Exhibit 10.13
EXECUTION COPY
CONTRIBUTION
AGREEMENT
THIS CONTRIBUTION AGREEMENT (this
“ Agreement ”) is made as of June 13, 2005, by
and among QubicaAMF Worldwide S.à.R.L., a Société
à Responsabilité Limitée organized under the laws of
Luxembourg (the “ Company ”), Qubica Lux
S.à.R.L., a Société à Responsabilité
Limitée organized under the laws of Luxembourg (“
Qubica ”), and AMF Holdings, Inc., a Delaware
corporation (“ AMF Inc. ”). Qubica and AMF Inc.
are collectively referred to herein as the “ Owners
” and each individually as an “ Owner .”
Except as otherwise indicated herein, capitalized terms used herein
are defined in Section 10 hereof.
WHEREAS, AMF Inc. currently owns,
and will own as of immediately prior to the Closing (as defined in
Section 1D below), all of the outstanding equity
interests of each of AMF Bowling Products International BV, a
company organized under the laws of the Netherlands (“ AMF
BV ”), and AMF Bowling Products, LLC, a Virginia limited
liability company (formerly known as AMF Bowling Products, Inc.)
(“ AMF Products ”).
WHEREAS, Qubica currently owns, and
will own as of immediately prior to the Closing, all of the
outstanding equity interests of Qubica, S.p.A., a Società per
Azioni organized under the laws of Italy (“ Qubica
Products ”).
WHEREAS, AMF Inc. desires to
contribute and transfer to the Company all of the outstanding
equity interests of AMF BV and AMF Products, in exchange for the
Company’s issuance to AMF Inc. of Series 1 Preferred
Equity Certificates of the Company having the rights and
preferences contained in Exhibit A hereto (“ Series
1 PECS ”), Series 1 Convertible Preferred Equity
Certificates of the Company having the rights and preferences
contained in Exhibit B hereto (“ Series 1 CPECS
”), and shares of the Company (“ Shares
”), in each case on the terms and subject to the conditions
contained herein. The outstanding equity interests of AMF BV and
AMF Products are collectively referred to herein as the “
AMF Assets .”
WHEREAS, Qubica desires to
contribute and transfer to the Company all of the outstanding
equity interests of Qubica Products in exchange for the
Company’s issuance to Qubica of Series 2 Preferred Equity
Certificates of the Company having the rights and preferences
contained in Exhibit C hereto (“ Series 2 PECS
” and, together with Series 1 PECS, “ PECS
”), Series 2 Convertible Preferred Equity Certificates of the
Company having the rights and preferences contained in Exhibit
D hereto (“ Series 2 CPECS ” and, together
with Series 1 CPECS, “ CPECS ”) and Shares, in
each case on the terms and subject to the conditions contained
herein. The outstanding equity interests of Qubica Products are
referred to herein as the “ Qubica Assets
.”
WHEREAS, the Company desires to
accept the contribution and transfer of the AMF Assets and the
Qubica Assets (collectively, the “ Contributed Assets
”) by AMF Inc. and Qubica, respectively, on the terms
contained herein.
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NOW THEREFORE, in consideration of
the foregoing, and the mutual covenants stated herein, and other
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Section 1. Authorization, Contribution and
Closing .
A. Authorization of the
Securities . As of the date hereof, the Company has authorized
the issuance to the Owners of an aggregate of 39,100,000 PECS,
257,600 CPECS and 18,400 Shares, on the terms and subject to the
conditions contained herein. Prior to the Closing, each Owner shall
cause the Company to, and the Company shall, take all actions
necessary or advisable to cause the Articles to be amended to
increase the share capital of the Company in a sufficient amount to
consummate the transactions contemplated by Section 1B
below.
B. Contribution and Acceptance of
Contributed Assets and Issuance of Securities .
(a) At the Closing, subject to the
terms and conditions contained herein and the concurrent closing of
the transactions contemplated by clause (b) below,
(i) the Company shall issue to AMF Inc. 19,550,000 Series 1
PECS, 128,800 Series 1 CPECS and 9,200 Shares, (ii) AMF Inc.
shall contribute, transfer and assign to the Company all of its
rights, title and interests in and to the AMF Assets, together with
all documentation, including certificates, books, records,
contracts, commitments, financial statements, minutes of meetings,
and investor and shareholder communications (collectively, “
Documentation ”), related primarily to AMF Products,
AMF BV or any of their respective Subsidiaries or branches, and
(iii) the Company shall accept and assume all of AMF
Inc.’s rights, title, interests and obligations in, to and
under the AMF Assets, together with all Documentation related
primarily thereto.
(b) At the Closing, subject to the
terms and conditions contained herein and the concurrent closing of
the transactions contemplated by clause (a) above,
(i) the Company shall issue to Qubica 19,550,000 Series 2
PECS, 128,800 Series 2 CPECS and 9,200 Shares, (ii) Qubica
shall contribute, transfer and assign to the Company all of its
right, title and interest in and to the Qubica Assets, together
with all Documentation related primarily to Qubica Products or any
of its Subsidiaries, and (iii) the Company shall accept and
assume all of Qubica’s rights, title, interests and
obligations in, to and under the Qubica Assets, together with all
Documentation related primarily thereto.
