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Exhibit 10.3
 
STOCK PURCHASE AGREEMENT
 
THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of May 23, 2014, by
and between Aero Investors LLC, a Delaware limited liability company
(“Investor”), and Aéropostale, Inc., a Delaware corporation (the “Company”). 
Capitalized terms used but not otherwise defined herein shall have the meaning
ascribed to such terms in Section 4M hereof.
 
WHEREAS, Investor and/or its Affiliates have extended to the Company, certain
term loans pursuant to that certain Loan and Security Agreement, dated as of the
date hereof (the “Credit Agreement”), by and among the Company, the guarantors
named therein, the Investor, as agent, and the other lenders party thereto; and
 
WHEREAS, concurrently with the consummation of the transactions contemplated by
the Credit Agreement, Investor desires to purchase from the Company, and the
Company desires to sell to Investor, 1,000 shares of Series B Convertible
Preferred Stock of the Company, $.01 par value (the “Series B Preferred Stock”),
upon the terms and subject to the conditions set forth herein.
 
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
 

Section 1. Purchase and Sale of the Series B Preferred Stock; Closing.

 
1A.              Purchase and Sale of the Preferred Stock.  Prior to the Closing
(as defined below), the Company shall have designated one thousand (1,000)
shares of the Series B Preferred Stock in accordance with the Certificate of
Designation of Preferences of Series B Preferred Stock attached hereto as
Exhibit A (the “Certificate of Designation”) and shall have authorized the sale
and issuance of such Series B Preferred Stock to Investor at an aggregate
purchase price equal to the amount allocated to the Series B Preferred Stock set
forth opposite Investor’s name on Exhibit 2-25 to the Credit Agreement (all as
determined in accordance with Section 2-25 of the Credit Agreement).
 
At the Closing and upon the terms and subject to the conditions set forth in
this Agreement, the Company shall issue and sell to Investor, and Investor shall
purchase from the Company, 1,000 shares of Series B Preferred Stock at an
aggregate purchase price equal to the amount allocated to the Series B Preferred
Stock set forth opposite Investor’s name on Exhibit 2-25 to the Credit Agreement
(all as determined in accordance with Section 2-25 of the Credit Agreement).

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1B.                The Closing.  Upon the terms and subject to the conditions
contained in this Agreement, the closing of the purchase and sale of the Series
B Preferred Stock hereunder (the “Closing”) shall take place at the offices of
Winston & Strawn LLP, 35 West Wacker Drive, Chicago, Illinois, on the date
hereof simultaneously with the execution of this Agreement.  At the Closing,
Investor shall deliver an aggregate amount equal to $100 million (less any net
funding of any fees and expenses in accordance with any separate fee letter
entered into between Investor, in its capacity as agent pursuant to the Credit
Agreement, and the Company) (i) in consideration for the Series B Preferred
Stock and (ii) in satisfaction of Investor’s funding obligations under Section
2-1(a)(i) of the Credit Agreement to the Company in respect of the Tranche A
Term Loans (as such term is defined in the Credit Agreement) by wire transfer of
immediately available funds to a bank account designated in writing by the
Company and, upon receipt of such $100 million (less any net funding of any fees
and expenses in accordance with any separate fee letter entered into between
Investor, in its capacity as agent pursuant to the Credit Agreement, and the
Company), the Company shall deliver to Investor (i) a certificate representing
the shares of Series B Preferred Stock purchased by Investor from the Company
hereunder and (ii) evidence of the due and effective filing, effective as of no
later than the date hereof (and, in any event, prior to the effectiveness of the
Closing hereunder), of the Certificate of Designation with the Secretary of
State of the State of Delaware.  In addition, at the Closing, each of the
parties hereto shall also execute and deliver to the other party (x) the
Investor Rights Agreement in the form attached hereto as Exhibit B (the
“Investor Rights Agreement”) and (y) the Registration Rights Agreement in the
form attached hereto as Exhibit C (the “Registration Rights Agreement”).
 

Section 2. Representations and Warranties of the Company.

