CONTRIBUTION AGREEMENT

 

 

 

 

 

CONTRIBUTION AGREEMENT

 

DATED AS OF JANUARY 31, 2006

 

among

 

HERCULES INCORPORATED,

WSP, INC.,

SPG/FV INVESTOR LLC

and

FIBERVISIONS DELAWARE CORPORATION

 

 

 

 

Table of Contents

 

 

 

 

Exhibits and Schedules

Exhibit ACertificate of Incorporation

Exhibit BStockholders Agreement

Exhibit COption Agreement

Exhibit DTransition Services Agreement

Exhibit ECommitment Letters

Exhibit FForm of Employee Lease Agreement

 

Schedule 1.1Hercules’ Knowledge

Schedule 1.2Permitted Encumbrances

Schedule 1.3Subsidiaries

Schedule 2.3(b)(i)Net Working Capital

Schedule 2.3(b)(ii)Adjusted EBITDA

Schedule 3.2Noncontravention

Schedule 3.3Stockholders’ Brokers

Schedule 3.4Equity Investments

Schedule 3.5Financial Statements

Schedule 3.6(a)Material Adverse Effect

Schedule 3.6(d)Material Transactions or Commitments Not in Ordinary Course

Schedule 3.6(e)Transfer or Mortgage of Non-Current Assets

Schedule 3.6(g)Capital Expenditures

Schedule 3.6(h)Discharge of Encumbrances

Schedule 3.6(i)Transfer of Intellectual Property Rights

Schedule 3.6(j)(i)Principal Officers

Schedule 3.6(j)(ii)Resignations

Schedule 3.6(k)Loans or Guarantees to Officers, Directors, etc.

Schedule 3.6(t)Material Changes in Customer Terms

Schedule 3.7Undisclosed Liabilities

Schedule 3.10(a)Owned Real Property

Schedule 3.10(b)Leased Real Property

Schedule 3.10(c)Other Real Property

Schedule 3.10(f)Material Written Notice

Schedule 3.11(a)(i)Registered Intellectual Property

Schedule 3.11(a)(ii)Intellectual Property Licenses

Schedule 3.11(b)Royalties; License Fees

Schedule 3.11(c)Employee Intellectual Property Rights

Schedule 3.11(d)Unregistered Intellectual Property Rights

Schedule 3.11(e)(i)Certain Intellectual Property Registrations

Schedule 3.11(e)(ii)Pursuit of Registrations

Schedule 3.12(a)Capitalization

Schedule 3.12(b)Anti-Dilution

Schedule 3.12(d)Registration Rights

Schedule 3.14Required Consents

Schedule 3.16Insurance

Schedule 3.17Environmental Matters

Schedule 3.18Litigation

Schedule 3.19(a)(i)Compliance with Certain Employment-Related Laws

Schedule 3.19(a)(ii)Employee Agreements

Schedule 3.20(a)Employee Benefit Plans

Schedule 3.20(c)Employee Plan Compliance

Schedule 3.20(d)ERISA Plans

Schedule 3.20(f)Plan Litigation

Schedule 3.20(g)Effect of Agreement on Plans

Schedule 3.20(j)Open Relocation Cases

Schedule 3.21Transactions with Interested Persons

Schedule 3.25Bank Accounts

Schedule 3.28Former Business Transactions

Schedule 4.1Organization; Good Standing; Corporate Power

Schedule 4.6Legal Name; Principal Office

Schedule 4.7SPG’s Brokers

Schedule 5.1Conduct of Business

Schedule 5.2Earnout EBITDA

Schedule 5.2(c)(v)Term Note Provisions

Schedule 5.9Resignations

Schedule 5.10Non-Competition

Schedule 5.15Executive Officers

Schedule 5.16Transferred Employees

 

 

 

 

 

CONTRIBUTION AGREEMENT

 

THIS CONTRIBUTION AGREEMENT dated as of January 31, 2006 is made by and among Hercules Incorporated, a Delaware corporation (“Hercules”), WSP, Inc., a Delaware corporation (“WSP” and together with Hercules, the “Stockholders”) and a wholly-owned subsidiary of Hercules, SPG/FV INVESTOR LLC, a Delaware limited liability company (“SPG”) and FiberVisions Delaware Corporation, a Delaware corporation (including any predecessor entity, the “Company”).