C. Payment of Expenses and AMF
Indebtedness . At the Closing, the Company shall:
(i) reimburse Qubica (and/or its designee(s)) for all
documented third-party out-of-pocket Transaction Expenses
reasonably incurred by or on behalf of Qubica, Qubica Products or
any Qubica Subsidiary, or any of their respective Affiliates or
other shareholders, on or prior to the date hereof (provided that,
for purposes of this Section 1C , including clause
(iii) below, the 1% stamp duty tax in the amount of 300,000
euro to be incurred by Qubica in connection with its formation and
the contribution of the Qubica Assets to the Company shall be
deemed to have been incurred prior to the date hereof), provided
that the Company’s obligation to Qubica pursuant to this
clause (i) shall in no event exceed $1,750,000;
(ii) reimburse AMF Inc. (and/or its designee(s)) for all
documented third-party out-of-pocket Transaction Expenses
reasonably incurred by or on behalf of AMF Inc., AMF Products or
any AMF Subsidiary, or any of their respective Affiliates or other
shareholders, on or prior to the date hereof, provided that the
Company’s obligation to AMF Inc. pursuant to this clause
(ii) shall in no event exceed $1,750,000; (iii) reimburse
Qubica (and/or its designee(s)) for all documented third-party
out-of-pocket Transaction Expenses reasonably incurred by or on
behalf of Qubica or any of its Affiliates or other shareholders
(excluding any Transaction Expenses incurred by or on behalf of
Qubica Products or any Qubica Subsidiary) after the date hereof;
(iv) reimburse AMF Inc. (and/or its designee(s)) for all
documented third-party out-of-pocket Transaction Expenses
reasonably incurred by or on behalf of AMF Inc. or any of its
Affiliates or other shareholders (excluding any Transaction
Expenses incurred by or on behalf of AMF Products or any AMF
Subsidiary) after the date hereof; and (v) cause each of AMF
Products and AMF BV to pay in full all amounts owed by AMF Products
and AMF BV to AMF Worldwide as of immediately prior to the Closing
under (x) the Demand Promissory Note (the “ Demand
Note ”) issued on the date hereof by AMF Products to AMF
Worldwide in the original principal sum of $3,681,941, a
copy
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of which is attached hereto as Exhibit E
, and (y) the Revolving Demand Promissory Note (the “
Revolving Note ”) issued by AMF Products and AMF BV to
AMF Worldwide on February 28, 2005, a copy of which is
attached hereto as Exhibit F and under which the outstanding
amount as of the opening of business on the date this Agreement is
executed by the parties hereto is $5,893,687.
D. Closing . The closing of
the transactions contemplated by this Agreement (the “
Closing ”) shall take place at the offices of
Kirkland & Ellis LLP, Citigroup Center, 153 E.
53 rd Street, New York, NY 10022,
commencing at 10:00 a.m. on the second business day following the
satisfaction of all conditions to the obligation of each Owner to
consummate the transactions contemplated hereby (other than
conditions with respect to actions that the respective parties will
take at the Closing itself), or at such other place or on such
other date as may be mutually agreed upon by the Owners. The date
of the Closing is referred to herein as the “ Closing
Date .”
E. Net Indebtedness
Adjustment .
(a) Determination of Adjustment
Amounts . As soon as practicable (but in any event within 10
days) following the Closing, the Board shall retain an accounting
firm of internationally recognized standing, who shall not have any
material relationship with AMF or Qubica or any of their respective
Affiliates (the “ Accounting Firm ”), to make a
final determination in accordance with the terms hereof of
(i) the collective Net Indebtedness of AMF Products, AMF BV
and the AMF Subsidiaries (the “ AMF Net Indebtedness
”) and (ii) the collective Net Indebtedness of Qubica
Products and the Qubica Subsidiaries (provided that, for purposes
of this calculation, only 51% of the Net Indebtedness of Nextia
shall be included) (the “ Qubica Net Indebtedness
”), in each case as of the opening of business on the date
this Agreement is executed by the parties hereto (each such amount,
an “ Adjustment Amount ” and, collectively, the
“ Adjustment Amounts ”); provided ,
however , if the Board is unable to agree on the selection
of an Accounting Firm within such period, the AMF Managers (as
defined in the JV Agreement) and the Qubica Managers (as defined in
the JV Agreement) shall each select within 10 days after the
expiration of such period one (1) such accounting firm, and
the two accounting firms shall jointly select a third accounting
firm, which shall serve as the Accounting Firm for the purposes of
this Section 1E ; provided , further ,
that if either the AMF Managers or the Qubica Managers fail to
select one (1) such accounting firm within such 10 day period,
the accounting firm selected by the other shall serve as the
Accounting Firm for the purposes of this Section 1E .
The Board shall request that the Accounting Firm render a
determination as to each Adjustment Amount within 30 days after its
retention (or as soon as practicable thereafter), and each of AMF
Inc., Qubica and the Company shall (and the Company shall cause its
Subsidiaries to) fully cooperate with the Accounting Firm during
the term of its engagement so as to enable it to make its
determination as quickly and as accurately as practicable. The
Adjustment Amounts shall become final and binding on the Company
and each Owner on the date the Accounting Firm delivers its final
determination in writing to the Board. The fees and expenses of the
Accounting Firm shall be borne by the Company.
(b) Net Indebtedness
Adjustments .
(i) If the amount of the AMF Net
Indebtedness is less than the AMF Target Net Indebtedness, the
Company shall, for purposes of Section 1E(c) below, owe
to AMF Inc. an amount equal to such shortfall (the “ AMF
Net Indebtedness Shortfall Amount ”). If the amount of
the Qubica Net Indebtedness is less than the Qubica Target Net
Indebtedness, the Company shall, for purposes of
Section 1E(c) below, owe to Qubica an amount equal to
such shortfall (the “ Qubica Net Indebtedness Shortfall
Amount ”).