 
As a material inducement to Investor to enter into this Agreement and purchase
the Series B Preferred Stock hereunder, the Company hereby represents and
warrants to Investor as follows:
 
2A.               Organization, Good Standing, Qualification.  The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
 
2B.               Authorization.  The Company has the corporate power and
authority to carry on its business as now conducted and presently proposed to be
conducted.  The Company has the corporate power and authority to enter into this
Agreement and to perform its obligations under, and consummate the transactions
contemplated by, this Agreement.  The execution, delivery and performance by the
Company of this Agreement and the adoption and filing of the Certificate of
Designation and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate actions on the part
of the Company, and no further approval or authorization in connection herewith
or therewith is required on the part of the Company or its stockholders pursuant
to the Certificate of Incorporation, Bylaws, applicable law, the listing
requirements of the New York Stock Exchange or otherwise.
 
2C.               Enforceability.  This Agreement constitutes a valid and
legally binding obligation of the Company, enforceable in accordance with its
terms, except as such enforceability may be limited by (i) applicable
insolvency, bankruptcy, reorganization, moratorium or other similar laws
affecting creditors’ rights generally, and (ii) applicable equitable principles
(whether considered in a proceeding at law or in equity).
 
2D.               No Conflicts.  None of the execution and delivery by the
Company of this Agreement, the consummation of the transactions contemplated
herein or the Company’s performance of and compliance with the terms and
provisions hereof will: (i) violate or conflict with any provision of the
Certificate of Incorporation or Bylaws; (ii) violate any law, regulation, order,
writ, judgment, injunction, decree or permit applicable to the Company; (iii)
violate or materially conflict with any contractual provisions of, or cause an
event of default or give rise to any right of acceleration under, any indenture,
loan agreement, mortgage, deed of trust, contract or other agreement or
instrument to which the Company is a party or by which the Company or any of the
Company’s properties may be bound; or (iv) result in or require the creation of
any lien, security interest or other charge or encumbrance (other than those
contemplated in or in connection with this Agreement, the Credit Agreement or
the agreements and instruments executed in connection with any of the foregoing)
upon or with respect to the Company’s properties.
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2E.                Valid Issuance of Series B Preferred Stock.  The Series B
Preferred Stock, when duly issued, delivered and paid for as provided herein,
will be duly and validly issued, fully paid and nonassessable, and will be free
of restrictions on transfer other than restrictions on transfer under this
Agreement, the Investor Rights Agreement, the Certificate of Incorporation, the
Certificate of Designation and under the Securities Act and applicable state
securities laws.
 
2F.                Consents.  No consent, approval, authorization or order of,
or filing, registration or qualification with, any court or governmental
authority or other Person is required in connection with the execution, delivery
or performance of this Agreement by the Company.
 
2G.               Capitalization.  As of the date hereof, the Company’s
authorized capital stock consists of 200,000,000 shares of Common Stock and
5,000,000 shares of Preferred Stock, $.01 par value (the “Preferred Stock”), of
which Preferred Stock, (x) 500,000 shares of Preferred Stock are designated as
Series A Junior Participating Preferred Stock (the “Series A Preferred Stock”)
and (y) 1,000 shares of Preferred Stock are designated as Series B Preferred
Stock (all of which Series B Preferred Stock are to be issued to Investor
hereunder).  As of the date hereof, (i) 78,640,376 shares of Common Stock were
issued and outstanding (excluding any shares of Common Stock held in treasury),
(ii) no shares of Preferred Stock (other than the Series B Preferred Stock
issued to Investor hereunder) were issued and outstanding, (iii) 276,680
exercisable stock options and 10,000 non-vested stock options were outstanding
(in each case exercisable for shares of Common Stock on a one-for-one basis),
533,209 restricted stock units (representing the economic equivalent of 533,209
shares of Common Stock on a one-for-one basis) and 1,810,046 non-vested shares
of restricted Common Stock were outstanding and 1,596,736 shares of market-based
performance shares of Common Stock were outstanding, under the Company’s
restricted stock and stock option plans and (iv) no other Common Stock
Equivalents were issued and/or outstanding.  There are no securities of the
Company of any kind or class authorized or outstanding other than the Common
Stock, the Series A Preferred Stock (none of which is outstanding) and the
Series B Preferred Stock to be issued to Investor hereunder.  The outstanding
shares of Common Stock are duly authorized, validly issued, fully paid and
non-assessable.  There are no preemptive rights other than as set forth in
Section 3D of the Investor Rights Agreement or, except as set forth in this
Section 2G, other outstanding rights, options, warrants, conversion rights or
agreements or commitments of any character relating to the Company’s authorized
and issued or unissued shares of capital stock, and, except as set forth in this
Section 2G, the Company has not issued any debt securities, other securities,
rights or obligations that are currently outstanding and convertible into or
exchangeable for, or giving any Person a right to subscribe for or acquire,
capital stock of the Company.  The representations and warranties set forth in
this Section 2G are a material inducement to Investor to enter into this
Agreement, and to the extent the representations and warranties set forth in
this Section 2G are inaccurate in any respect, the number of shares of
Conversion Stock into which the Series B Preferred Stock is convertible will be
equitably adjusted upward (but not downward), if necessary, such that the number
of shares of Conversion Stock into which the Series B Preferred Stock was
convertible, as of the date hereof, equals, in the aggregate, a number of shares
of Conversion Stock equal to 5.0% of the number of shares of Common Stock
outstanding as of the date hereof (rounded down to the nearest whole share), and
the Company shall take all actions necessary to cause such equitable adjustment
to be made.
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2H.              Board Approvals.  The Company’s Board of Directors (the
“Board”) has granted all necessary approvals under the Company’s constituent
documentation and the Delaware General Corporation Law with respect to the
acquisition and conversion of the Series B Preferred Stock by Investor.
 
