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EXHIBIT 10.13
EXECUTION COPY
MANAGEMENT CONTRIBUTION AGREEMENT, dated as
of April 7, 2004 (this "Agreement"),
by and between AC SAFETY HOLDING CORP., a
Delaware corporation (the
"Corporation"), and the CONTRIBUTOR whose
name is set forth on the signature
page hereto (the "Contributor").
RECITALS
WHEREAS,
pursuant to the Agreement and Plan of Merger dated as of March
10,
2004 as amended, supplemented or restated
from time to time, (the "Merger
Agreement"), by and among the Corporation,
its wholly owned subsidiary AC Safety
Acquisition Corp., a Delaware corporation
("Acquisition"), and Aearo
Corporation, a Delaware corporation
("Aearo"), Acquisition will merge with and
into Aearo, with Aearo being the surviving
corporation and a wholly owned
subsidiary of the Corporation (the
"Merger");
WHEREAS, in
connection with the Merger, the Contributor desires to
contribute, assign, convey, transfer and
deliver to the Corporation, and the
Corporation desires to purchase, the number
of shares of common stock, par value
$0.01 per share, of Aearo set forth on the
signature page hereto (the
"Contributed Shares") valued at the dollar
amount listed immediately below the
Number of Contributed Shares on the
signature page hereto, subject to the terms
and conditions and for the Consideration
Shares (as defined below) set forth
herein (the "Contribution");
WHEREAS, in
connection with the Merger, the Corporation desires to issue to
the Contributor, and the Contributor
desires to purchase from the Corporation,
the number of shares set forth on the
signature page hereto of (i) the
Corporation's common stock, $0.01 par value
per share (the "Common Stock"), and
(ii) the Corporation's Series A Preferred
Stock, $0.01 par value per share (the
"Preferred Stock"), subject to the terms
and conditions and in return for the
Contributed Shares as set forth herein;
and
WHEREAS, the
Contributor agreed to enter into this Agreement as an
inducement for Corporation to enter into
the Merger Agreement and the other
agreements contemplated thereby and the
Contributor hereby agrees to be bound by
the terms and provisions hereof, including,
without limitation, the restrictions
contained herein, as an inducement for
Corporation to enter into this Agreement
and to consummate the Merger and the other
transactions contemplated by the
Merger Agreement.
NOW THEREFORE,
in consideration of the mutual promises herein made, and in
consideration of the representations,
warranties, and covenants herein
contained, the Corporation and the
Contributor hereby agree as set forth below.
ARTICLE I
CONTRIBUTION AND ISSUANCE OF CONSIDERATION SHARES;
CONTRIBUTION CLOSING; DELIVERABLES
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1.1 CONTRIBUTION OF CONTRIBUTION
SHARES; ISSUANCE OF THE CONSIDERATION SHARES.
(a) In
accordance with, and subject to, the provisions of this
Agreement,
at the Contribution Closing, (i) the
Contributor shall contribute, assign,
transfer, convey and deliver to the
Corporation the Contributed Shares, free and
clear of all Encumbrances and the
Corporation shall acquire the Contributed
Shares for the consideration set forth in
this Section 1.1 and (ii) the
Corporation shall issue, sell and deliver
the number of shares of Common Stock
and Preferred Stock to the Contributor as
set forth on the signature page hereto
(collectively, the "Consideration
Shares").
(b) Subject to
the terms and conditions contained herein, each party shall
use commercially reasonable efforts to take
or cause to be taken all actions and
do or cause to be done all things required
under all applicable Laws, in order
to consummate the transactions contemplated
by this Agreement.
1.2 CONTRIBUTION CLOSING;
DELIVERABLES.
(a) The closing
(the "Contribution Closing") with respect to the
Contribution shall take place at the
offices of O'Melveny & Myers LLP, Times
Square Tower, 7 Times Square, New York, NY
10036. The Contribution Closing shall
occur on the Closing Date immediately prior
to the consummation of the Merger
and the other transactions contemplated by
the Merger Agreement (such date, the
"Contribution Closing Date").
(b) At the
Contribution Closing, the Corporation shall deliver to the
Contributor:
(i) certificates representing the number of Consideration Shares
set
forth on the
signature page attached hereto registered in the name of the
Contributor;
(ii) a counterpart to this Agreement duly executed by the
Corporation;
(iii) a counterpart to the Buyer Support Agreement, dated as of
the
Closing Date (the "Buyer
Support Agreement"), among the Corporation, Bear
Stearns Merchant
Banking Partners II, L.P., Vestar Equity Partners, L.P.
and the other
stockholders of the Corporation whose names are set forth on
the signature
pages thereto; and
(iv) a counterpart to the Stockholders' Agreement, dated as of
the
Contribution
Closing Date (the "Stockholders' Agreement"), among the
Corporation and
the other parties thereto, duly executed by the
Corporation.
