EXHIBIT 10.2
FORM OF
STONINGTON STOCK SUBSCRIPTION AGREEMENT
STONINGTON STOCK SUBSCRIPTION AGREEMENT (the "Agreement"), dated as of
__________, 1996, by and between GGS Holdings, Inc., a Delaware corporation
("Holdings") and Stonington Capital Appreciation 1994 Fund, L.P., a Delaware
limited partnership ("Stonington").
W I T N E S S E T H:
WHEREAS, pursuant to a Stock and Asset Purchase Agreement, dated as of
April 26, 1996, as amended (the "Stock and Asset Purchase Agreement"), by and
among Rockwell International Corporation, a Delaware corporation ("Rockwell")
and Xxxx Graphic Systems, Inc., a Delaware corporation and a wholly owned
subsidiary of Holdings (the "Company"), the Company has, simultaneously with the
execution and delivery of this Agreement, directly or indirectly, acquired the
Graphic Systems business unit of Rockwell ("Xxxx") through the purchase of all
of the capital stock of certain subsidiaries of Rockwell that constitute a part
of Xxxx and certain assets and liabilities of certain subsidiaries of Rockwell
that constitute the remainder of Xxxx (the "Acquisition");
WHEREAS, on the date hereof, Stonington, Xxxxxxx Xxxxx KECALP L.P. 1994 and
the Management Investors (as defined below) are entering into a Stockholders'
Agreement with Holdings (the "Stockholders' Agreement"), which will be effective
simultaneously with the purchase of shares of common stock, par value $.01 per
share, of Holdings ("Shares") by Stonington;
WHEREAS, simultaneously herewith, certain of the investors listed in
Schedule I to the Stockholders' Agreement (the "Management Investors") are
entering into a Management Stock Subscription Agreement with Holdings (the
"Management Stock Subscription Agreement") providing for the purchase of Shares
by such Management Investors thereunder in exchange for cash and the issuance of
notes by the Management Investors (the "Management Notes") and the execution of
a stock pledge agreement (the "Stock Pledge Agreements"); and
WHEREAS, pursuant to the terms and subject to the conditions set forth in
this Agreement and in connection with providing equity financing for the
transactions contemplated by the Acquisition Agreements, Stonington desires to
subscribe for and purchase from Holdings, and Holdings desires to issue and sell
to Stonington, ______ Shares (the "Stonington Shares") for $_____ (the "Purchase
Price").
WHEREAS, in connection with the Acquisition, the Company is obtaining (i)
senior debt financing from a group of lenders with Bankers Trust Company, The
Bank of Nova Scotia and Credit Suisse as the Arrangers pursuant to a credit
agreement dated _________, 1996 (the "Credit Agreement"), (ii) subordinated debt
financing pursuant to the sale of $225,000,000 aggregate principal amount of
[__%] Senior Subordinated Notes due 2006 (the "Notes") under an Indenture dated
____________, 1996 (the "Indenture"), and (iii) proceeds from the sale of a
portfolio of customer notes of Xxxx (the "Customer Notes") pursuant to a Note
Purchase Agreement between the Company and BT Commercial Corporation (the "Note
Purchase Agreement");
NOW THEREFORE, in consideration of the premises and the representations,
warranties and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
Stock Subscription
Section 1.1. Purchase and Sale of Stock. Upon the terms and conditions
hereinafter set forth, Holdings hereby agrees to issue and sell, and Stonington
hereby agrees to subscribe for and purchase the Stonington Shares.
Section 1.2. Consideration for Shares. In consideration of, and
concurrently with, the issuance of the Stonington Shares, Stonington shall
deliver in exchange therefor the Purchase Price in cash, certified check or by
wire transfer to an account or accounts designated by Holdings.
Section 1.3. Closing. At the Closing (as defined below), Holdings will
deliver to Stonington duly issued certificates representing the Stonington
Shares. The delivery and transfer of the Stonington Shares in exchange for the
payment of the Purchase Price by Stonington (the "Closing") will take place
simultaneously with the purchase of Shares by the Management Investors
purchasing pursuant to the Management Stock Subscription Agreement, and
immediately prior to the consummation of the Acquisition, at a location and time
to be designated by Holdings.