2I.                 No Registration Requirement.  None of the Company, its
subsidiaries or any of their respective Affiliates has directly, or through any
agent, (i) sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any “security” (as defined in the Securities Act) that
is or would be integrated with the issuance of the Series B Preferred Stock in a
manner that would require the registration under the Securities Act of the
Series B Preferred Stock or (ii) engaged in any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) in connection with the offering of the Series B Preferred Stock
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act.  Assuming the accuracy of the representations and
warranties of Investor in Section 3E hereof, it is not necessary in connection
with the offer, sale and delivery of the Series B Preferred Stock to Investor in
the manner contemplated herein to register any of the Series B Preferred Stock
under the Securities Act.
 

Section 3. Representations and Warranties of Investor.

 
As a material inducement to the Company to enter into this Agreement and
transfer the Series B Preferred Stock hereunder, Investor hereby represents and
warrants to the Company as follows:

3A.               Organization, Good Standing, Qualification.  Investor is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware.
 
3B.                Authorization.  Investor has the limited liability company
power and authority to enter into this Agreement and to perform its obligations
under, and consummate the transactions contemplated by, this Agreement.  The
execution, delivery and performance by Investor and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate actions on the part of Investor, and no further approval or
authorization in connection herewith or therewith is required on the part of
Investor pursuant to its constituent documentation or applicable law.
 
3C.                Enforceability.  This Agreement constitutes a valid and
legally binding obligation of Investor, enforceable in accordance with its
terms, except as such enforceability may be limited by (i) applicable
insolvency, bankruptcy, reorganization, moratorium or other similar laws
affecting creditors’ rights generally, and (ii) applicable equitable principles
(whether considered in a proceeding at law or in equity).
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3D.                No Conflicts.  The execution, delivery and performance of
this Agreement by Investor does not (i) violate or conflict with any provision
of the constituent documentation of Investor, (ii) conflict with, violate or
result in the breach of, any agreement, instrument, order, judgment, decree, law
or governmental regulation to which Investor is a party or is subject or (iii)
violate or materially conflict with any contractual provisions of, or cause an
event of default or give rise to any right of acceleration under, any indenture,
loan agreement, mortgage, deed of trust, contract or other agreement or
instrument to which Investor is a party or by which Investor or any of
Investor’s properties may be bound.
 
3E.                 Investment.  Investor is acquiring the Series B Preferred
Stock purchased hereunder or acquired pursuant hereto for its own account with
the present intention of holding such securities for purposes of investment, and
has no intention of selling such securities in a public distribution in
violation of the federal securities laws or any applicable state securities
laws.  Investor is an “accredited investor” within the meaning of Rule 501
promulgated under the Securities Act, is sophisticated in financial matters and
is able to evaluate the risks and benefits of the investment in the Series B
Preferred Stock and is able to bear the economic risk of its investment in the
Series B Preferred Stock for an indefinite period of time because such
securities have not been registered under the Securities Act and, therefore,
cannot be sold unless subsequently registered under the Securities Act or an
exemption from such registration is available.
 