(c) At the
Contribution Closing, the Contributor shall deliver to the
Corporation:
(i) one or more certificates representing the number of
Contributed
Shares set forth
on the signature page attached hereto (or an affidavit of
lost certificate
with respect to such Contributed Shares, in form and
substance
reasonably satisfactory to the Corporation);
(ii) a counterpart to this Agreement duly executed by the
Contributor;
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(iii) a counterpart to the Buyer Support Agreement;
(iv) a counterpart to the Stockholders' Agreement duly executed by
the
Contributor;
and
(v) if applicable, a Spousal Acknowledgment and Consent as required
by
the Stockholders'
Agreement duly executed by the spouse of the Contributor.
1.3 SECTION 351 TRANSACTION.
The Corporation
and the Contributor agree that the transaction effected
hereby is entered into in connection with
the transaction contemplated by (i)
the Merger Agreement, (ii) the Securities
Purchase Agreement, dated as of the
date hereof, by and among the Corporation
and the Purchasers parties thereto,
(iii) the Management Contribution
Agreements, dated as of the date hereof, by
and between the Corporation and the
Contributors whose names are set forth on
the signature pages thereto and (iv) the
Management Subscription and
Contribution Agreements, dated as of the
date hereof, by and between the
Corporation and the Purchasers whose names
are set forth on the signature pages
thereto (collectively, the "Related
Transactions"), and is intended to, together
with the Related Transactions, constitute a
single transaction under Section 351
of the Internal Revenue Code of 1986, as
amended, and the regulations
promulgated thereunder (collectively,
"Section 351"), so that the Contributors,
along with any other party receiving shares
of capital stock in the Corporation
pursuant to the Related Transactions, are
treated as contributing property to
the Corporation in exchange for its shares
of capital stock and controlling the
Corporation under Section 351 immediately
after the Related Transactions are
effected. The Corporation and the
Contributor shall report the transaction
effected hereby as a contribution under
Section 351, and not take any position
inconsistent with such treatment.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
As a material
inducement to the Contributor to enter into and to perform
his obligations under this Agreement, the
Corporation represents and warrants to
the Contributor as of the date hereof as
set forth below.
2.1 ORGANIZATION; GOOD STANDING;
QUALIFICATION AND POWER.
The Corporation
is duly organized, validly existing and in good standing
under the laws of the State of Delaware,
and has all requisite power and
authority to own, lease and operate its
properties and assets and to carry on
its business as presently being conducted.
The Corporation is qualified or
licensed to do business and is in good
standing in every jurisdiction in which
the failure to so qualify, be licensed or
be in good standing, individually or
in the aggregate, could have a material
adverse effect on the Corporation.
2.2 AUTHORIZATION; ISSUANCE OF
CONSIDERATION SHARES.
(a) The
Corporation has all requisite power and authority to execute
and
deliver this Agreement and any and all
instruments necessary or appropriate in
order to effectuate fully the
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terms and conditions of this Agreement, and
the transactions contemplated
hereby. This Agreement has been duly
authorized by all necessary action
(corporate or otherwise) on the part of the
Corporation and this Agreement has
been duly executed and delivered by the
Corporation and constitutes the valid
and legally binding obligation of the
Corporation, enforceable in accordance
with its terms and conditions, subject, as
to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and
similar laws of general applicability
relating to or affecting creditors' rights
and to general equity principles.
(b) The
authorization, issuance, sale and delivery of the Consideration
Shares have been duly authorized by all
requisite action of the Corporation's
board of directors (the "Board"). The
Consideration Shares will be validly
issued and outstanding, fully paid and
nonassessable, with no personal liability
attaching to the ownership thereof, free
and clear of any Encumbrances
whatsoever and with no restrictions on the
voting rights thereof and other
incidents of record and beneficial
ownership pertaining thereto, in each case,
created by the Corporation, other than as
contemplated by the Stockholders'
Agreement.