ARTICLE II
Representations and Warranties of Holdings
Holdings represents and warrants to Stonington that:
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Section 2.1. Organization and Authority. Holdings is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to enter into and
perform (or cause a subsidiary thereof to enter into and perform, as the case
may be) its obligations under this Agreement, the Management Stock Subscription
Agreement, the Credit Agreement, the Stock and Asset Purchase Agreement, the
Notes, the Indenture, the Note Purchase Agreement, the Stock Pledge Agreement,
the Management Notes, the Management Stock Incentive Plan (as such term is
defined and the Management Stock Subscription Agreement) and the Stockholders'
Agreement (all such agreements and plans other than this Agreement being
hereinafter sometimes collectively referred as the "Collateral Agreements"), and
to consummate the transactions contemplated hereby and thereby. Holdings has all
requisite corporate power and authority to issue and sell the Stonington Shares
and otherwise to carry out the transactions contemplated hereby. Holdings has
taken all necessary corporate action to authorize the execution, delivery and
performance by it of this Agreement and (by it or a subsidiary thereof, as the
case may be, of) each of the Collateral Agreements and the consummation of the
transactions contemplated hereby and thereby. Holdings has not engaged in any
business or incurred any liabilities since the date of its incorporation except
for activities, expenses and liabilities incident to its organization and to the
carrying out of the transactions contemplated by this Agreement and the
Collateral Agreements.
Section 2.2. Capitalization. (a) After giving effect to the transactions
contemplated by this Agreement, the authorized capital of Holdings will consist
of 10,000,000 authorized Shares of which 1,165,000 Shares will be issued and
outstanding immediately after the Closing, 7,500 authorized shares of nonvoting
common stock, par value $.01 per share, of Holdings, of which 7,500 shares will
be issued and outstanding immediately after the Closing, and 1,000,000
authorized shares of preferred stock, par value $.01 per share, of Holdings, of
which 100,000 shares will be designated as 6 1/2% Redeemable Pay-in-Kind
Preferred Stock and 47,500 shares of such 6 1/2% Redeemable Pay-in-Kind
Preferred Stock will be issued and outstanding immediately after the Closing. In
addition, up to ______ Shares will have been reserved for issuance under the
Management Stock Incentive Plan. All of the outstanding shares will be duly
authorized, validly issued, fully paid and nonassessable.
Section 2.3. Compliance with Other Instruments, etc. Holdings is not in
violation of any term of its Certificate of Incorporation or of its By-Laws or
any agreement or instrument
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to which it is a party or by which it or any of its properties or assets is
bound, and Holdings is not in violation of any term of any applicable law,
ordinance, rule or regulation or any applicable order, judgment or decree of any
court or governmental authority, the consequences of which violation may
reasonably be expected to have a material adverse effect on the business,
financial condition, properties or operations of Holdings. Neither the execution
and delivery of this Agreement or the Collateral Agreements, nor the issuance of
the Shares nor the performance by Holdings of its obligations hereunder or
thereunder nor the consummation of the transactions contemplated hereby or
thereby will result in any violation of or be in conflict with or constitute a
default (with due notice or lapse of time or both) under any term of the
Certificate of Incorporation or the By-Laws of Holdings or any agreement or
instrument to which Holdings is a party or by which any of its properties or
assets is bound or any applicable law, ordinance, rule or regulation or any
applicable order of any court or governmental authority or, except as expressly
provided herein or in the Collateral Agreements, will result in the creation of
any mortgage, pledge, lien, security interest, charge or encumbrance upon any of
the properties or assets of Holdings, which violation, conflict, default, or
creation, either in any case or in the aggregate, materially adversely affects,
or may reasonably be expected to have a material adverse effect on, the
business, financial condition, properties or operations of Holdings.
Section 2.4. Authorization and Delivery of Collateral Agreements. Each of
the Collateral Agreements to be executed by Holdings (or a subsidiary thereof,
as the case may be) has been duly authorized and has been or, prior to the
Closing, will be, executed and delivered by such entity and in full force and
effect. Holdings has delivered or will deliver to Stonington and counsel
complete and correct copies of each of the Collateral Agreements and of all
exhibits and schedules thereto.
