SUBSCRIPTION AGREEMENT, dated as of June 15, 1999 (this
"Agreement"), between SPS International Holdings, Inc., a Delaware corporation
(the "Company"), and the individual named on the signature page hereto (the
"Stockholder").
WHEREAS, concurrently herewith, the Company, SPS Acquisition,
Inc., a Delaware corporation and a wholly owned subsidiary of the Company
("Acquisition"), and CPI Corp., a Delaware corporation ("CPI"), are entering
into an Agreement and Plan of Merger dated as of the date hereof (the "Merger
Agreement") pursuant to which, among other things, Acquisition agrees to merge
(the "Merger") into CPI;
WHEREAS, as a condition to their willingness to enter into
the Merger Agreement, the Company and Acquisition have required the Stockholder
and certain other Management Investors referred to below to enter into this
Agreement and the Stockholders Agreement dated as of the date hereof (the
"Stockholders Agreement");
WHEREAS, as of the date hereof, Stockholder beneficially owns
directly or indirectly shares of CPI common stock, par value $0.40 per share
(the "CPI Common Stock");
WHEREAS, pursuant to a plan and arrangement between American
Securities Partners II, L.P. and American Securities Partners II(B), L.P.
(collectively, "ASP") and the Management Investors referred to below the
Company is being formed with ASP contributing cash and each Management Investor
contributing shares of CPI Common Stock (the "Rollover Shares") having a value
equal to the Merger Consideration (as defined in the Merger Agreement)
multiplied by the number of Rollover Shares (the "Rollover Shares Value") and
cash (the "Cash Consideration") in exchange for shares of common stock of the
Company, par value $.01 per share (the "Common Stock") in a transaction
intended by the parties to be governed by Section 351 of the Internal Revenue
Code of 1986, as amended;
WHEREAS, the Stockholder also owns options to purchase CPI
Common Stock (the "Rollover Options") having an aggregate value equal to the
excess of the Merger Consideration over the exercise price of all such Rollover
Options multiplied by the number of Rollover Options having such exercise price
being converted into Company Options, as hereinafter defined, (the "Rollover
Options Value", and together with the Rollover Shares Value and the Cash
Consideration, the "Aggregate Consideration") which the Stockholder intends to
convert into options to purchase Common Stock (the "Company Options");
WHEREAS, the Stockholder has agreed that the Aggregate
Consideration to be contributed by him or her will be at least equal to the
value set forth on Schedule I attached hereto (the "Minimum Aggregate
Consideration");
WHEREAS, Stockholder has agreed, among other things, to vote
the number of shares of CPI Common Stock owned directly or indirectly by him or
her listed on Merger (collectively, the "Shares"); and
WHEREAS, this Agreement is one of several agreements being
entered into by the Company on or after the date hereof with certain persons
who are or will be key employees of the Company or one of its subsidiaries
(collectively with the Stockholder, the "Management Investors");
NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
EXCHANGE AND PURCHASE
1.1 Delivery of Rollover Shares. On the terms and subject to
the conditions contained in this Agreement and the 351 transfer agreement in
substantially the form attached hereto as Exhibit A (the "Transfer Agreement"),
at the Closing (as defined in the Merger Agreement), the Stockholder shall
deliver stock certificates (duly endorsed to the Company) evidencing the
Rollover Shares to the Company.
1.2 Issuance and Delivery of Common Stock. On the terms and
subject to the conditions contained in this Agreement and the Transfer
Agreement, in consideration of the contribution and delivery of the Rollover
Shares referred to in Section 1.1, the Company shall, at the Closing, issue to
the Stockholder the number of shares of Common Stock (at a price per share
equal to the price per share paid by ASP and its affiliates for Common Stock)
equal in value to the Rollover Shares Value.
1.3 Conversion of Rollover Options. On the terms and subject
to the conditions contained in this Agreement, at the Closing, all of the
Rollover Options of the Stockholder shall automatically be converted into
Company Options equal in value to the Rollover Options Value and with an
exercise price per share of Common Stock determined by the Company and the
Stockholder in good faith which will (i) preserve the excess, if any, of the
Merger Consideration (as defined in the Merger Agreement) over the exercise
price of the Rollover Options and (ii) minimize the dilution to be suffered by
the non-management investors in the Company as of the Effective Time; provided,
however, that in no event shall the exercise price for a Company Option be less
per share than 30% of the price per share paid by ASP and its affiliates for
Common Stock pursuant to Section 1.4 hereof. The Company Options will be
subject to same terms and conditions as the Rollover Options except that the
Company Options will be fully vested and their duration will be ten (10) years
from the Effective Time.