Background

WHEREAS, Hercules presently owns 510 shares of common stock, par value $.01 per share of the Company (“Hercules Shares”), which represents 51% of the Stock (as defined below) ;

WHEREAS, WSP presently owns 490 shares of common stock, par value $.01 per share of the Company (“WSP Shares”), which represents 49% of the Stock;

WHEREAS, the Hercules Shares and the WSP Shares, collectively, constitute all of the issued and outstanding capital stock of the Company (collectively, the “Stock”);

WHEREAS, on the Closing Date (as defined below), the Company and FiberVisions, A/S, a corporation organized and existing under the laws of the Kingdom of Denmark (“FV Denmark”) and a wholly owned subsidiary of the Company, shall incur the Debt Financing (as defined below) on the terms provided herein;

WHEREAS, FV Denmark, holds all of the outstanding equity (“FPI Equity”) of FiberVisions Products, Inc., a Georgia corporation (“FPI”).

WHEREAS, on the Closing Date, FV Denmark shall make a dividend of the FPI Equity to the Company and, upon the consummation of such dividend, FPI shall be a wholly-owned subsidiary of the Company and (ii) FV Denmark shall dividend its portion of the Debt Financing proceeds to the Company (the “Restructuring”).

WHEREAS, immediately following the consummation of the Debt Financing and the Restructuring on the Closing Date, the Company shall pay the Hercules Dividend (as defined below) to Hercules and the WSP Dividend (as defined below) to WSP;

WHEREAS, on the Closing Date, SPG shall contribute the Contribution Amount (as defined below) to the Company in exchange for 33.78% of the Stock of the Company (the “SPG Shares”);

WHEREAS, immediately following the Contribution on the Closing, the Company shall redeem all of the Hercules Shares in exchange for the payment by the Company to Hercules of the Redemption Price (as defined below) and the right to receive the Earnout Payments (as defined below);

WHEREAS, WSP and SPG shall have entered into the Option Agreement (as defined below), pursuant to which WSP shall grant to SPG an option to acquire 140 shares of Stock, which represents 14% of the Stock, from WSP on the terms set forth in the Option Agreement; and

WHEREAS, this Agreement provides for, among other things, each of the following, which are expressly conditioned on each other: (i) the Debt Financing; (ii) the Restructuring; (iii) certain dividends to each of Hercules and WSP; (iv) the Contribution by SPG; and (v) the redemption by the Company of the Hercules Shares.

NOW, THEREFORE, in consideration of the mutual covenants and promises set forth herein, the parties hereto, intending to be legally bound, agree as follows:

 

 

 

. For purposes of this Agreement, the following terms when appearing with initial capital letters will have the following meanings:

“Adjusted EBITDA Floor” shall have the meaning set forth in Section 2.3(e).

“Affiliate” of a Person shall mean a Person Controlling, Controlled by or under common Control with such Person.

“Agent” shall mean Credit Suisse First Boston, as administrative agent under the Credit Agreement.

“Agreement” shall mean this Contribution Agreement and the Schedules and Exhibits attached hereto.

“Basket Amount” shall have the meaning set forth in Section 8.2(b).

“Cap Amount” shall have the meaning set forth in Section 8.2(b).

“Certificate of Incorporation” shall mean the certificate of incorporation of the Company as filed with the Secretary of State of the State of Delaware and attached hereto as Exhibit A.

“Closing” shall have the meaning set forth in Section 2.1(b).

“Closing Date” shall have the meaning set forth in Section 2.1(b).

“Closing Date Financial Statements” shall have the meaning set forth in Section 2.3(a).

“Closing Date Net Working Capital Statement” shall have the meaning set forth in Section 2.3(a).

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Company” shall have the meaning set forth in the preamble hereto.

 

 

“Company Group” shall have the meaning set forth in Section 3.20(c).

“Company Indemnified Parties” shall have the meaning set forth in Section 8.1(d).

“Company Indemnifying Parties” shall have the meaning set forth in Section 8.1(a).

