STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is entered into as of June , 2003 (this
"Agreement"), by Aearo Corporation, a Delaware corporation (the "Company"),
Cabot Corporation, a Delaware corporation ("Cabot Parent"), and Cabot CSC
Corporation, a Delaware corporation and a wholly owned subsidiary of Cabot
Parent ("Cabot Sub" and, together with Cabot Parent, "Cabot").
W I T N E S S E T H :
WHEREAS, Cabot Sub owns beneficially and of record 42,500 shares of
common stock, par value $.01 per share, and 22,500 shares of redeemable
preferred stock, $.01 per share, of the Company (collectively, the "Shares");
WHEREAS, the Company has agreed to purchase, and Cabot has agreed to
sell, the Shares, and all accrued dividends thereon, upon the terms and subject
to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements hereinafter set forth, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Purchase and Sale of Shares. Subject to the satisfaction or waiver of the
conditions set forth herein, at the --------------------------- closing (the
"Closing"), Cabot shall sell and the Company shall purchase the Shares, and all
accrued dividends thereon, for the consideration described below.
2. Consideration. The aggregate purchase price for the Shares, and all accrued
dividends thereon, shall be the sum of $33.5 million plus an amount, if any,
equal to the excess, if any, of (x) $5 million over (y) the aggregate amount of
fees and other out-of-pocket expenses incurred by the Company in connection with
the consummation of the transactions contemplated hereby, including without
limitation consent fees payable to lenders and debt securityholders, commitment
and other financing fees, and fees and expenses of professional advisors to the
Company and its creditors (the "Purchase Price"). The Purchase Price shall be
payable by wire transfer of immediately available funds to such bank account as
shall be designated by Cabot in writing at least three business days prior to
Closing.
3. Deliveries. Cabot Sub will deliver or cause to be delivered to the Company at
the Closing stock certificates representing all of the Shares, accompanied by
stock powers duly executed in blank or duly executed stock transfer forms or
instruments of transfer which validly transfer title to such Shares. The Company
will deliver to Cabot at the Closing the Purchase Price.
4. Cabot's Representations and Warranties. Cabot Parent and Cabot Sub each
represents and warrants to the Company --------------------------------------
that:
(a) each of them is duly incorporated and in good standing under the laws
of the jurisdiction of its incorporation; Cabot Sub is the sole owner
of the Shares and has good title to such Shares, free and clear of all
liens, claims, encumbrances and restrictions of every kind other than
those imposed by the Stockholders' Agreement, dated July 11, 1995,
among Vestar Equity Partners, L.P., Cabot Parent, Cabot Sub, the
Company, the Seelig Family Lifetime Trust and the Management Investors
(as defined in the Stockholders' Agreement), as amended by the
Amendment, dated July 3, 1996 (the "Stockholders' Agreement"), and,
upon completion of the transactions contemplated hereby, such title
will pass to the Company; and each of them has all requisite power and
authority to execute and deliver this Agreement and an amendment to
the Stockholders' Agreement in substantially the form set forth on
Exhibit A hereto (the "Amendment") and, subject to the satisfaction of
the conditions set forth herein, to consummate the transactions
contemplated hereby; and
(b) this Agreement constitutes the legal, valid and binding obligation of
each of them, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws now or hereafter in effect
relating to or limiting creditors' rights generally and general
principles of equity (whether considered in an action in equity or at
law).
5. The Company's Representations and Warranties. The Company represents and
warrants to Cabot that: --------------------------------------------
(a) it is duly incorporated and in good standing under the laws of the
jurisdiction of its incorporation; and it has all requisite power and
authority to execute and deliver this Agreement and the Amendment and,
subject to the satisfaction of the conditions set forth herein, to
consummate the transactions contemplated hereby; and
(b) this Agreement constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws now or hereafter in effect relating to or
limiting creditors' rights generally and general principles of equity
(whether considered in an action in equity or at law).
6. Covenants. ---------
(a) Each party shall pay its own expenses in connection with the
transactions contemplated hereby whether or not the transactions
contemplated hereby are consummated.
(b) Subject to the terms and conditions hereof, each of the parties hereto
agrees to use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things
necessary to consummate and make effective the transactions
contemplated hereby, including, without limitation, obtaining the
consents set forth on Schedule 1 hereto (the "Requisite Consents");
provided, however, that with respect to the Requisite Consents, Cabot
shall not be required to undertake any affirmative effort or to pay
any cost or expense, all of which shall be undertaken and borne by the
Company.