(c) The
execution, delivery and performance of this Agreement by the
Corporation and the consummation of the
transactions contemplated hereby shall
not (i) violate any Law applicable to the
Corporation or any of its assets or
(ii) conflict with, or result in any breach
of, any of the terms, conditions or
provisions of, or constitute (with due
notice or lapse of time, or both) a
default or give rise to any right of
termination, cancellation or acceleration,
or result in the creation of any
Encumbrance (A) upon any of the Corporation's
assets or (B) under any provision of (i)
the Corporation's certificate of
incorporation or bylaws, (ii) any Permit or
(iii) any other Contract to which
the Corporation is a party or by which its
Assets is or may be bound. The
Corporation has not been and is not
required to give any notice to, or make any
filing with, any Governmental Authority or
any other Person, or obtain any
Permit, in each case, for the valid
execution, delivery and performance by the
Corporation.
2.3 CAPITALIZATION OF THE
CORPORATION.
(a) Immediately
after the Closing, the authorized capital stock of the
Corporation shall consist of 4,000,000
shares, of which (i) 3,849,999 shares
will be Common Stock, of which (A)
2,510,499 shares will be issued and
outstanding, fully paid and nonassessable
and (B) 633,923 shares will be
reserved for issuance pursuant to the
Corporation's 2004 Stock Incentive Plan,
(ii) one share will be Class A Common
Stock, of which one share will be issued
and outstanding, fully paid and
nonassessable, and (iii) 150,000 shares of
preferred stock, $0.01 par value per share,
of which 76,000 shares will be
designated as Series A Preferred Stock,
75,188 shares of which will be issued
and outstanding, fully paid and
nonassessable.
(b) Except as
described in Section 2.3(a) and as contemplated by the
Stockholders' Agreement, there are no (i)
outstanding warrants, options,
agreements, convertible securities or other
commitments or instruments pursuant
to which the Corporation is or may become
obligated to issue or sell any shares
of its capital stock or other securities or
(ii) preemptive or similar rights to
purchase or otherwise acquire shares of the
capital stock or other securities of
the Corporation.
2.4 OFFERING EXEMPTION.
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Assuming the
accuracy of the representations and warranties of the
Contributor made in Article III, the
offering, sale and issuance of the
Consideration Shares has been, is, and will
be, exempt from registration under
the Securities Act of 1933, as amended, and
the rules and regulations in effect
thereunder (the "Securities Act"), and such
offering, sale and issuance is also
exempt from registration under applicable
state securities and "blue sky" laws.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTOR
As a material
inducement to the Corporation to enter into and perform its
obligations under this Agreement, the
Contributor represents and warrants to the
Corporation as of the date hereof as set
forth below.
3.1 VALID TITLE; POWER AND AUTHORITY;
NO CONFLICTS.
(a) The
Contributor beneficially owns and has valid title of record to
the
Contributed Shares, free and clear of any
Encumbrance, subject only to
restrictions as to marketability imposed by
securities laws.
(b) Subject only
to restrictions as to marketability imposed by securities
laws, the Contributor has full right,
power, authority and capacity and all
approvals required by Law, if any, to sell,
transfer, assign and deliver the
Contributed Shares hereunder and to enter
into this Agreement, and the
Corporation will acquire valid title to the
Contributed Shares, free and clear
of any Encumbrance, upon the consummation
of the transactions contemplated by
this Agreement.
(c) The
Contributor has all requisite power and authority to execute
and
deliver this Agreement and any and all
instruments necessary or appropriate in
order to effectuate fully the terms and
conditions of this Agreement and to
perform and consummate such Contributor's
obligations hereunder. This Agreement
and the performance of the Contributor's
obligations hereunder, have been duly
authorized by all requisite action on the
part of the Contributor, and this
Agreement has been duly and validly
executed and delivered by the Contributor
and constitutes a valid and legally binding
obligation of the Contributor,
enforceable against the Contributor in
accordance with its terms and conditions,
except as enforceability thereof may be
limited by any applicable bankruptcy,
reorganization, insolvency or other Laws
affecting creditors' rights generally
or by general principles of equity.
(d) The
execution, delivery and performance by the Contributor of this
Agreement, and the consummation of the
transactions contemplated hereby, shall
not (i) violate any Law applicable to the
Contributor or (ii) conflict with or
result in any violation or breach of, any
of the terms, conditions or provisions
of, or constitute (with due notice or lapse
of time, or both) a default under,
or give rise to any right of termination,
cancellation or acceleration or result
in the creation of any Encumbrance upon any
of the assets of the Contributor,
any Contracts to which the Contributor is a
party or by which the Contributor or
any of the Contributor's assets is or may
be bound, in each case, which would
prohibit the Contributor from consummating
the transactions contemplated hereby.
The Contributor has not been or is not
required to give any
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notice to, or make any filing with, any
Governmental Authority or any other
Person, or obtain any Permit, in each case,
for the valid execution, delivery
and performance by the Contributor of this
Agreement.
3.2 CERTAIN INVE