(ii) If the amount of the AMF Net
Indebtedness is greater than the AMF Target Net Indebtedness, the
Company shall, for purposes of Section 1E(c) below, owe
to Qubica an
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amount equal to such excess (the
“ AMF Net Indebtedness Excess Amount ”). If the
amount of the Qubica Net Indebtedness is greater than the Qubica
Target Net Indebtedness, the Company shall, for purposes of
Section 1E(c) below, owe to AMF Inc. an amount equal to
such excess (the “ Qubica Net Indebtedness Excess
Amount ”).
(c) Payment . The sum of the
Qubica Net Indebtedness Shortfall Amount, if any, and the AMF Net
Indebtedness Excess Amount, if any, shall be referred to herein as
the “ AMF Shortfall Amount .” The sum of the AMF
Net Indebtedness Shortfall Amount, if any, and the Qubica Net
Indebtedness Excess Amount, if any, shall be referred to herein as
the “ Qubica Shortfall Amount .” Notwithstanding
any implication herein to the contrary:
(i) in the event that the aggregate
amount owed by the Company to AMF Inc. pursuant to
Section 1E(b) above (i.e., the Qubica Shortfall Amount)
exceeds the amount owed by the Company to Qubica pursuant to such
sections (i.e., the AMF Shortfall Amount), the Company shall,
within 5 days after the Adjustment Amounts are finally determined
pursuant to Section 1E(a) above, pay to AMF Inc., by
wire transfer of immediately available funds to an account
designated by AMF Inc., an amount equal to the Qubica Shortfall
Amount minus the AMF Shortfall Amount, which payment shall be
treated as an adjustment to and return of a portion of the AMF
Assets; or
(ii) in the event that the aggregate
amount owed by the Company to Qubica pursuant to
Section 1E(b) above (i.e., the AMF Shortfall Amount)
exceeds the amount owed by the Company to AMF Inc. pursuant to such
sections (i.e., the Qubica Shortfall Amount), the Company shall,
within 5 days after the Adjustment Amounts are finally determined
pursuant to Section 1E(a) above, pay to Qubica, by wire
transfer of immediately available funds to an account designated by
Qubica, an amount equal to the AMF Shortfall Amount minus the
Qubica Shortfall Amount, which payment shall be treated as an
adjustment to the Qubica Assets.
Section 2. Conditions of each Owner’s
Obligation at the Closing . The obligation of each Owner to
contribute the portion of the Contributed Assets to be contributed
by it pursuant to Section 1B is subject to the
satisfaction as of the Closing of the following
conditions:
A. Compliance with Applicable
Laws . The contribution of the Contributed Assets and
acquisition of Securities hereunder by such Owner shall not be
prohibited by any applicable law or governmental regulation, shall
not subject such Owner to any material penalty or liability under
or pursuant to any applicable law or governmental regulation, and
shall be permitted by the laws and regulations of the jurisdictions
to which such Owner is subject.
B. Judgments, Decrees and
Orders . No judgment, decree or order shall have been issued
preventing the performance of this Agreement or the consummation of
any of the transactions contemplated hereby or declaring unlawful
the transactions contemplated by this Agreement.
C. Governmental Consents and
Approvals . All governmental filings, consents, authorizations
and approvals, if any, set forth on the Governmental Consents
Schedule attached hereto shall have been made and
obtained.
D. Debt Financing . The
Company shall have secured a credit facility or facilities (the
“ Credit Facility ”) from one or more third
party lenders, contingent only on the closing of the transactions
contemplated by this Agreement, providing for available financing
of at least $32,000,000 (or, to the extent any portion of such
financing is denominated in a currency other than U.S. Dollars, the
equivalent thereof); provided that such minimum amount shall
be reduced by the aggregate amount of the collective Indebtedness
of Qubica Products and the Qubica Subsidiaries (provided that, for
purposes of this
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calculation, only 51% of the Indebtedness of
Nextia shall be included) and the aggregate amount of the
collective Indebtedness of AMF Products, AMF BV and the AMF
Subsidiaries, in each case to the extent such Indebtedness is not
repaid as of the Closing and is not required to be repaid hereunder
or under the terms of such Indebtedness as a result of the
Closing.
E. Waiver . Any condition
specified in this Section 2 may be waived with respect
to an Owner only if such waiver is set forth in a writing executed
by such Owner.
Section 3. Covenants .