3F.                Current Ownership of Company Stock.  Before giving effect to
the purchase of the Series B Preferred Stock hereunder (and determined without
regard to any rights under the Rights Agreement), The Sycamore Group
Beneficially Owns 6,250,000 shares of the Company’s outstanding Common Stock.
 

Section 4. Miscellaneous.

 
4A.               Expenses.  Without limiting any rights or remedies of any
member of The Sycamore Group and/or any holder of Series B Preferred Stock, the
Company shall pay all reasonable and documented out-of-pocket fees and expenses
of Investor and the other members of The Sycamore Group (including the
reasonable fees, disbursements and other charges of counsel to Investor and/or
any of the other foregoing Persons) incurred (i) in connection with the
negotiation, execution and delivery of this Agreement and/or any of the other
agreements and documents contemplated hereby (including the Certificate of
Designation, the Investor Rights Agreement and the Registration Rights
Agreement) and the consummation of the transactions contemplated hereby and/or
thereby, (ii) in connection with any amendments or waivers (whether or not the
same become effective) under or in respect of this Agreement and/or any of such
other agreements and documents contemplated hereby, (iii) with respect to the
enforcement of the rights granted under this Agreement and/or any of such other
agreements and  documents contemplated hereby, and (iv) by any such Person in
any filing with any governmental agency with respect to its investment in the
Company or in any other filing with any governmental agency with respect to the
Company which mentions such Person and is made as a result of, or in connection
with, the transactions contemplated by this Agreement and/or any of the other
agreements and documents contemplated hereby.
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4B.                Amendment and Waiver.  The provisions of this Agreement may
be amended or waived only with the prior written consent of Investor and the
Company.
 
4C.                Successors and Assigns.  Notwithstanding anything to the
contrary in this Agreement, nothing in this Agreement, express or implied, is
intended to confer any rights or benefits on any Persons that are not parties
hereto, except as expressly provided for in this Section 4C.  Investor shall be
entitled to assign any of its rights and obligations hereunder to any Permitted
Transferee(s) of Series B Preferred Stock or Conversion Stock (with such
Permitted Transferee(s) thereafter constituting the “Investor” hereunder for so
long as such Permitted Transferee holds Series B Preferred Stock or Conversion
Stock); provided, that, Investor shall have no right or ability to assign its
rights and obligations under Section 4B but may assign its rights and
obligations in Section 4B to an Affiliate of Investor; and provided, further,
that any such assignment shall not be permitted unless (i) Investor complies
with all laws applicable thereto and provides written notice of assignment to
the Company promptly after such assignment is effected and (ii) such Permitted
Transferee agrees in writing to be bound by this Agreement as if it were a party
hereto and bound by all rights and obligations of Investor hereunder.
 
4D.                Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
 
4E.               Counterparts.  This Agreement may be executed simultaneously
in two or more counterparts (including via facsimile or electronic
transmission), any one of which need not contain the signatures of more than one
party, but all such counterparts taken together shall constitute one and the
same Agreement.
 
4F.               Descriptive Headings; Interpretation.  The descriptive
headings of this Agreement are inserted for convenience only and do not
constitute a substantive part of this Agreement.  The use of the word
“including” in this Agreement shall be by way of example rather than by
limitation.
 
4G.                Further Assurances.  The parties hereto agree to execute and
deliver any and all papers and documents and to take such further actions, in
each case as may be necessary to complete the transactions contemplated hereby
in accordance with the terms set forth herein.
 
4H.                Governing Law.  All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
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4I.                 Notices.  All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid.  Such notices, demands and other
communications shall be sent to Investor and the Company at the addresses
indicated below:
 
If to Investor:
Aero Investors LLC
c/o Sycamore Partners
9 West 57th Street, 31st Floor
New York, New York 10019
Telephone No.:     (212) 796-8500
Fax No.:                         (212) 796-8501
Attention:                   Stefan Kaluzny
E-mail:                             skaluzny@sycamorepartners.com

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

Law Offices of Gary M. Holihan, P.C.
2345 Larkdale Drive
Glenview, Illinois 60025
Attention:                   Gary M. Holihan
Email:                               garyholihan@gmail.com

And

Winston & Strawn LLP
35 West Wacker Drive
Chicago, Illinois 60610
Attention:                   James Faley
Telephone:                (312) 558-5600
Facsimile:                     (312) 558-5700
E-mail:                             jfaley@winston.com

If to the Company:

Aéropostale, Inc.
112 West 34th Street, 22nd Floor
New York, New York 10120
Attention:                    General Counsel
Telephone:                 (646) 452-1851
E-mail:                             MSchuback@aeropostale.com

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

Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention:                   Michael Aiello
Telephone:                 (212) 310-8000
Facsimile:                    (212) 310-8007
E-mail:                             michael.aiello@weil.com

to such other address or to the attention of such other Person as the recipient
party has specified by prior written notice to the sending party.

4J.                 No Strict Construction.  The parties hereto have
participated jointly in the negotiation and drafting of this Agreement.  In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
 
4K.               Complete Agreement.  This Agreement (and the other agreements
contemplated hereby, including the Certificate of Designation, the Investor
Rights Agreement, the Registration Rights Agreement, the Credit Agreement and
the agreements and instruments executed in connection with any of the foregoing)
and all counterparts thereto and hereto, embody the complete agreement and
understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
 
4L.               Remedies.  The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that the Company and Investor will have the right to seek
injunctive relief, in addition to all of its rights and remedies at law or in
equity, to enforce the provisions of this Agreement.  Nothing contained in this
Agreement will be construed to confer upon any Person who is not a signatory
hereto or any successor or permitted assign of a signatory hereto any rights or
benefits, as a third party beneficiary or otherwise.
 
4M.             Certain Definitions.  For purposes of this Agreement, the
following terms shall have the following meanings (except where otherwise
defined in this Agreement):
 
“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person.
 
“Bylaws” means the Company’s Amended and Restated Bylaws, as amended.
 
“Beneficial Owner” or “Beneficially Owned” shall have the meanings ascribed to
such term in Rule 13d-3 of the General Rules and Regulations of the Exchange
Act. In addition, a Person shall be the “Beneficial Owner” of any voting stock
which such Person or any of its Affiliates has (a) the right to acquire (whether
such right is exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options or otherwise or (b) the
right to vote pursuant to any agreement, arrangement or understanding (but
neither such Person nor any such Affiliate shall be deemed to be the Beneficial
Owner of any shares of voting stock solely by reason of a revocable proxy or
consent granted for a particular meeting of stockholders, pursuant to a public
solicitation of proxies or consents for such meeting, and with respect to which
shares neither such Person nor any such Affiliate is otherwise deemed the
Beneficial Owner).
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“Certificate of Incorporation” means the Company’s Amended and Restated
Certificate of Incorporation, as amended.
 
“Common Stock” means the Company’s common stock, $.01 par value per share.
 
“Common Stock Equivalents” means, collectively, any warrant, right or option to
acquire any shares of Common Stock or any security convertible into or
exchangeable for shares of Common Stock.
 
“control” (including, with correlative meanings, the terms “controlling,”
“controlled by,” and “under common control with”), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.
 
“Conversion Stock” has the meaning ascribed to such term in the Certificate of
Designation.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
similar federal statute, and the rules and regulations of the SEC thereunder.
 
“Permitted Transferee” shall mean any Person that, upon acquiring Beneficial
Ownership of Series B Preferred Stock or Conversion Stock, will not (together
with such Person’s Affiliates and any “group” (within the meaning of Section
13(d) of the Exchange Act) of which such Person or any Affiliate is a part)
Beneficially Own greater than 14.99% of the Company’s outstanding Common Stock.
 
“Person” means an individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization, other entity or government or other agency or
political subdivision thereof.
 
“Rights Agreement” means the Rights Agreement, dated as of November, 26, 2013,
as amended, between the Company and American Stock Transfer and Trust Company,
LLC, as Rights Agent.
 
“Securities Act” means the Securities Act of 1933, as amended, or any similar
federal statute, and the rules and regulations of the SEC thereunder, all as the
same shall be in effect from time to time.
 
“The Sycamore Group” means Sycamore Partners Management, L.L.C. and its
Affiliates.
 
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first written above.

INVESTOR:
COMPANY:
 
 
Aero Investors LLC
Aéropostale, Inc.
 
 
 
 
By:
 /s/ Stefan Kaluzny
 
By:
 /s/ Marc D. Miller
Name:
Stefan Kaluzny
 
Name:
Marc D. Miller
Its:
Chief Executive Officer and President
 
Its:
Executive Vice President and Chief Financial Officer

 
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