Section 2.5. Valid and Binding Agreements. Each of this Agreement and the
Collateral Agreements, when duly executed and delivered by Holdings and the
other parties thereto, will be the valid and binding obligations of Holdings (or
a subsidiary thereof, as the case may be) enforceable in accordance with their
respective terms, except (i) as may be limited by or subject to any bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, and (ii) that the remedies of
specific performance, injunction and other forms of equitable relief may not be
available because they are subject to certain
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tests of equity jurisdiction, equitable defenses and the discretion of the court
before which any proceeding therefor may be brought.
Section 2.6. No Consents. No order, license, consent, authorization or
approval of, or exemption by, or notice to or filing or registration with, or
other actions to, with or by any federal, state or other governmental body was
or is necessary to effect the transactions contemplated by this Agreement and
the Collateral Agreements or to authorize the execution, delivery and
performance by Holdings (or a subsidiary thereof, as the case may be) of this
Agreement or the Collateral Agreements or the issuance of the Shares, except (i)
such as have heretofore been made or obtained, (ii) such as may be required
under the Securities Act of 1933, as amended (the "Securities Act") or state
securities, or "blue sky," laws, (iii) filings required under the Credit
Agreement to perfect the security interests granted to the lenders thereunder,
(iv) other filings, authorizations, consents and approvals referred to in the
Collateral Agreements, and (v) such as would not, if not obtained, made or
performed, have a material adverse effect on the business, financial condition,
properties or operations of Holdings.
ARTICLE III
Representations and Warranties of Stonington
Stonington hereby represents and warrants as follows:
Section 3.1. Investment Intention. Stonington represents that it is
acquiring the Stonington Shares for its own account for investment purposes only
and not with a view to, or for resale in connection with, the distribution or
other disposition thereof or with any present intention of distributing or
reselling any Stonington Shares thereof. Stonington represents that it has been
advised that the Stonington Shares issuable hereunder have not been registered
under the Securities Act. Stonington agrees and acknowledges that it will not
directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or
otherwise dispose of any of the Stonington Shares (or solicit any offers to
purchase or otherwise acquire or take a pledge of any of the Stonington Shares)
unless such transfer, sale, assignment, pledge, hypothecation or other
disposition is made (i) pursuant to an effective registration statement under
the Securities Act and all applicable state securities, or "blue sky," laws or
(ii) pursuant to an available exemption from registration under, or otherwise in
compliance with, the
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Securities Act and all applicable state securities, or "blue sky," laws.
Section 3.2. Legend. The certificate or certificates representing
Stonington Shares shall bear the legend set forth in Section 2.6 of the
Stockholders' Agreement.
Section 3.3. Rule 144. Stonington acknowledges and represents that it has
been advised that (i) Rule 144 promulgated under the Securities Act ("Rule 144")
is not currently available with respect to the sales of any securities of
Holdings, and Holdings has made no covenant to make such Rule 144 available,
(ii) if and when the Stonington Shares may be disposed of without registration
in reliance on Rule 144, such disposition can be made only in limited amounts in
accordance with the terms and conditions of such Rule 144, and (iii) if the Rule
144 exemption is not available, public offer or sale without registration will
require the availability of an exemption under the Securities Act. If any of the
Stonington Shares are disposed of in accordance with Rule 144, Stonington shall
deliver to Holdings at or prior to the time of such disposition an executed copy
of Form 144 (if required by Rule 144) and such other documentation as Holdings
may reasonably require in connection with such disposition.
Section 3.4. Ability to Bear Risk; Evaluation of Risks. Stonington
represents that (i) the financial situation of Stonington is such that it can
afford to bear the economic risk of holding the unregistered Stonington Shares
for an indefinite period, (ii) it can afford to suffer the complete loss of its
investment in the Stonington Shares, (iii) it understands and has taken
cognizance of all the risk factors related to the purchase of the Stonington
Shares, and (iv) its knowledge and experience in financial and business matters
is such that it is capable of evaluating the risks of the investment in the
Stonington Shares.
Section 3.5. Authorization, etc. Stonington represents to Holdings that
this Agreement has been duly authorized, executed and delivered.