A. Financial Statements and Other
Information . From and after the Closing, the Company shall
deliver to each Owner (so long as such Owner holds any
Securities):
(a) as soon as available but in any
event within 30 days after the end of each monthly accounting
period in each fiscal year, unaudited consolidating and
consolidated statements of income and cash flows of the Company and
its Subsidiaries for such monthly period and for the period from
the beginning of the fiscal year to the end of such monthly period,
and consolidating and consolidated balance sheets of the Company
and its Subsidiaries as of the end of such monthly period, all
prepared in accordance with US GAAP, subject to the absence of
footnote disclosures and to normal year-end adjustments;
(b) accompanying the financial
statements referred to in Section 3A(a) above,
(i) a monthly reporting package for the Company and its
Subsidiaries similar to that which AMF Products and its
Subsidiaries provided on a monthly basis to AMF Worldwide prior to
the date hereof, (ii) a copy of any such or similar reporting
package received by the Company from its Subsidiaries after the
date hereof and (iii) an Officer’s Certificate stating
that neither the Company nor any of its Subsidiaries is in default
under any of its material agreements or, if any such default
exists, specifying the nature and period of existence thereof and
what actions the Company and its Subsidiaries have taken and
propose to take with respect thereto;
(c) within 90 days after the end of
each fiscal year of the Company, (i) consolidating and
consolidated statements of income and cash flows of the Company and
its Subsidiaries for such fiscal year, and consolidating and
consolidated balance sheets of the Company and its Subsidiaries as
of the end of such fiscal year, setting forth in each case
comparisons to the annual budget and to the preceding fiscal year,
all prepared in accordance with US GAAP, and
(ii) consolidating and consolidated statements of income and
cash flows of the Company and its Subsidiaries for such fiscal
year, and consolidating and consolidated balance sheets of the
Company and its Subsidiaries as of the end of such fiscal year,
setting forth in each case comparisons to the annual budget and to
the preceding fiscal year, all prepared in accordance with IAS, and
for each of clauses (i) and (ii), accompanied by (A) with
respect to the consolidated portions of such statements (except
with respect to budget data and specifically excluding any
consolidating schedules used to prepare such consolidated
statements), an opinion containing no exceptions or qualifications
(except for qualifications regarding specified contingent
liabilities) of the Company’s independent accounting firm,
and (B) a copy of such accounting firm’s annual
management letter to the Board;
(d) promptly upon receipt thereof,
any additional reports, management letters or other detailed
information concerning significant aspects of the operations or
financial affairs of the Company and its Subsidiaries given to the
Company by its independent accountants (and not otherwise contained
in other materials provided hereunder);
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(e) at least 30 days prior to the
beginning of each fiscal year, an annual budget prepared on a
monthly basis for the Company and its Subsidiaries for such fiscal
year (displaying anticipated statements of income and cash flows),
and promptly upon preparation thereof any other significant budgets
or strategic plans prepared by the Company and any revisions of
such annual or other budgets, and within 30 days after any monthly
period in which there is a material adverse deviation from the
annual budget, an Officer’s Certificate explaining the
deviation and what actions the Company has taken and proposes to
take with respect thereto;
(f) promptly (but in any event
within five business days) after:
(i) the discovery or receipt of
notice of any default under any agreement to which the Company or
any of its Subsidiaries is a party that is reasonably likely to
have a Material Adverse Effect;
(ii) any litigation, action,
investigation or proceeding is commenced, or to the knowledge of
the Company or any Subsidiary, is threatened to be, or has a
reasonable likelihood of being (based on the existence of any
material dispute with any Person or otherwise), commenced and that
is, or any pending litigation, action, investigation or proceeding
that becomes, reasonably likely to (A) have a material adverse
effect on the ability of the Company or any Subsidiary to perform
its material obligations under its agreements, (B) have a
Material Adverse Effect or (C) constitute or result in a
material breach of any representation, warranty, covenant or
agreement set forth in any agreement to which the Company or any
Subsidiary is a party;
(iii) any material casualty, damage,
destruction, loss or forfeiture (whether or not covered by
insurance and whether or not in the ordinary course of business or
consistent with past practice) having a Material Adverse
Effect;
(iv) any change in the conduct of
the business of the Company or any Subsidiary, or any change in the
manner in which the Company or any Subsidiary markets, produces,
distributes or sells its products or services that has had or may
reasonably be expected to have a Material Adverse
Effect;
(v) any material change in any
accounting procedures, practices or the basis of accounting of the
Company or any Subsidiary; or
(vi) any other transaction, event or
circumstance affecting the Company or any Subsidiary reasonably
likely to have a Material Adverse Effect (including any material
alteration or change in the business plan or strategy of the
Company or any Subsidiary);
an Officer’s Certificate specifying the
nature and period of existence thereof and what actions the Company
and its Subsidiaries have taken and propose to take with respect
thereto, and, to the extent applicable, until such matter(s) are
finally resolved, subsequent Officer’s Certificates shall be
delivered at the end of every 90-day period beginning after the
initial Officer’s Certificate is required to be delivered
under this Section 3A(f) specifying the current status
of such matter(s);
(g) within 10 days after
transmission thereof, copies of all financial statements, proxy
statements, reports and any other general written communications
that the Company sends to its shareholders and copies of all
registration statements and all regular, special or periodic
reports that it files, or any of its officers or managers file with
respect to the Company and its Subsidiaries, with any governmental
authority (including, without limitation, the Securities and
Exchange Commission) or with any securities exchange on which any
of the Company’s Shares are then listed, and copies of all
press
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releases and other statements made
available generally by the Company to the public concerning
material developments in the Company’s and its
Subsidiaries’ businesses;
(h) on a quarterly basis, a
Financial Statement Certificate executed by the chief executive
officer, chief financial officer and the controller of the Company
in form and substance substantially similar to Exhibit G
attached hereto;
(i) at the same time as provided to
the lenders under the Credit Facility, copies of all correspondence
and documents provided to the lenders thereunder; and
(j) with reasonable promptness, such
other information and financial data concerning the Company and its
Subsidiaries as any Person entitled to receive information under
this Section 3A may reasonably request (including,
without limitation, such information and cooperation necessary for
such Person and/or its Affiliates, in its reasonable discretion, to
complete all external securities filings and any reviews and audits
in connection therewith).
Each of the financial statements referred to in
subsections (a) and (c) shall be true and correct in all
material respects as of the dates and for the periods stated
therein, subject in the case of the unaudited financial statements
to changes resulting from normal year-end audit adjustments (none
of which would, alone or in the aggregate, be materially adverse to
the financial condition, operating results, assets, operations or
business prospects of the Company and its Subsidiaries taken as a
whole).
B. Compliance with Applicable
Laws . So long as any Owner holds any Securities, the Company
shall, and shall cause each Subsidiary to, comply in all material
respects with all applicable laws, rules and regulations of all
governmental authorities, and pay and discharge when payable all
Taxes (except to the extent the same are being contested in good
faith and adequate reserves therefor have been
established).
