UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
April 7, 2004
AEARO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-26942 13-3840450
-------------- ------------- ----------------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
5457 West 79th Street
Indianapolis, Indiana 46268
(Address of principal executive
offices including Zip Code)
(317) 692-6666
(Registrant's telephone number, including area code)
______ N/A________
(Former name or former address, if changed since last report)
Item 1. Changes in Control of Registrant
As previously reported, on March 10, 2004, we entered into a merger
agreement with AC Safety Holding Corp. and its subsidiary, AC Safety Acquisition
Corp. On April 7, 2004, pursuant to the terms of the Merger Agreement, AC Safety
Acquisition Corp. merged with and into Aearo Corporation with Aearo Corporation
surviving the merger as a wholly-owned subsidiary of AC Safety Holding Corp.
Pursuant to the merger agreement, each of the holders of our preferred
stock immediately prior to the merger received cash for their preferred shares.
Each of the holders of options to acquire a share of our common stock
immediately prior to the merger received cash equal to the amount between the
per share common merger price and the exercise price of the option. Finally, the
holder of our common stock immediately prior to the merger received cash for his
or its common shares and had the right to elect to receive a portion of the
consideration in shares of AC Safety Holding Corp. preferred stock and common
stock ("Capital Stock Units"). Under the merger agreement, the number of common
shares for which Capital Stock Units (rather than cash) were issued was limited
to approximately 14% of our shares of common stock outstanding at the effective
time of the merger.
Approximately 79.5% of the outstanding common and preferred stock of AC
Safety Holding Corp. is now owned by affiliates of Bear Stearns Merchant
Banking, approximately 10.5% of the outstanding common and preferred stock is
owned by management investors, and approximately 10.0% of the outstanding common
and preferred stock is owned by certain of our former stockholders, including
Vestar Equity Partners, L.P., the former majority holder of our common stock and
preferred stock.
Professional Services Agreement
On the closing date of the merger, AC Safety Acquisition Corp. entered into
a professional services agreement on our behalf with Bear Stearns Merchant
Manager II, LLC, or BSMM, AC Safety Holding Corp. and Aearo Company. Under the
terms of the professional services agreement, AC Safety Holding Corp., Aearo
Corporation and Aearo Company agreed to retain BSMM to provide certain
management consulting and financial advisory services, for which BSMM is paid an
annual management fee equal to the greater of (i) $700,000 and (ii) 1.25% of
Consolidated EBITDA (as defined in our senior credit facility), as adjusted for
certain expenses. In addition, as consideration for arranging the merger and
certain related transactions, we paid BSMM a fee of $6.0 million. If we engage
BSMM with respect to any merger, acquisition, disposition, recapitalization,
issuance of securities, financing or similar transaction, we will pay BSMM a
transaction fee to be negotiated between the parties. If the parties do not
agree on a fee, the transaction fee will be 1.0% of the aggregate enterprise
value paid or provided to Aearo Corporation. BSMM will also be entitled to an
exit fee of 0.65% of the aggregate enterprise value paid to Aearo Corporation or
AC Safety Holding Corp. in a sale of Aearo Corporation or AC Safety Holding
Corp. The professional services agreement will terminate on the earlier to occur
of (i) the tenth anniversary of the closing date of the merger, (ii) the
consummation of a sale of Aearo Corporation, (iii) termination upon thirty days'
written notice by BSMM and (iv) the consummation of a qualified public offering
of AC Safety Holding Corp. common stock. Upon the tenth anniversary of the date
of the professional services agreement and the end of each year thereafter, the
term is automatically extended for an additional year unless terminated by
either party at least 30 days prior to such year end. Under the professional
services agreement, we, AC Safety Holding Corp. and Aearo Company have agreed to
indemnify BSMM for any and all claims and losses arising out of or relating to
the professional services agreement.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
(c) The following exhibits are filed as part of this Current Report on Form
8-K.
2.1 Agreement and Plan of Merger dated March 10, 2004 among AC Safety
Holding Corp., AC Safety Acquisition Corp. and Aearo Corporation.
10.1 Professional Services Agreement dated April 7, 2004 by and among
Bear Stearns Merchant Manager II, LLC, AC Safety Holding Corp.,
AC Safety Acquisition Corp. and Aearo Company. ...
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AEARO CORPORATION
(Registrant)
Dated: April 21, 2004 By:/s/Jeffrey S. Kulka
------------------------------------------------
Jeffrey S. Kulka
Senior Vice President,
Chief Financial Officer and Treasurer
EXHIBIT INDEX
Exhibit No. Document
2.1 Agreement and Plan of Merger dated March 10, 2004 among AC Safety
Holding Corp., AC Safety Acquisition Corp. and Aearo Corporation.
10.1 Professional Services Agreement dated April 7, 2004 by and among
Bear Stearns Merchant Manager II, LLC, AC Safety Holding Corp.,
AC Safety Acquisition Corp. and Aearo Company.