Section 3.6. Termination of Restrictions. The restrictions referred to in
Section 3.2 shall cease and terminate as to any particular Stonington Shares
when, in the opinion of counsel for Holdings, the provisions of the
Stockholders' Agreement are no longer applicable to such Stonington Shares or
the Stockholders' Agreement shall have terminated in accordance with its terms.
Whenever such restrictions shall cease and terminate as to any Stonington
Shares, the holder thereof shall be entitled to receive from Holdings, without
expense (other
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than applicable transfer taxes, if any, if such unlegended shares are being
delivered and transferred to any person other than the registered holder
thereof), new certificates for such shares of like tenor not bearing the legend
referred to in Section 3.2.
ARTICLE IV
Conditions to Closing
Section 4.1. Conditions to Stonington's Obligation. Stonington's obligation
to purchase and deliver the consideration for the Stonington Shares to be sold
by Holdings to Stonington at the Closing is subject to the fulfillment at or
prior to the Closing of the following conditions, any or all of which may be
waived by Stonington, in whole or in part, to the extent permitted by applicable
law:
Section 4.1.1. Representations and Warranties. The representations and
warranties of Holdings contained in this Agreement shall be true and correct in
all material respects when made and at and as of the time of the Closing.
Section 4.1.2. Performance. Holdings shall have performed and complied in
all material respects with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at the
Closing.
Section 4.1.3. No Impediments. As of the Closing there shall be no
impediments to (a) the drawdown of funds pursuant to the Credit Agreement, (b)
consummation of the Sale of Customer Notes, (c) consummation of the Notes
Offering, and (d) consummation of the Acquisition.
Section 4.1.4. No Orders. As of the Closing, there shall not be outstanding
any order of any court, administrative agency or governmental body which in any
way restrains or prevents the carrying out of the transactions contemplated by
this Agreement or any of the Collateral Agreements.
Section 4.1.5. Compliance with Securities Laws. The offering and sale of
the Stonington Shares to be issued at the Closing under this Agreement shall
have complied with all requirements of federal and any applicable state
securities, or "blue sky," laws.
Section 4.1.6. Funding. The drawdown of funds pursuant to the Credit
Agreement and consummation of the Sale of
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Customer Notes and the Notes Offering shall be reasonably certain to occur
immediately after the purchase of Shares by Stonington and the Management
Investors.
Section 4.2. Conditions to Holdings' Obligation. Holdings' obligations to
accept payment for and to deliver Stonington Shares at the Closing are subject
to the fulfillment at or prior to the Closing of the following conditions, any
or all of which may be waived by Holdings, in whole or in part, to the extent
permitted by applicable law:
Section 4.2.1. Representations and Warranties. The representations and
warranties of Stonington contained in this Agreement shall be true and correct
in all material respects when made and at and as of the time of the Closing.
Section 4.2.2. Performance. Stonington shall have performed and complied in
all material respects with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at the
Closing.
Section 4.2.3. No Impediments. As of the Closing there shall be no
impediments to (a) the drawdown of funds pursuant to the Credit Agreement, (b)
consummation of the Sale of Customer Notes, (c) consummation of the Notes
Offering, and (d) consummation of the Acquisition.
Section 4.2.4. No Orders. As of the Closing, there shall not be outstanding
any order of any court, administrative agency or governmental body which in any
way restrains or prevents the carrying out of the transactions contemplated by
this Agreement or any of the Collateral Agreements.
Section 4.2.5. Compliance with Securities Laws. The offering and sale of
the Stonington Shares to be issued at the Closing under this Agreement shall
have complied with all requirements of federal and any applicable state
securities, or "blue sky," laws.
Section 4.2.6. Funding. The drawdown of funds pursuant to the Credit
Agreement and consummation of the Sale of Customer Notes and the Notes Offering
shall be reasonably certain to occur immediately after the purchase of Shares by
Stonington and the Management Investors.
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ARTICLE V
Miscellaneous Provisions
Section 5.1. Survival of Representations and Warranties. All covenants,
agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement and delivery of the Stonington Shares
and payment therefor and shall continue in full force and effect. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors of such party; and all covenants, promises and
agreements in this Agreement by or on behalf of Holdings, or by or on behalf of
Stonington, shall bind and inure to the benefit of the successors of such
parties hereto.