C. Current Public Information
. At all times after the Company (or its successor) has filed a
registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the
Securities Exchange Act (or any similar statement pursuant to the
requirements of equivalent rules and regulations in any other
applicable jurisdiction), the Company (or its successor) shall file
all reports required to be filed by it under the Securities Act and
the Securities Exchange Act and the rules and regulations adopted
by the Securities and Exchange Commission thereunder (or equivalent
rules and regulations adopted by an equivalent governing body in
any other applicable jurisdiction) and shall take such further
action as any holder or holders of Securities may reasonably
request, all to the extent required to enable such holders to sell
Securities pursuant to (a) Rule 144 adopted by the Securities
and Exchange Commission under the Securities Act (as such rule may
be amended from time to time) or any similar rule or regulation
hereafter adopted by the Securities and Exchange Commission (or
pursuant to any other rules and regulations in any other applicable
jurisdiction providing for a similar method of disposition) or
(b) a registration statement on Form S-2 or S-3 or any similar
registration form hereafter adopted by the Securities and Exchange
Commission (or equivalent form adopted pursuant to rules,
regulations or governing bodies in any other applicable
jurisdiction). Upon request, the Company (or its successor) shall
deliver to any holder of Securities a written statement as to
whether it has complied with any such applicable
requirements.
D. Public Disclosures .
Neither the Company nor any Owner shall, nor shall the Company
permit any Subsidiary to, disclose the name or identity of any
Owner, or any Affiliate of any Owner, as an investor in the Company
in any press release or other public announcement (it being agreed
that internal confidential communications with such Person’s
investors shall not be considered a public announcement) or in any
document or material filed with any governmental entity, without
the prior written consent of
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such Owner, unless such disclosure is required
by applicable law or governmental regulations or by order of a
court of competent jurisdiction, in which case prior to making such
disclosure the disclosing party shall give written notice to such
Owner describing in reasonable detail the proposed content of such
disclosure and shall permit such Owner to review and comment upon
the form and substance of such disclosure.
E. Compliance with
Hart-Scott-Rodino and Other Competition Laws . In connection
with any transaction in which the Company or any of its
Subsidiaries is involved (a “ Transaction ”)
that is required to be reported under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended from time to time
(the “ HSR Act ”) and/or under the competition
laws of any other jurisdiction, the Company shall prepare and file
all documents that may be required to comply with the HSR Act
and/or with such other competition laws, and shall promptly furnish
all materials thereafter requested by any of the regulatory
agencies having jurisdiction over such Transaction, in connection
with such Transaction. The Company shall take all reasonable
actions and shall file and use reasonable best efforts to have
declared effective or approved all documents and notifications with
any governmental or regulatory bodies, as may be necessary or may
reasonably be requested under any applicable competition laws for
the consummation of the Transaction. Notwithstanding the foregoing,
if any Owner, rather than the Company, is required to make a filing
under the HSR Act and/or the competition laws of any other
jurisdiction in connection with a Transaction, the Company will
provide to such Owner all necessary information for such filing,
will execute any documents required in connection with such filing,
will facilitate such filing and will pay all fees and expenses
associated with such filing.
Section 4. Representations and Warranties
Regarding the Company . As a material inducement to each Owner
to enter into this Agreement and contribute its portion of the
Contributed Assets, each Owner, severally and not jointly, hereby
represents and warrants to the other Owner that to such
Owner’s knowledge:
A. Organization and Corporate
Power . The Company is a Société à
Responsabilité Limitée duly organized under the laws of
Luxembourg, validly existing and in good standing under the laws of
Luxembourg. The Company has all requisite organizational power and
authority and all material licenses, permits and authorizations
necessary to carry out the transactions contemplated by this
Agreement.
B. Securities and Related
Matters .
(a) As of the Closing and
immediately thereafter, the outstanding share capital of the
Company will consist of 18,400 Shares, entirely subscribed and paid
up and held by the shareholders as set forth in
Section 1B hereof. In addition, the Company will be the
owner of PECS and CPECS, and the holders of such PECS and CPECS
will be as set forth in Section 1B hereof. As of the
Closing, the Company will not be subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or
retire any of its Securities or any warrants, options or other
rights to acquire any of its Securities, except pursuant to this
Agreement, the JV Agreement, the Articles or the terms and
conditions of the PECS and CPECS as contained in Exhibits A
, B , C and D attached hereto. As of the
Closing, all of the Company’s outstanding Shares shall be
validly issued and fully paid.
(b) There are no statutory or
contractual preemptive rights or rights of refusal with respect to
the issuance of the Securities hereunder, except as expressly
contemplated in the JV Agreement or as provided or contemplated
herein. Based in part on the investment representations of the
Owners in Section 6F hereof, the Company has not
violated any applicable securities laws in connection with the
offer, sale or issuance of any of the Securities, and the offer,
sale and issuance of the Securities hereunder do not and will not
require registration under any applicable securities laws. There
are no agreements between the Company’s securityholders with
respect to the voting or transfer of the Company’s
Securities
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or with respect to any other aspect
of the Company’s affairs, except for the JV Agreement, the
Articles and the Shareholders Agreement.