“Competing Business” shall mean the development, manufacture, marketing, sale and distribution of viscose, polypropylene, polyethylene, polyester, bi-component (defined as but not limited to staple fibers and continuous filaments made of two or more thermoplastic polymers having different melting points), staple fibers and filament yarns with and without additives to impart properties to the staple fibers and/or the filament yarns such as, but not limited to, color (solution dyed), dyeability, wettability and antimicrobial, and used in applications such as, but not limited to the production of nonwoven fabrics using a carded thermal bonded process, spunlace process, needlepunch process, airlaid process and combination thereof, the production of woven and knitted fabrics and the use in industrial applications such as, but not limited to, concrete reinforcement, concrete cracking prevention, automotive nonwoven, tea bags, wet laid applications, and binder fibers.

“Confidential Information” shall have the meaning set forth in Section 10.8(a).

“Contract” means any agreement, contract, obligation, promise, or undertaking (whether written or oral, express or implied) that is legally binding.

“Contribution” shall have the meaning set forth in Section 2.1(b)(i).

“Contribution Amount” shall have the meaning set forth in Section 2.1(b)(i).

“Control” and each derivative thereof shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management of a Person, whether through ownership of voting securities, by contract or otherwise.

“Control Premium” shall mean the Earnout Payments payable to Hercules by the Company, in respect of Hercules’ ownership of a controlling interest in the Company, which distribution amount shall be calculated in accordance with Section 5.2 hereof.

“Credit Agreement” shall mean the Amended and Restated Credit Agreement dated as of April 8, 2004 by and among Hercules, certain subsidiaries of Hercules, several banks and financial institutions named therein, and Agent, as amended by that certain First Amendment dated as of August 12, 2004, as further amended by that certain Second Amendment dated as of June 29, 2005, and as further amended, restated, modified or supplemented.

“Debt Financing” shall have the meaning set forth in Section 5.3 of this Agreement.

 

 

“Debt Financing Costs” shall mean those certain fees and expenses specifically listed on Schedule 2.2(a) incurred by the Company in connection with the consummation of the Debt Financing.

“Definitive Agreements” shall mean this Agreement, the Stockholders Agreement, the Transition Services Agreement, the Option Agreement and all other agreements, documents, certificates and other instruments to be executed and delivered by any party at the Closing.

“Divestiture Notice” shall have the meaning set forth in Section 5.10(a)(iii).

“Earnout Accountant” shall have the meaning set forth in Section 5.2(c)(ii).

“Earnout EBITDA” shall have the meaning set forth in Section 5.2(c)(i).

“Earnout Payment” shall have the meaning set forth in Section 5.2(a).

“Election Notice” shall have the meaning set forth in Section 5.10(a)(iii).

“Encumbrance” shall mean any encumbrance, security interest, mortgage, lien, pledge, claim, lease, agreement, right of first refusal, option, limitation on transfer or use or assignment or licensing, restrictive easement, charge or any other restriction or third party rights of any kind with respect to any property or assets (tangible or intangible), including any restriction on the ownership, use, voting, transfer, possession, receipt of income or other exercise of any attributes of ownership of such property or assets (whether tangible, intangible, real or personal).

“Environmental Laws” shall mean any Law relating to pollution or protection of the environment or human health or safety, including, without limitation, the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials.

“Environmental Permits” shall mean any permit, approval, identification number, license or other authorization required under or issued pursuant to any Environmental Law.

“ERISA” shall have the meaning set forth in Section 3.20(a).

“Estimated Earnout EBITDA” shall have the meaning set forth in Section 5.2(b)(i).

“Executive Officers” shall have the meaning set forth in Section 5.15(a).

“FiberVisions Business” shall mean the development, manufacture, marketing, sale and distribution of nonwoven polypropylene staple fiber used in carded thermal bonded fabrics for hygiene coverstock as well as olefin fiber for the domestic textile and industrial markets.

“FiberVisions Group” shall have the meaning set forth in Section 3.1(a).

 

 

“FiberVisions Real Property” shall have the meaning set forth in Section 3.10(b).

“Final 2005 Adjusted EBITDA” shall have the meaning set forth in Section 2.3(b).

