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Stock Purchase, Redemption and Contribution Agreement

Stock Repurchase Agreement

Stock Purchase, Redemption and Contribution Agreement 

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This Stock Repurchase Agreement involves

COMPASS GROUP DIVERSIFIED HOLDINGS LLC | Norwest Mezzanine Partners I, LP | Crosman Acquisition Corporation | Crosman Group LLC

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Title: Stock Purchase, Redemption and Contribution Agreement
Governing Law: New York     Date: 1/10/2007
Law Firm: Compass Group Diversified Holdings LLC; Alston & Bird LLP    

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Exhibit 10.1

Stock Purchase, Redemption and Contribution Agreement

by and among

Compass Group Diversified Holdings LLC, Norwest Mezzanine Partners I, LP
and the other shareholders party hereto
(collectively, the “Sellers”);

Compass Group Diversified Holdings LLC
(the “Sellers’ Representative”);

Crosman Acquisition Corporation
(“CAC”);

and

Crosman Group LLC
(the “Buyer”)

Dated as of January 5, 2007

 


 

TABLE OF CONTENTS

 

 

 

 

 

 

 

Page

 

1. Definitions

 

 

1

 

 

 

 

 

 

2. Sale, Redemption and Contribution of Shares; Closing

 

 

17

 

2.1 Contribution

 

 

17

 

2.2 Sale of Purchased Shares and Redemption of Redeemed Shares

 

 

17

 

2.3 Certain Events Prior to the Closing

 

 

17

 

2.4 Closing

 

 

18

 

2.5 Adjustment Procedure

 

 

20

 

2.6 Releases

 

 

22

 

 

 

 

 

 

3. Representations and Warranties of CAC

 

 

23

 

3.1 Organization and Good Standing

 

 

23

 

3.2 Authority; No Conflict

 

 

23

 

3.3 Capitalization

 

 

24

 

3.4 Financial Statements

 

 

25

 

3.5 Books and Records

 

 

25

 

3.6 Title to Properties; Encumbrances

 

 

26

 

3.7 Condition and Sufficiency of Assets

 

 

27

 

3.8 Accounts Receivable

 

 

27

 

3.9 Inventory

 

 

27

 

3.10 Taxes

 

 

28

 

3.11 Employee Benefits

 

 

30

 

3.12 Compliance with Legal Requirements; Governmental Authorizations

 

 

35

 

3.13 Legal Proceedings; Orders

 

 

36

 

3.14 Absence of Certain Changes and Events

 

 

37

 

3.15 Contracts; No Defaults

 

 

39

 

3.16 Insurance

 

 

41

 

3.17 Environmental Matters

 

 

42

 

3.18 Employees; Employee Matters

 

 

43

 

3.19 Intellectual Property

 

 

45

 

3.20 Brokers or Finders

 

 

49

 

3.21 Certain Payments

 

 

49

 

3.22 Customers and Suppliers

 

 

49

 

3.23 No Undisclosed Liabilities

 

 

50

 

3.24 No Product Liabilities; Product Warranties

 

 

50

 

3.25 Accuracy of Information

 

 

51

 

 

 

 

 

 

3A Representations and Warranties of Sellers

 

 

51

 

3A.1 Organization and Good Standing

 

 

51

 

3A.2 Authority

 

 

51

 

3A.3 Title to the Shares

 

 

51

 

3A.4 Relationships with Related Persons

 

 

52

 

3A.5 No Conflicts

 

 

52

 

-i-


 

TABLE OF CONTENTS
(continued)

 

 

 

 

 

 

 

Page

 

3A.6 Investment Representations

 

 

52

 

3A.7 Legal Proceedings

 

 

53

 

3A.8 Brokers or Finders

 

 

53

 

 

 

 

 

 

4. Representations and Warranties of Buyer

 

 

53

 

4.1 Organization and Good Standing

 

 

53

 

4.2 Authority; No Conflict

 

 

53

 

4.3 Securities Act Representation

 

 

54

 

4.4 Certain Proceedings

 

 

55

 

4.5 Brokers or Finders

 