C. Authorization; Valid and
Binding Agreements . The execution, delivery and performance of
this Agreement, the JV Agreement, the Articles, the Supply
Agreement, the Interim Distributorship Agreement, the Interim
Supply Agreement, the Services Agreement, the Reverse Services
Agreement, the Management Agreements, the CEO Employment Agreement,
the Shareholders Agreement, the Trademark Agreement, the Plant
Lease, the Bell Creek Lease, the UK Services Agreement, the UK
Pension Cost Allocation Agreement and the Affiliated Party
Undertakings and Agreements (collectively, the “
Transaction Documents ”) and all other agreements
contemplated hereby to which the Company is a party have been duly
authorized by the Company. The Transaction Documents and all other
agreements contemplated hereby each constitutes a valid and binding
obligation of the Company, enforceable in accordance with its
terms.
D. Conduct of Business;
Liabilities . Other than in connection with the negotiation,
execution and delivery of the Transaction Documents and all other
agreements contemplated hereby and thereby, the Company has not
(i) conducted any business, (ii) incurred any expenses,
obligations or liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to the Company and
whether due or to become due and regardless of when asserted),
(iii) owned any assets including any interests in any other
Person, (iv) entered into any contracts or agreements, or
(v) violated any laws or governmental rules or
regulations.
E. Governmental Consents,
etc. Except as set forth on the Governmental Consents
Schedule , no permit, consent, approval or authorization of, or
declaration to or filing with, any governmental authority is
required in connection with the execution, delivery and performance
by the Company of the Transaction Documents or the other agreements
contemplated hereby, or the consummation by the Company of any
other transactions contemplated hereby or thereby.
F. Disclosure . Neither this
Agreement nor any of the schedules, attachments, written
statements, documents, certificates or other items prepared or
supplied to the Owners by or on behalf of the Company with respect
to the transactions contemplated hereby contain any untrue
statement of a material fact or omit a material fact necessary to
make each statement contained herein or therein not misleading.
There is no fact which the Company has not disclosed to the Owners
in writing and of which any of its officers, managers or executive
employees is aware and which has had or might reasonably be
anticipated to have a material adverse effect upon the existing or
expected financial condition, operating results, assets, customer
or supplier relations, employee relations or business prospects of
the Company.
G. Closing Date . The
representations and warranties regarding the Company contained in
this Section 4 and elsewhere in this Agreement and all
information contained in any exhibit, schedule or attachment hereto
or in any writing delivered by, or on behalf of, the Company to the
Owners will be true and correct in all material respects on the
Closing Date as though then made.
Section 5. Representations and Warranties
Regarding the Owners and the Contributed Assets . As a material
inducement to the other Owner to enter into this Agreement and
contribute its portion of the Contributed Assets, each Owner,
severally and not jointly, hereby represents and warrants to the
other Owner that, except as otherwise expressly contemplated by the
Transaction Documents:
A. Organization and Power .
Such Owner is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, has full
organizational power to enter into the Transaction Documents and
the other agreements contemplated hereby to which such Owner is a
party and to perform such Owner’s obligations hereunder and
thereunder.
9
B. Authorization. The
execution, delivery and performance by such Owner of this Agreement
and the other agreements contemplated hereby to which such Owner is
a party and the consummation of the transactions contemplated
hereby and thereby are within the powers and authority of such
Owner, have been duly authorized by all necessary corporate (or
equivalent) action on the part of such Owner.
C. Valid and Binding
Agreements . This Agreement, and each of the other agreements
contemplated hereby to which such Owner is a party, has been duly
executed and delivered by such Owner, and this Agreement
constitutes, and the other agreements contemplated hereby to which
such Owner is a party, when executed and delivered by such Owner in
accordance with the terms thereof shall each constitute, a valid
and binding obligation of such Owner, enforceable in accordance
with its terms, subject to the effect of bankruptcy or other
similar laws and to general principles of equity (whether
considered in proceedings at law or in equity).
D. No Violation . Except as
set forth on the Governmental Consents Schedule , the
execution, delivery and performance by such Owner of this Agreement
and the other agreements contemplated hereby to which such Owner is
a party, the contribution of such Owner’s portion of the
Contributed Assets to the Company, and the fulfillment of and
compliance with the respective terms hereof and thereof by such
Owner, do not and will not (i) conflict with or result in a
breach of the terms, conditions or provisions of,
(ii) constitute a default under, (iii) result in the
creation of any Lien upon such Owner’s portion of the
Contributed Assets pursuant to, (iv) give rise to any right of
termination, cancellation or acceleration of any right or
obligation of such Owner or any of its Subsidiaries or to the loss
of any benefit to which such Owner or any of its Subsidiaries is
entitled under, (v) result in a violation of, or
(vi) require any authorization, consent, approval, exemption
or other action by or notice to any court or administrative or
governmental body pursuant to, the certificate of incorporation or
bylaws (or equivalent governing documents) of such Owner or any of
its Subsidiaries, any material law, statute, rule, regulation,
order, judgment or decree to which such Owner or any of its
Subsidiaries is subject, or any material agreement or instrument to
which such Owner or any of its Subsidiaries is a party or by which
such Owner or any of its Subsidiaries is bound.
E. Contributed Assets
.