(c) The Company shall pay Cabot all accrued and unpaid Fees and
Out-of-Pocket Expenses payable to Cabot under (and as those terms are
defined in) the Management Advisory Agreement dated as of July 11,
1995 among Cabot, the Company and Vestar Capital Partners (the
"Management Agreement"); provided that notwithstanding anything in the
Management Agreement to the contrary, within 30 days after the last
day of the month in which the Closing occurs, the semi-annual Fee
payment next paid to Cabot shall be pro-rated through the day of
Closing and adjusted through that day in the same manner as
semi-annual Fee payments are adjusted under the Management Agreement,
and Cabot shall pay the Company an amount equal to the excess of the
next semi-annual Fee payment paid to Cabot over the aforementioned
pro-rated and adjusted Fee.
7. Conditions. ----------
(a) The obligation of Cabot to consummate the transactions contemplated
hereby shall be subject to the satisfaction at or prior to Closing of
each of the following conditions:
(i) the representations and warranties of the Company
contained herein shall be true and correct on the date hereof and on
the date of Closing, and the Company shall have performed all of its
covenants contained herein to be performed prior to Closing;
(ii) the approval of this Agreement and the transactions
contemplated hereby by Cabot Parent's Board of Directors;
(iii) on the date of Closing, there shall be no decree of
any governmental or judicial authority of competent jurisdiction that
prohibits the occurrence of the Closing; and
(iv) the Amendment shall have been duly executed and
delivered by the parties (other than Cabot) specified in Section 5.5
of the Stockholders' Agreement.
(b) The obligation of the Company to consummate the transactions contemplated
hereby shall be subject to the satisfaction at or prior to Closing of each of
the following conditions.
(i) the representations and warranties of Cabot contained
herein shall be true and correct on the date hereof and on the date of
Closing, and Cabot shall have performed all of its covenants contained
herein to be performed prior to Closing;
(ii) the approval of this Agreement and the transactions
contemplated hereby by the Company's Board of Directors;
(iii) the Company's receipt of all Requisite Consents;
(iv) the Company shall have received proceeds of financing
sufficient to pay the Purchase Price and any other out-of-pocket
expenses incurred by the Company in connection with the transactions
contemplated hereby on terms reasonably satisfactory to the Company;
(v) on the date of Closing, there shall be no decree of any
governmental or judicial authority of competent jurisdiction that
prohibits the occurrence of the Closing; and
(vi) the Amendment shall have been duly executed and
delivered by the parties (other than the Company) specified in Section
5.5 of the Stockholders' Agreement.
8. Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any ----------- time prior to the
Closing as follows:
(a) by mutual written consent of the parties;
(b) by either the Company or Cabot in writing, if the Closing has not occurred
on or before September 30, 2003;
(c) by the Company in writing, if the conditions set forth in Sections 7(b)(ii)
and 7(b)(vi) shall not have been satisfied on or before July 12, 2003; and
(d) by Cabot in writing, if the conditions set forth in Sections 7(a)(ii) and
7(a)(iv) shall not have been satisfied on or before July 12, 2003.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New ------------- York applicable to
contracts made and to be performed therein.
10. Amendment; Waiver. No change or modification of this Agreement or waiver of
any provision hereof shall be valid ----------------- unless it is in writing
and signed by each of the parties.
11. Entire Agreement. This Agreement shall supersede all previous negotiations
and agreements between the parties, and shall constitute the entire agreement of
the parties, with respect to the subject matter hereof. This Agreement shall not
supercede any other agreements or obligations of the parties hereto with respect
to other subject matters, including without limitation obligations of the
parties with respect to confidentiality and under Sections 4.12 and 8.1 of the
Asset Transfer Agreement, dated as of June 13, 1995, among the parties hereto
and certain other persons, and such other agreements and obligations shall
remain in full force and effect.
12. Survival. The representations, warranties and covenants contained herein
shall survive the Closing. --------
13. Closing Date. Unless this Agreement shall have been terminated pursuant to
Section 8, and subject to the satisfaction or waiver of the conditions set forth
herein, the Closing shall take place substantially concurrently with the
satisfaction or waiver of each of the conditions set forth herein at the offices
of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, NY 10017.