1.4 Purchase of Common Stock. Pursuant to the terms and
subject to the conditions set forth in this Agreement, the Stockholder hereby
subscribes for and agrees to purchase, and the Company hereby agrees to issue
and sell to the Stockholder, the number of shares of Common Stock, at a price
per share equal to the price per share paid by ASP and its affiliates for
Common Stock, having a value equal to the Cash Consideration.
1.5 Minimum Aggregate Consideration. At the Closing, the
Aggregate Consideration contributed by Stockholder shall be at least equal to
the Minimum Aggregate
Consideration. Stockholder shall provide written notice to the Company, no
more than thirty (30) days after the signing of this Agreement, indicating the
Rollover Shares Value, the Rollover Options Value and the amount of cash being
contributed by him or her.
ARTICLE II
CLOSING
2.1 Time and Place The closing hereunder shall take place
concurrently with the Closing of the Merger prior to the effective time of the
Merger (the "Closing Date") and at such time as the Company shall direct on at
least five business days' prior notice to the Stockholder and shall occur at
the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, or at such other place as the parties may mutually agree.
2.2 Delivery At the Closing, the Stockholder (or the
Stockholder's representative) shall deliver to the Company (i) all stock
certificates evidencing the Rollover Shares, (ii) documents and/or instruments
representing the Rollover Options and (iii) the Cash Consideration by delivery
of a certified check or by wire transfer in immediately available funds (which
such Cash Consideration when added to the Rollover Shares Value and the
Rollover Options Value shall be at least equal to the Minimum Aggregate
Consideration).
ARTICLE III
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
3.1 Conditions to the Obligations of the Company. (a) The
obligations of the Company under this Agreement shall be subject to the
conditions that (i) the Stockholder shall have executed and delivered the
Stockholders Agreement in substantially the form attached hereto as Exhibit A,
(ii) the representations and warranties of the Stockholder in Sections 4.2 and
4.3 of this Agreement shall be true and correct as of the Closing Date in all
material respects, (iii) the Stockholder shall not have breached his
obligations under Section 5 of this Agreement and (iv) all conditions to the
obligation of the Company and Acquisition to consummate the Merger have been
satisfied or waived.
3.2 Conditions to the Obligations of the Stockholder The
obligations of the Stockholder under this Agreement shall be subject to the
conditions that (i) the Company shall have executed and delivered the
Stockholders Agreement and (ii) the representations and warranties of the
Company in Section 4.1 of this Agreement shall be true and correct as of the
Closing Date in all material respects.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
4.1 Representations and Warranties of the Company. The
Company represents and warrants to the Stockholder as follows:
(a) the Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
full corporate power and authority to execute and deliver this Agreement and the
Stockholders Agreement and to perform its obligations hereunder and thereunder.
The execution, delivery and performance by the Company of this Agreement and the
Stockholders Agreement has been duly authorized by all necessary corporate and
legal action by the Company, and no other corporate proceeding by the Company is
necessary for the execution, delivery and performance by the Company of this
Agreement or the Stockholders Agreement. This Agreement and the Stockholders
Agreement have been duly executed and delivered by the Company and, assuming
they are duly executed and delivered by the Stockholder, constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms.
(b) the Common Stock to be issued to the Stockholder pursuant
to this Agreement, when issued and delivered in accordance with the terms
hereof, will be duly and validly issued and, upon receipt by the Company of the
Purchase Price therefor, will be fully paid and nonassessable with no personal
liability attached to the ownership thereof and will not be subject to any
preemptive rights under the Delaware General Corporation Law; and
(c) the execution, delivery and performance by the Company of
this Agreement and the Stockholders Agreement will not (i) conflict with the
certificate of incorporation or by-laws of the Company or any of its
subsidiaries or (ii) result in any breach of any terms or conditions of, or
constitute a default under, any contract, agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or (iii) conflict with or violate any law, rule,
regulation, ordinance, writ, injunction, judgment or decree applicable to the
Company or any of its subsidiaries or by which any of their assets may be bound
or affected.