(a) In the case of AMF
Inc.:
(i) Such Owner is the record and
beneficial owner of all of the outstanding equity interests of each
of AMF Products and AMF BV;
(ii) Such Owner is not a party to
any option, warrant, right, contract, call, put or other agreement
or commitment providing for the acquisition or disposition of any
equity interests of AMF Products or AMF BV (other than this
Agreement), nor is such Owner a party to any voting trust, proxy or
other agreement or understanding with respect to the voting of any
equity interests of AMF Products or AMF BV;
(iii) On the Closing Date, such
Owner will transfer to the Company good and marketable title to all
of the outstanding equity interests of each of AMF Products and AMF
BV, free and clear of all Liens, other than those imposed under the
CSFB Credit Agreement, all of which Liens will be released as of
the Closing, and other than those imposed by applicable securities
laws;
(iv) AMF Products and/or AMF BV is
the record and beneficial owner of all of the outstanding equity
interests of each of (A) AMF Bowling India Private Limited, a
company organized under the laws of India, (B) AMF Bowling
Poland Sp.zo.o, a company organized under the
10
laws of Poland, (C) AMF Bowling
Products, LLC, a company organized under the laws of Russia and
(D) AMF Bowling Products Mexico, S. de R.L. de C.V., a company
organized under the laws of Mexico, in each case free and clear of
all Liens (other than those imposed under the CSFB Credit
Agreement, all of which Liens will be released as of the Closing),
except for Permitted Liens and liens imposed by applicable
law;
(v) None of AMF Products, AMF BV or
any of the Subsidiaries referenced in clause (iv) above
(collectively, the “ AMF Subsidiaries ”) owns or
controls (directly or indirectly), or holds or has any rights or
options to subscribe for, purchase or acquire, any shares of stock,
partnership interest, joint venture interest, equity participation
or any other security or interest in any other Person;
(vi) AMF Products, AMF BV and each
AMF Subsidiary has all authorizations, licenses and permits
necessary to own and operate its properties and to carry on its
business as now conducted, except where the failure to hold such
authorizations, licenses and permits would not have a Material
Adverse Effect;
(vii) AMF Products, AMF BV or an AMF
Subsidiary has good and marketable title to, free and clear of all
Liens (other than those imposed under the CSFB Credit Agreement,
all of which Liens will be released as of the Closing, and other
than Permitted Liens), or a valid leasehold interest in, or a
license to use pursuant to a valid and enforceable written
agreement, the properties and assets, tangible or intangible, used
by it or located on its premises, except for inventory disposed of
in the ordinary course of business. As of the Closing, AMF
Products, AMF BV and the AMF Subsidiaries will collectively own, or
have a valid leasehold interest in, or a valid license to use, all
the assets and rights necessary for the conduct of their businesses
as presently conducted and as proposed to be conducted;
(viii) Other than in connection with
the negotiation, execution and delivery of the Transaction
Documents and all other agreements contemplated hereby and thereby
(including, without limitation, certain internal restructuring
transactions such as the distribution of AMF UK by AMF Products to
AMF Inc. and the assignment of the assets and liabilities of the
billiards business from AMF Products to AMF Billiards &
Games LLC), since November 28, 2004, each of AMF Products, AMF
BV and the AMF Subsidiaries has (i) conducted its business and
operations only in the ordinary course of business consistent with
past practice (including, without limitation, with respect to the
incurrence of Indebtedness, the collection of accounts receivable
and the payment of accounts payable), (ii) not declared or
made any dividends or distributions of cash, stock, property or
assets with respect to any of its capital stock, or redeemed,
retired, repurchased or otherwise acquired, directly or indirectly,
any of its capital stock and (iii) not increased in any
material respect the compensation (including, but not limited to,
base salary, bonus and perquisites or pursuant to any severance or
retirement plans or policies) or benefits of, or entered into any
(or amended any existing) deferred compensation, severance,
retirement or other similar agreement with, any officer, director,
manager, employee or consultant.
(ix) The AMF Intellectual
Property Schedule contains a complete and accurate list of all
(i) patented or registered Intellectual Property Rights owned
or held by AMF Products, AMF BV or an AMF Subsidiary,
(ii) pending patent applications and applications, including
any intent-to-use, provisional, or other applications, or other
applications for registration of Intellectual Property Rights filed
by or on behalf of AMF Products, AMF BV or an AMF Subsidiary and
(iii) any unregistered Intellectual Property Rights that are
material to the conduct of AMF Products’, AMF BV’s or
any AMF Subsidiary’s respective businesses as presently
conducted, or as presently planned to be conducted, including any
such Intellectual Property Rights as are embodied or used in any
past, current or planned products. AMF Products, AMF BV or an AMF
Subsidiary owns and possesses all right, title and interest to the
Intellectual Property Rights set forth on the AMF Intellectual
Property Schedule . Except as set
11
forth on the AMF Intellectual
Property Schedule , AMF Products, AMF BV or an AMF Subsidiary
owns and possesses, free and clear of all Liens (other than those
imposed under the CSFB Credit Agreement, all of which Liens will be
released as of the Closing, and other than Permitted Liens), all
right, title and interest to, or has a license to use pursuant to a
valid and enforceable written agreement listed on the AMF
Intellectual Property Schedule , all Intellectual Property
Rights used in or necessary for the operation of their respective
businesses as presently conducted and as proposed to be conducted.