Section 5.2. Notices. All notices, statements, instructions or other
documents required to be given hereunder shall be in writing and shall be given
either personally or by mailing the same in a sealed envelope, first-class mail,
postage prepaid and either certified or registered, return receipt requested, or
by telecopy, addressed to Holdings at its principal offices and to the other
parties at their addresses reflected in the stock records of Holdings.
Stonington, by written notice given to Holdings in accordance with this Section
5.2 may change the address to which notices, statements, instructions or other
documents are to be sent. All notices, statements, instructions and other
documents hereunder that are mailed or telecopied shall be deemed to have been
given on the date of mailing or telecopying.
Section 5.3. Further Assurances. The parties hereto shall from time to time
execute and deliver all such further documents and do all acts and things as the
other party may reasonably require to effectively carry out or better evidence
or perfect the full intent and meaning of this Agreement.
Section 5.4. Complete Agreement; Counterparts. This Agreement and the
Collateral Agreements (and the agreements referred to herein and therein)
constitute the entire agreement and supersede all other agreements and
understandings, both written and oral, among the parties or any of them, with
respect to the subject matter hereof. This Agreement may be executed by any one
or more of the parties hereto in any number of counterparts, each of which shall
be deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
Section 5.5. Amendments; No Waiver; Remedies. No amendment or waiver of any
provision of this Agreement, nor any
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consent to any departure by Holdings therefrom, shall in any event be effective
unless the same shall be in writing and signed by Holdings and Stonington and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. No failure on the part of Stonington
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. Holdings may waive its rights under this Agreement with respect to
Stonington at any time, and no such waiver shall operate to waive Holdings'
rights under this Agreement with respect to Stonington. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 5.6. Indemnity. Holdings agrees to indemnify and hold harmless
Stonington, their affiliates, their limited and general partners, and the
directors, officers, employees, agents, representatives, and controlling persons
of the foregoing (each being an "Indemnified Party") from and against any and
all claims, damages, liabilities and expenses (including, without limitation,
fees and disbursements of counsel) which may be incurred by or asserted against
any Indemnified Party in connection with or arising out of any investigation,
litigation, or proceeding related to or arising out of or pertaining to the
purchase of the Stonington Shares or any of the transactions contemplated by
this Agreement and the Collateral Agreements, whether or not the Indemnified
Party is a party thereto, other than any of the foregoing that result solely by
reason of the negligence, willful misconduct or bad faith of Stonington.
Section 5.7. Binding Effect; Governing Law. This Agreement shall be binding
upon and inure to the benefit of Holdings and Stonington and their respective
successors and assigns, except that Holdings shall not have the right to assign
its rights hereunder or any interest herein without the prior written consent of
Stonington. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without regard to the principles of
conflicts of laws.
Section 5.8. Waiver of Jury Trial. Each of Holdings and Stonington hereby
irrevocably waives all right to a trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Agreement or the transactions
contemplated hereby.
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Section 5.9. Costs, Expenses and Taxes. Holdings agrees to pay within 30
days after demand all reasonable out-of-pocket costs and expenses of Stonington
and its affiliates in connection with the preparation, execution, delivery and
administration of this Agreement, and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for Stonington with respect thereto and with respect to
advising Stonington and its affiliates as to their rights and responsibilities
under this Agreement, and all costs and expenses, if any (including reasonable
counsel fees and expenses), in connection with the purchase of the Stonington
Shares. In addition, Holdings shall pay any and all stamp and other taxes
payable or determined to be payable in connection with the execution and
delivery of this Agreement, and the other documents to be delivered hereunder,
and agrees to save Stonington and its affiliates harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes.
Section 5.10. Descriptive Headings, Etc. The headings in this Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Agreement
otherwise requires, (i) words of any gender shall be deemed to include each
other gender; (ii) words using the singular or plural number shall also include
the plural or singular number, respectively; and (iii) references to "hereof,"
"herein," "hereby" and similar terms shall refer to this entire Agreement unless
the context otherwise requires.
Section 5.11. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed on the date first written above.
GGS HOLDINGS INC.
By:___________________________________
Name:
Title:
STONINGTON CAPITAL APPRECIATION
1994 FUND, L.P.
By:___________________________________
Name:
Title:
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