 

55

 

 

 

 

 

 

5. Covenants of CAC

 

 

55

 

 

 

 

 

 

6. Covenants of Buyer

 

 

55

 

 

 

 

 

 

7. Conditions Precedent to Buyer’s Obligation to Close

 

 

55

 

7.1 Accuracy of Representations

 

 

55

 

7.2 Required Consents

 

 

55

 

7.3 Diablo

 

 

55

 

 

 

 

 

 

8. Conditions Precedent to the Sellers’ Obligation to Close

 

 

56

 

8.1 Accuracy of Representations

 

 

56

 

 

 

 

 

 

9. Termination

 

 

56

 

 

 

 

 

 

10. Indemnification; Remedies

 

 

56

 

10.1 Survival

 

 

56

 

10.2 Indemnification and Payment of Damages by Seller

 

 

56

 

10.3 Indemnification and Payment of Damages by Buyer

 

 

58

 

10.4 Time Limitations

 

 

58

 

10.5 Limitations on Amount

 

 

59

 

10.6 Procedure for Indemnification—Third Party Claims

 

 

60

 

10.7 Procedure for Indemnification—Other Claims

 

 

61

 

 

 

 

 

 

11. Tax Matters

 

 

61

 

11.1 Tax Matters

 

 

61

 

 

 

 

 

 

12. General Provisions

 

 

64

 

12.1 Expenses

 

 

64

 

12.2 Public Announcements

 

 

64

 

12.3 Confidentiality

 

 

65

 

12.4 Termination of Certain Equity Holder Documents

 

 

65

 

12.5 Notices

 

 

65

 

12.6 Further Assurances

 

 

66

 

12.7 Waiver

 

 

66

 

-ii-


 

TABLE OF CONTENTS
(continued)

 

 

 

 

 

 

 

Page

 

12.8 Entire Agreement and Modification

 

 

66

 

12.9 Assignments, Successors and No Third-Party Rights

 

 

67

 

12.10 Severability

 

 

67

 

12.11 Section Headings; Construction

 

 

67

 

12.12 Time of Essence

 

 

67

 

12.13 Governing Law

 

 

68

 

12.14 Authority of Sellers’ Representative

 

 

68

 

12.15 Provision Regarding Legal Representation

 

 

70

 

12.16 Independence of Covenants and Representations and Warranties

 

 

71

 

12.17 Counterparts

 

 

71

 

 

 

 

 

 

Schedule 1.1 Capital Leases

 

 

 

 

Schedule 1.2 Pro Rata Percentages

 

 

 

 

Schedule 1.3 Working Capital Methodology

 

 

 

 

Schedule 2.1 Rollover Amounts

 

 

 

 

Schedule 12.4 Agreements to be Terminated

 

 

 

 

Schedule 12.14 holdback Percentages

 

 

 

 

 

 

 

 

 

Exhibit A Wire Transfer Instruction Form

 

 

 

 

Exhibit B Amended and Restated LLC Agreement

 

 

 

 

Exhibit C Amendment to Employment Agreement

 

 

 

 

Exhibit D Indemnification Agreement

 

 

 

 

-iii-


 

STOCK PURCHASE, REDEMPTION AND CONTRIBUTION AGREEMENT

     This Stock Purchase, Redemption and Contribution Agreement (this “ Agreement ”) is made as of January 5, 2007 by and among COMPASS GROUP DIVERSIFIED HOLDINGS LLC , a Delaware limited liability company (“ CODI ”), NORWEST MEZZANINE PARTNERS I, LP , a Minnesota limited partnership (“ Norwest ”), KENNETH R. D’ARCY (“ D’Arcy ”), ROBERT BECKWITH (“ Beckwith ”), STEVE UPHAM (“ Upham ”), DAN SCHULTZ (“ Schultz ”), ROBERT HAMPTON (“ Hampton ”) (CODI, Norwest, D’Arcy, Beckwith, Upham, Schultz, Hampton and the other individual shareholders party hereto, collectively referred to herein as the “ Sellers ”), CROSMAN ACQUISITION CORPORATION , a Delaware corporation (“ CAC ”), COMPASS GROUP DIVERSIFIED HOLDINGS LLC , as representative of the Sellers (in such capacity, the “ Sellers’ Representative ”), and CROSMAN GROUP LLC , a Delaware limited liability company (the “ Buyer ”).