4.2 Representations, Warranties and Covenants of the
Stockholder. The Stockholder represents and warrant to the Company as follows:
(a) Competency; Power; Enforceability; Noncontravention. The
Stockholder is competent to and has sufficient capacity to execute and deliver
this Agreement and the Stockholders Agreement and to perform his obligations
hereunder and thereunder. This Agreement and the Stockholders Agreement have
been duly executed and delivered by the Stockholder.
(b) Assuming the due execution and delivery of this Agreement
and the Stockholders Agreement by the Company, this Agreement and the
Stockholders Agreement
constitute valid and binding obligations of the Stockholder, enforceable
against the Stockholder in accordance with their terms.
(c) The execution, delivery and performance of this Agreement
and the Stockholders Agreement by the Stockholder will not (i) conflict with or
violate any law, rule, regulation, ordinance, writ, injunction, judgment or
decree applicable to the Stockholder or by which any of his assets may be bound
or affected or (ii) result in any breach of any terms or conditions of, or
constitute a default under, any contract, agreement or instrument to which the
Stockholder is a party or by which the Stockholder is bound.
(d) Investment Intention; No Resales. The Stockholder hereby
represents and warrants that he is acquiring the Common Stock for investment
solely for his own account and not with a view to, or for resale in connection
with, the distribution or other disposition thereof. The Stockholder agrees and
acknowledges that he will not, directly or indirectly, offer, transfer, sell,
assign, pledge, hypothecate or otherwise dispose of any shares of Common Stock,
or solicit any offers to purchase or otherwise acquire or pledge any shares of
Common Stock, unless such offer, transfer, sale, assignment, pledge,
hypothecation or other disposition complies with the provisions hereof and of
the Stockholders Agreement.
(e) Common Stock Unregistered. The Stockholder acknowledges
and represents that he has been advised by the Company that:
(1) the offer and sale of the Common Stock have not been and
will not be registered under the Securities Act;
(2) the Common Stock must be held indefinitely and the
Stockholder must continue to bear the economic risk of the investment in the
Common Stock unless the offer and sale of such Common Stock is subsequently
registered under the Securities Act and all applicable state securities laws or
an exemption from such registration is available;
(3) there is no established market for the Common Stock and
it is not anticipated that there will be any public market for the Common Stock
in the foreseeable future;
(4) Rule 144 promulgated under the Securities Act is not
presently available with respect to the sale of any securities of the Company,
and, except as set forth in the Stockholders Agreement, the Company has made no
covenant to make such Rule available;
(5) when and if shares of Common Stock may be disposed of
without registration under the Securities Act in reliance on Rule 144, such
disposition can be made only in limited amounts in accordance with the terms
and conditions of such Rule;
(6) if the Rule 144 exemption is not available, public offer
or sale of Common Stock without registration will require compliance with some
other exemption under the Securities Act;
(7) if any shares of Common Stock are at any time disposed of
in accordance with Rule 144, the Stockholder will deliver to the Company at or
prior to the time of such disposition
an executed Form 144 (if required by Rule 144) and such other documentation as
the Company may reasonably require in connection with such sale;
(8) a restrictive legend in the form set forth in the
Stockholders Agreement shall be placed on the certificates representing Common
Stock; and
(9) a notation shall be made in the appropriate records of
the Company indicating that the Common Stock is subject to restrictions on
transfer and, if the Company should at some time in the future engage the
services of a securities transfer agent, appropriate stop-transfer instructions
will be issued to such transfer agent with respect to the Common Stock.
4.3 Additional Investment Representations. The Stockholder
represents and warrants that:
(a) Ownership of Rollover Shares and Rollover Options. The
Stockholder (or accounts or trusts controlled or beneficially owned by
Stockholder) is the owner of the Rollover Shares and the Rollover Options and
has the power to dispose of the Rollover Shares and Rollover Options. To
Stockholder's knowledge, the Rollover Shares are validly issued, fully paid and
nonassessable, with no personal liability attaching to the ownership thereof.
On the date hereof, the Rollover Shares are owned of record and beneficially by
Stockholder. Stockholder has sole voting power and sole power of disposition
with respect to all of the Rollover Shares, with no restrictions, subject to
applicable federal securities laws, on Stockholder's rights of disposition
pertaining thereto. On the date hereof, Stockholder has, and on the date of any
Closing hereunder Stockholder will have, good, valid and marketable title to
the Rollover Shares and Rollover Options free and clear of all claims, liens,
encumbrances, security interests and charges of any nature whatsoever (other
than the encumbrance created by this Agreement), and shall not be subject to
any preemptive right of any stockholder of CPI. The contribution of the
Rollover Shares to Company hereunder will transfer to Company good, valid and
marketable title to the Rollover Shares, free and clear of all claims, liens,
encumbrances, security interests and charges of any nature whatsoever.