“Final 2005 Adjusted EBITDA Statement” shall have the meaning set forth in Section 2.3(b).

“Final Closing Date Net Working Capital” shall have the meaning set forth in Section 2.3(b).

Final Closing Date Net Working Capital Statement” shall have the meaning set forth in Section 2.3(b).

“Final Earnout EBITDA” shall have the meaning set forth in Section 5.2(c)(iii).

“Financial Statements” shall have the meaning set forth in Section 3.5.

“FPI” shall have the meaning set forth in the preamble hereto.

“FPI Equity” shall have the meaning set forth in the preamble hereto.

“FV Denmark” shall have the meaning set forth in the preamble hereto.

“GAAP” shall mean accounting principles generally accepted in the United States consistently applied.

“Governmental Entity” shall mean any court, arbitrator or other foreign, federal, state or local governmental, regulatory or other administrative body, authority, department, commission, board, bureau, agency or instrumentality.

“Gross Revenues” shall have the meaning set forth in Section 5.10(a)(iii).

“Group Employees” shall have the meaning set forth in Section 3.20(a).

“Hazardous Material” shall mean (a) petroleum, petroleum products, by-products or breakdown products, radioactive materials, asbestos or polychlorinated biphenyls, and (b) any chemical, material or substance defined or regulated as hazardous, dangerous, infectious or toxic or as a pollutant, contaminant or waste, or any other term of similar import under any Law relating to pollution or protection of the environment or human health or safety or that could otherwise reasonably be expected to result in the imposition of liability under any Law relating to pollution or protection of the environment or human health or safety.

“Hercules Dividend Amount” shall have the meaning set forth in Section 2.1(a)(iii).

“Hercules’ Knowledge” or any other phrase referring to the knowledge of Hercules means the actual knowledge, without independent verification, of the individuals listed on Schedule 1.1.

 

 

“Hercules Shares” shall have the meaning set forth in the preamble hereto.

“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder.

“Indemnified Party” shall have the meaning set forth in Section 8.5.

“Indemnifying Party” shall have the meaning set forth in Section 8.5.

“Infringe” shall have the meaning set forth in Section 3.11(a).

“Intellectual Property Rights” shall mean all intellectual property rights of any nature, including, without limitation, patents, patent applications, patent rights, trademarks, trade names, service marks, domain names, copyrights and works of authorship, computer programs, software and related items, trade secrets, proprietary processes, methodologies, technology, know-how and formulae.

“Intercompany Balances” means any and all intercompany balances between the FiberVisions Group, on the one hand, and the Hercules and WSP, and their Affiliates (other than the FiberVisions Group), on the other hand, arising from transactions of any kind between or among the FiberVisions Group, whether shown on the Most Recent Financial Statements or arising after the date of the Most Recent Financial Statements.

“Investment Assets” shall mean all debentures, notes and other evidences of indebtedness, stocks, securities (including rights to purchase and securities convertible into or exchangeable for other securities), interests in joint ventures and general and limited partnerships, mortgage loans and other investment or portfolio assets owned of record or beneficially by the Company (other than trade receivables generated in the Ordinary Course of Business).

“Laws” shall mean laws and binding governmental requirements, including constitutions, statutes, rules, regulations, compacts, treaties, codes, plans, injunctions, judgments, orders, decrees, rulings, charges, and other restrictions thereunder of each Governmental Entity.

“Leased Real Property” shall have the meaning set forth in Section 3.10(b).

“Losses” shall have the meaning set forth in Section 8.1(a).

“Material Adverse Effect” shall mean any change or effect that (a) is individually or together with any other change or effect materially adverse to the business, operations, properties (including intangible properties), condition (financial or otherwise), assets or liabilities of the Company and the Subsidiaries, taken as a whole, or (b) impairs in any material respect the ability of the Company and the Subsidiaries, taken as a whole, to perform its obligations under this Agreement or the Stockholders Agreement; provided that none of the following shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has been, a Material Adverse Effect: any adverse change, event, development, or effect arising from or relating to (i) general business or economic conditions, including such conditions related to the business of the Company and the Subsidiaries; (ii) national or