RECITALS

     A. This Agreement provides for (a) the contribution of the Rollover Shares by the Rollover Shareholders to Buyer in exchange for $2,316,500 ( the “ Rollover Amount ”) worth of equity interests of Buyer in a transaction intended to qualify as a tax-free contribution pursuant to IRC §721, (b) the contribution of up to $35,683,500 to Buyer (the “ Equity Financing ”) by Wachovia Capital Partners 2006, LLC (“ WCP ”) and certain other Persons in exchange for equity interests of Buyer, (c) the acquisition by Buyer of the Purchased Shares with the proceeds of the Equity Financing, and (d) the redemption by CAC of the Redeemed Shares with a portion of proceeds of Debt Financing Proceeds.

     B. The Rollover Shares, Purchased Shares and Redeemed Shares constitute all of the issued and outstanding shares of capital stock (the “ Shares ”) of CAC.

     C. CAC is the sole shareholder of Crosman Corporation, a Delaware corporation (the “ Company ”).

AGREEMENT

     The parties, intending to be legally bound, agree as follows:

1. Definitions

     For purposes of this Agreement, the following terms have the meanings specified or referred to in this Section 1:

      “Accounts Receivable” shall have the meaning set forth in Section 3.8.

      “Adjusted Current Assets” means the aggregate amount of the current consolidated assets of the Companies shown on the Working Capital Closing Statement

 


 

as such current assets are calculated as of the close of business on the business day immediately preceding the Closing Date in accordance with the Working Capital Methodology, but including Cash and excluding, to the extent included in such current consolidated assets, (a) any deferred or current income tax assets, (b) any 2007 Tax Refund amount, (c) any interest accrued on or principal of the Promissory Notes, (d) any pre-paid fees or expenses in connection with the Management Services Agreement, and (e) any sums due to any of the Companies from any of the other Companies that appear as “current assets” on the Working Capital Closing Statement. For purposes of determining the Adjusted Current Assets, the assets of Diablo shall be excluded for all purposes, including any asset reflected on the books and records of any of the other Companies related to an investment in Diablo; provided, that, the Diablo Receivable shall be included in the Adjusted Current Assets. For this purpose the “Diablo Receivable” shall mean the amount payable as of the close of business on the business day immediately preceding the Closing Date by Diablo to the Company pursuant to the Diablo Membership Agreement with respect to the 5% commission payable to the Company for the provision of management and administrative services to Diablo.

      “Adjusted Current Liabilities” means the aggregate amount of the current consolidated liabilities of the Companies shown on the Working Capital Closing Statement as such current liabilities are calculated as of the close of business on the business day immediately preceding the Closing Date in accordance with the Working Capital Methodology, but excluding, to the extent included in such current consolidated liabilities, (a) any Indebtedness of the Companies, (b) any sums owed by any of the Companies to any of the other Companies that appear as “current liabilities” on the Working Capital Closing Statement, (c) any deferred or current income tax liabilities, (d) any 2007 Tax Obligation amount, (e) any of the Company Transaction Expenses and (f) any D’Arcy Interest Bonus. For purposes of determining the Adjusted Current Liabilities, the Liabilities of Diablo shall be excluded for all purposes. For the avoidance of doubt, the Adjusted Current Liabilities shall include, to the extent accrued in accordance with the Working Capital Methodology but not paid as of the Closing, (i) the 2007 Year End Bonuses and (ii) all employer paid payroll Taxes due or payable with respect to compensation payable on or prior to the Closing Date, including with respect to the D’Arcy Interest Bonus.

     “ Adjusted Equity Value ” means $140,000,000 increased or decreased, as the case may be, by the Adjustment Amount.

      “Adjusted Net Working Capital” means the amount (which amount may be positive or negative) equal to Adjusted Current A