Except as set forth on the AMF Intellectual Property
Schedule , AMF Products, AMF BV or an AMF Subsidiary owns and
possesses all right, title and interest in and to all Intellectual
Property Rights created or developed by AMF Products’, AMF
BV’s and the AMF Subsidiaries’ employees and
independent contractors, or otherwise under the direction or
supervision of AMF Products’, AMF BV’s and the AMF
Subsidiaries’ employees or independent contractors, relating
to AMF Products’, AMF BV’s or the AMF
Subsidiaries’ (as applicable) business or to the actual or
demonstratively anticipated research or development conducted by or
for AMF Products, AMF BV or an AMF Subsidiary. Except as set forth
on the AMF Intellectual Property Schedule , none of the
Owners nor any Affiliate of any Owner (other than AMF Products, AMF
BV or an AMF Subsidiary) owns or holds any Intellectual Property
Rights that are embodied or used in AMF Products’, AMF
BV’s or the AMF Subsidiaries’ respective businesses or
products. Except as set forth on the AMF Intellectual Property
Schedule , no loss, cancellation or expiration of any
Intellectual Property Right owned or used by AMF Products, AMF BV
or an AMF Subsidiary is threatened, pending or reasonably
foreseeable;
(x) Except as set forth on the
AMF Intellectual Property Schedule , (i) there have
been no claims, suits, arbitrations, mediations, or other
adversarial or ex parte proceeding made, threatened or initiated
before any governmental authority or in any jurisdiction against
AMF Products, AMF BV or any AMF Subsidiary or against such Owner
asserting the invalidity, misuse or unenforceability of any of the
Intellectual Property Rights owned or used by AMF Products, AMF BV
or any AMF Subsidiary, (ii) none of AMF Products, AMF BV, the
AMF Subsidiaries and such Owner has received any notices of, and
there are no facts that indicate a likelihood of, any infringement
or misappropriation by, or conflict with, any third party with
respect to any Intellectual Property Rights (including any demand
or request that AMF Products, AMF BV or any AMF Subsidiary license
any rights from a third party, or identifying any third party
Intellectual Property Rights in relation to one or more products or
services), (iii) the conduct of the AMF Products’, AMF
BV’s or the AMF Subsidiaries’ businesses has not
infringed, misappropriated or conflicted with, and the continued
conduct of AMF Products’, AMF BV’s or the AMF
Subsidiaries’ businesses will not infringe, misappropriate or
conflict with, any Intellectual Property Rights of any other
Person, and (iv) the Intellectual Property Rights owned by or
licensed to AMF Products, AMF BV and the AMF Subsidiaries have not
been infringed, misappropriated or conflicted by any other Person.
Except as disclosed on the AMF Third Party Consents Schedule
, the execution of the Transaction Documents will not have a
material adverse effect on AMF Products’, AMF BV’s or
the AMF Subsidiaries’ right, title or interest in and to the
Intellectual Property Rights owned, held or used by AMF Products,
AMF BV or any AMF Subsidiary and all of such Intellectual Property
Rights used by AMF Products, AMF BV or any AMF Subsidiary shall be
owned or available for use from a Person other than any Owner or
any of their Affiliates by AMF Products, AMF BV and the AMF
Subsidiaries immediately after the Closing on terms and conditions
identical to those under which they were owned or available for use
immediately before the Closing;
(xi) Except for source code escrow
provisions (each of which has been provided to Qubica), only the
executable code relating to any of the Software on the AMF
Intellectual Property Schedule (“ AMF Software
”) has been disclosed to any third party and no third party
has asserted any right to access any source code for any of the AMF
Software;
(xii) AMF Products, AMF BV and the
AMF Subsidiaries have not and do not use or incorporate into any
AMF Software, including without limitation, any third-party
software or
12
software components embedded,
integrated, bundled with or otherwise distributed with the AMF
Software, any software that requires as a condition of use
(including, but not limited to, pursuant to GNU General Public
License), modification and/or distribution of such software that
other software incorporated into, derived from or distributed with
such software be (i) disclosed or distributed in source code
form; (ii) licensed for the purpose of making derivative
works; or (iii) redistributable at no charge;
(xiii) There are no known defects in
any of the AMF Software that would prevent the AMF Software from
performing substantially in accordance with its published user
documentation or specifications. AMF Products, AMF BV and the AMF
Subsidiaries use current industry standard tools and methods to
ensure that there are no viruses, worms, Trojan horses or similar
programs in any of the AMF Software;
(xiv) Except as set forth on the
AMF Intellectual Property Schedule , AMF Products, AMF BV
and the AMF Subsidiaries have entered into written agreements with
each of their current and former employees and agents engaged in
computer programming, research or development, and with all
independent contractors AMF Products, AMF BV and the AMF
Subsidiaries have engaged in computer programming, research or
development providing in each case for the protection of
confidential information relating to their business, and for the
assignment to AMF Products, AMF BV or the applicable AMF Subsidiary
of all works of authorship, inventions, improvements, and
discoveries created or developed by such employees, agents and
independent contractors within the scope of their employment or
agency or pursuant to the applicable contractor
agreement;
(xv) Except as contemplated by this
Agreement, the JV Agreement or any of the Transaction Documents and
except as set forth on the AMF Affiliated Transactions
Schedule , (A) no officer, director, employee, shareholder
or Affiliate (nor any officer, director, employee or shareholder of
any such Affiliate) of AMF Products, AMF BV or any of the AMF
Subsidiaries or any individual related by blood, marriage or
adoption to any such individual or any entity in which any such
Person or individual owns any beneficial interest, is a party to
any agreement, contract, commitment or transaction with AMF
Products, AMF BV or any of the AMF Subsidiaries or has any
interests in any property used by AMF Products, AMF BV or any of
the AMF Subsidiaries and (B) any such agreement, contract,
commitment, transaction or otherwise is terminable at will by AMF
Inc. or an AMF Subsidiary, as the case may be; and
(xvi) There are no claims against
the Company, AMF Products, AMF BV or any of the AMF Subsidiaries
for brokerage commissions, finders’ fees or similar
compensation in connection with the transactions contemplated by
this Agreement or any of the other agreements contemplated hereby
based on any arrangement or agreement made by or on behalf of such
Owner or any of its Affiliates.
(b) In the case of
Qubica:
(i) Such Owner is the record and
beneficial owner of all of the outstanding equity interests of
Qubica Products;
(ii) Such Owner is not a party to
any option, warrant, right, contract, call, put or other agreement
or commitment providing for the acquisition or disposition of any
equity interests of Qubica Products (other than this Agreement),
nor is such
