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")Contribution Agreement |
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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 INVESTMENT REPRESENTATIONS.
(a) The Contributor is an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D under the Securities Act.
(b) The Contributor is acquiring the Consideration Shares for investment
for the Contributor's own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof except in
compliance with the Stockholders Agreement and as permitted by law, including
without limitation the Securities Act. The Contributor does not have any present
intent to resell or distribute all or any part of its Consideration Shares. If
the Contributor is a corporation, trust, partnership or other organization, it
was not organized for the specific purpose of acquiring the Consideration
Shares.
(c) The Contributor has been advised that the Consideration Shares have not
been registered under the Securities Act, that the Consideration Shares may not
be sold or otherwise disposed of unless they are registered thereunder or an
exemption from registration is available and that accordingly the Contributor
may be required to bear the economic risk of the investment in the Consideration
Shares for an indefinite period of time. The Contributor also understands that
the Corporation does not have any intention of registering the Consideration
Shares under the Securities Act or of supplying the information which may be
necessary to enable the Contributor to sell Consideration Shares pursuant to
Rule 144 under the Securities Act.
(d) The Contributor has been given the opportunity to obtain any
information or documents, and to ask questions and receive answers about such
documents, the Corporation and its subsidiaries and the business and prospects
of the Corporatio