(b) the Stockholder's financial situation is such that he can
afford to bear the economic risk of holding the Common Stock for an indefinite
period of time, has adequate means for providing for his current needs and
personal contingencies, and can afford to suffer a complete loss of his
investment in the Common Stock;
(c) the Stockholder's knowledge and experience in financial
and business matters are such that he is capable of evaluating the merits and
risks of the investment in the Common Stock, as contemplated by this Agreement;
(d) the Stockholder understands that the Common Stock is a
speculative investment which involves a high degree of risk of loss of his
investment therein, there are substantial restrictions on the transferability
of the Common Stock and, on the Closing Date and for an indefinite period
following the Closing, there will be no public market for the Common Stock and,
accordingly, it may not be possible for the Stockholder to liquidate his
investment in case of emergency, if at all;
(e) the terms of the Stockholders Agreement provide that in
the event that the Stockholder ceases to be an employee of CPI, the Company,
ASP (as defined in the Stockholders Agreement) and their designated affiliates
have the right to repurchase the Common Stock at a price which may, in certain
circumstances, be less than the fair market value of such stock;
(f) the Stockholder understands and has taken cognizance of
all the risk factors related to the purchase of Common Stock and, other than as
set forth in this Agreement, no representations or warranties have been made to
the Stockholder or his representatives concerning the Common Stock or the
Company, its subsidiaries or their prospects or other matters;
(g) in making his decision to purchase the Common Stock
hereby subscribed for, the Stockholder has relied upon independent
investigations made by him or her and, to the extent believed by the
Stockholder to be appropriate, his representatives, including his own
professional, financial, tax and other advisors;
(h) the Stockholder has been given the opportunity to examine
all documents and to ask questions of, and to receive answers from, the Company
and its representatives concerning the Company and its subsidiaries and the
terms and conditions of the purchase of the Common Stock and to obtain any
additional information, in each case as the Stockholder or his representatives
deems necessary;
(i) all information which the Stockholder has provided to the
Company and its representatives concerning the Stockholder and his financial
position is complete and correct as of the date of this Agreement; and
(j) the Stockholder is an "accredited investor" within the
meaning of Rule 501 of Regulation D under the Securities Act.
ARTICLE V
AGREEMENTS RELATING TO CPI COMMON STOCK
5.1 Voting of Shares. The Stockholder hereby agrees, so long
as the Merger Agreement has not been terminated, to vote all Shares (a) in
favor of the adoption of the Merger Agreement and the approval of the
transactions contemplated thereby and (b) against any action or agreement that
would result in a breach of any representation, warranty, covenant or agreement
of the Company contained in the Merger Agreement or would impede, interfere
with, delay or prevent the consummation of the Merger or the purchase of shares
of CPI Common Stock by Acquisition. The Stockholder shall not, so long as the
Merger Agreement has not been terminated, purport to vote (or execute a written
consent with respect to) Shares other than in accordance with this Agreement or
grant any proxy or power of attorney with respect to Shares, deposit any Shares
into a voting trust, or enter into any agreement, arrangement or understanding
with any person (other than this Agreement), directly or indirectly, to vote,
grant any proxy or give instructions with respect to the voting of Shares, or
agree to do any of the foregoing.
5.2 Disposition of Shares. The Stockholder shall not, so long
as the Merger Agreement has not been terminated, sell, transfer or otherwise
dispose of, pledge or otherwise encumber, any Shares after the date hereof
(except as provided for in this Agreement), or agree to do any of the
foregoing.
5.3 Stop Transfer Order. The Stockholder hereby agrees to
cause CPI's transfer agent to be notified that there is a stop transfer order
with respect to all Shares so long as the Merger Agreement has not been
terminated.
ARTICLE VI
MISCELLANEOUS
6.1 Recapitalizations, Exchanges, Etc., Affecting Common
Stock. The provisions of this Agreement shall apply, to the full extent set
forth herein with respect to Common Stock, to any and all shares of capital
stock of the Company or any successor or assign of the Company (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for, or in substitution for Common Stock, by reason of
any stock dividend, stock split, stock issuance, reverse stock split,
combination, recapitalization, reclassification, merger, consolidation or
otherwise. Upon the occurrence of any of such events, amounts hereunder shall
be appropriately adjusted, in good faith, by the Board of Directors of the
Company.