14. Notices. All notices, and other communications required or permitted
hereunder shall be in writing and shall be ------- deemed to have been duly
given if delivered personally, telecopied, emailed, or mailed, certified or
registered mail with postage prepaid, as follows:
If to the Company:
Aearo Corporation
5457 W. 79th Street
Indianapolis, IN 46268
Attn: Jeffrey Kulka
Tel.: (317) 692-6983
Fax: (317) 692-6784
Email: Jeff_Kulka@aearo.com
with a copy to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue, 12th Floor
New York, NY 10017-3954
Attn: Peter J. Gordon
Tel: (212) 455-2605
Fax: (212) 455-2827
Email: pgordon@stblaw.com
------------------
If to Cabot;
Cabot Corporation
Two Seaport Lane
Suite 1300
Boston, MA 02210
Attn: Ho-il Kim
Tel.: 617-342-6172
Fax: 617-342-6039
Email: hoil_kim@cabot-corp.com
With a copy to:
Cabot Corporation
Two Seaport Lane
Suite 1300
Boston, MA 02210
Attn: Philip J. Szabla
Tel.: 617-342-6179
Fax: 617-342-6073
Email: philip_szabla@cabot-corp.com
or to such other person or address or telecopy number as a party shall specify
in writing. All such communications shall be deemed to have been received on the
date of personal delivery, on the third business day after mailing or, in the
case of notice by telecopier or email, when receipt is confirmed by telephone.
15. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be ------------ an original and all of which
together shall be deemed to be one instrument.
IN WITNESS WHEREOF, the undersigned have set their hands as of the
date first written above.
SELLER:
CABOT CORPORATION
By: ________________________________________
Name:
Title:
CABOT CSC CORPORATION
By: ________________________________________
Name:
Title:
PURCHASER:
AEARO CORPORATION
By: ________________________________________
Name:
Title:
Schedule 1
Requisite Consents
Consent of lenders under the Credit Agreement, dated as of July 11, 1995, among
Aearo Company, the Company and the Subsidiary Borrowers named therein, the
lenders and arrangers listed therein and Bankers Trust Company, as co-arranger
and administrative agent, as amended and restated as of July 13, 2001.
Consent of holders of 12.5% Senior Subordinated Notes due 2005.
Exhibit A
Form of Amendment to Stockholders' Agreement
AMENDMENT TO STOCKHOLDERS' AGREEMENT, dated as of June __, 2003 (this
"Amendment"), among Vestar Equity Partners, L.P. ("Vestar"), Cabot CSC
Corporation, formerly known as Cabot Safety Corporation ("Cabot"), Aearo
Corporation, formerly known as Cabot Safety Holdings Corporation ("Holdings"),
Cabot Corporation ("Cabot Parent"), the Seelig Family Lifetime Trust and the
parties identified on the signature pages hereto as Management Investors (the
"Management Investors").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the signatories hereto desire to amend the Stockholders'
Agreement, dated July 11, 1995, as amended by the Amendment, dated July 3, 1996
(the "Stockholders' Agreement"), as set forth below;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
B. Section 3.4(d) of the Stockholders' Agreement is hereby amended by adding at
the end thereof the following new sentence:
"Notwithstanding anything to the contrary provided herein, the
requirements set forth in Section 3.4(a) and 3.4(b) shall not be
applicable to any Transfer of Common Stock and Preferred Stock by
Cabot to Holdings pursuant to the Stock Purchase Agreement, dated June
__, 2003, among Holdings, Cabot and Cabot Parent."
C. Except as specifically amended hereby, the Stockholders' Agreement shall
remain unchanged and continue in full force and effect.
[Remainder of page intentionally blank.]
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first written above.
VESTAR EQUITY PARTNERS, L.P.
By: Vestar Associates, L.P.,
its general partner
By: VESTAR ASSOCIATES CORPORATION,
its general partner
By:_____________________________
Name:
Title:
CABOT CSC CORPORATION
By:_____________________________
Name:
Title:
AEARO CORPORATION
By:_____________________________
Name:
Title:
CABOT CORPORATION
By:_____________________________
Name:
Title:
SEELIG FAMILY LIFETIME TRUST
By:_____________________________
Name: Leonard Lieberman
Title: Trustee
MANAGEMENT INVESTORS:
By:_____________________________
Name:
By:_____________________________
Name:
By:_____________________________
Name:
By:_____________________________
Name:
By:_____________________________
Name:
By:_____________________________
Name: