SUBSCRIPTION AGREEMENT, dated as of June 15, 1999 (the "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 merger
(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 not sell,
transfer or otherwise dispose of the number of shares of CPI Common Stock owned
directly or indirectly by him or her listed on Schedule II hereto (the
"Shares"); and
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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
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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.
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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 bylaws 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
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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
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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 the 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;
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(c) 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
AGREEMENT RELATING TO CPI COMMON STOCK
5.1 Disposition of Shares. The Stockholder shall not, as 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.
5.2 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.
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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 benefits 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.
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(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 to 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
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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:
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
STOCKHOLDER:
------------------------
Name:
