (PER SHARE): _________________

 

AGGREGATE PURCHASE PRICE: _________________

 

Signature		Signature (if purchasing jointly)
Name Typed or Printed		Name Typed or Printed
Title (if Subscriber is an Entity)		Title (if Subscriber is an Entity)
Address		Address
City, State and Zip Code		City, State and Zip Code
Telephone-Business		Telephone-Business
Telephone-Residence		Telephone-Residence
Facsimile		Facsimile
Tax ID # or Social Security #		Tax ID # or Social Security #
E-Mail Address		E-Mail Address

 

Name in which Securities should be issued:    ______________________________

 

Dated: October 29, 2018

 

[Signature Page to Subscription Agreement]

 

 

This Subscription Agreement is agreed to and accepted as of October 29, 2018.

 

DIFFERENTIAL BRANDS GROUP INC.

 

By:
Name:
Title:

 

[Signature Page to Subscription Agreement]

 

 

ACKNOWLEDGEMENT, NOTICE AND QUESTIONNAIRE

 

The undersigned Subscriber hereby provides the following information to the Company and represents and warrants that such information is accurate and complete:

 

1.

Name.

 

	(a)	Full Legal Name of Subscriber:

 

	(b)	Full Legal Name of Natural Control Person of the Subscriber (which means a natural person who directly or indirectly alone or with others has (or will have) power to vote or dispose of the Securities):

 

2.

Broker-Dealer Status:

 

(a)

Is the Subscriber a broker-dealer?

 

Yes ¨

No ¨

 

(b)

If “yes”, will the Subscriber receive any Securities as compensation for investment banking services to the Company?

 

Yes ¨

No ¨

N/A ¨

 

(c)

Is the Subscriber an affiliate of a broker-dealer?

 

Yes ¨

No ¨

 

Note:

If yes, provide a narrative explanation below:

 

 

(d)

If the Subscriber is an affiliate of a broker-dealer, does the Subscriber certify that it is buying the Securities in the ordinary course of business, and at the time of the purchase of the Securities, had no agreements or understandings, directly or indirectly, with any person to distribute the Securities?

 

Yes ¨

No ¨

N/A ¨

 

Note:

If no, the Commission’s staff has indicated that the Subscriber should be identified as an underwriter in the Registration Statement contemplated by the Registration Rights Agreement.

 

 

3.

Beneficial Ownership of Other Securities of the Company Owned by the Selling Stockholder.

 

Except as set forth below in this Item 3, the Subscriber is not the beneficial or registered owner of any securities of the Company other than the Securities to be purchased in the Offering.

 

Type and amount of other securities beneficially owned:

 

4.

Relationships with the Company:

 

Except as set forth below, neither the Subscriber nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

 

State any exceptions here:

 

 

The Subscriber agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein or in the Accredited Investor Questionnaire that may occur subsequent to the date hereof. All notices hereunder and pursuant to the Agreement shall be made in accordance with notice provisions set forth in the Agreement. In the absence of any such notification, the Company shall be entitled to continue to rely on the accuracy of the information provided herein.

 

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Agreement to be executed and delivered either in person or by its duly authorized agent.

 

Signature		Signature (if shares are held jointly)
Name Typed or Printed		Name Typed or Printed
Title (if Investor is an Entity)		Title (if Investor is an Entity)