6.2 Stockholder's Employment by the Company. Nothing
contained in this Agreement shall be deemed to obligate the Company or any
subsidiary of the Company to employ the Stockholder in any capacity whatsoever
or to prohibit or restrict the Company (or any such subsidiary) from
terminating the employment, if any, of the Stockholder at any time or for any
reason whatsoever, with or without Cause (as defined in the Stockholders
Agreement), it being understood that this Section 6.2 shall have no effect on
any separate written employment agreement between Stockholder and CPI.
6.3 Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns. No assignment
of any of the rights or obligations of the Stockholder shall be permitted
except as expressly contemplated hereby; any purported assignment in violation
of this provision shall be null and void ab initio.
6.4 Amendment; Waiver. This Agreement may be amended only by
a written instrument signed by the parties hereto. No waiver by either party
hereto of any of the provisions hereof shall be effective unless set forth in a
writing executed by the party so waiving.
6.5 Governing Law. This Agreement shall be governed by and
construed in all respects under the laws of the State of New York. Any action
to enforce which arises out of or in any way relates to any of the provisions
of this Agreement may be brought and prosecuted in such court or courts located
within the State of New York as provided by law; and the parties consent to the
jurisdiction of such court or courts located within the State of New York and
to
service of process by registered mail, return receipt requested, or by any
other manner provided by New York law.
6.6 Notices. Any notices or communications permitted or
required hereunder shall be deemed sufficiently given if hand-delivered, or
sent by (x) registered or certified mail return receipt requested, (y) telecopy
or other electronic transmission service (to the extent receipt is confirmed)
or (z) by overnight courier, in each case to the parties at their respective
addresses and telecopy numbers set forth below, or to such other address of
which any party may notify the other party in writing.
(a) If to the Company, to it at the following address:
SPS International Holdings, Inc.
c/o American Securities Capital Partners, L.P.
000 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
(b) If to the Stockholder, to him or her at the address or
telecopy number as shown on the stock register of the Company.
6.7 Integration. This Agreement and the documents referred to
herein or delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to the subject matter hereof and
thereof. There are no restrictions, agreements, promises, representations,
warranties, covenants or undertakings with respect to the subject matter hereof
other than those expressly set forth herein and therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
6.8 Counterparts. This Agreement may be executed in two or
more counterparts, and by different parties on separate counterparts, each of
which shall be deemed an original, but all of which shall constitute one and
the same instrument.
6.9 Injunctive Relief. The Stockholder, on behalf of
Stockholder and his permitted transferees, and the Company, on its own behalf
and on behalf of its successors and assigns, each acknowledges and agrees that
a violation of any of the terms of this Agreement will cause the other
irreparable injury for which adequate remedy at law is not available.
Accordingly, it is agreed that the Company or the Stockholder, as the case may
be, shall be
entitled to an injunction, restraining order or other equitable relief to
prevent breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof in any court of competent
jurisdiction in the United States or any state thereof, in addition to any
other remedy to which it or he may be entitled at law or equity.
6.10 Rights to Negotiate. Nothing in this Agreement shall be
deemed to restrict or prohibit the Company from purchasing shares of Common
Stock from the Stockholder at any time upon such terms and conditions and at
such price as may be mutually agreed upon between the Company and the
Stockholder, whether or not at the time of such purchase circumstances exist
which specifically grant the Company the right to purchase, or the Stockholder
the right to sell, shares of Common Stock pursuant to the terms of this
Agreement or the Stockholders Agreement.
6.11 Rights Cumulative; Waiver. The rights and remedies of
the Stockholder and the Company under this Agreement shall be cumulative and
not exclusive of any rights or remedies which either would otherwise have
hereunder or at law or in equity or by statute, and no failure or delay by
either party in exercising any right or remedy shall impair any such right or
remedy or operate as a waiver of such right or remedy, nor shall any single or
partial exercise of any power or right preclude such party's other or further
exercise or the exercise of any other power or right. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any preceding or succeeding breach and no failure by
either party to exercise any right or privilege hereunder shall be deemed a
waiver of such party's rights or privileges hereunder or shall be deemed a
waiver of such party's rights to exercise the same at any subsequent time or
times hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
SPS International Holdings, Inc.
By:
--------------------------------
Name:
Title:
