1
EXHIBIT 10.1
RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
by and among
MS ACQUISITION CORP., the Company,
the STOCKHOLDERS of the Company,
and
CITICORP VENTURE CAPITAL, LTD., Buyer
Dated as of August 13, 1996
2
RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
INDEX
PAGE
----
SECTION 1. THE RECAPITALIZATION................................................... 2
1.1 The Recapitalization Closing........................................... 2
1.2 Certificate of Incorporation........................................... 2
SECTION 2. SALE OF THE STOCK PURCHASE SHARES...................................... 3
2.1 Transfer of the Stock Purchase Shares.................................. 3
2.2 Purchase Price and Payment............................................. 3
2.3 Time and Place of Closing.............................................. 3
2.4 Stockholders' Representative........................................... 3
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY TO BUYER................. 5
3.1 Making of Representations and Warranties............................... 5
3.2 Organization of the Company............................................ 5
3.3 Capital Stock of the Company........................................... 6
3.4 Authority of the Company............................................... 6
SECTION 4. REPRESENTATIONS AND WARRANTIES OF EACH OF THE STOCKHOLDERS TO THE
COMPANY AND BUYER ..................................................... 7
4.1 Making of Representations and Warranties............................... 7
4.2 Ownership of the Shares................................................ 7
4.3 Authority.............................................................. 7
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER TO THE STOCKHOLDERS AND THE
COMPANY................................................................ 8
5.1 Making of Representations and Warranties............................... 8
5.2 Organization of Buyer.................................................. 8
5.3 Authority of Buyer..................................................... 8
SECTION 6. COVENANTS PRIOR TO THE STOCK PURCHASE CLOSING.......................... 8
6.1 Conduct of Business of the Company..................................... 8
6.2 No Solicitation........................................................ 10
6.3 Access to Information; Confidentiality................................. 10
6.4 Reasonable Efforts..................................................... 11
6.5 Stockholders Meeting or Consent........................................ 11
6.6 Actions by Stockholders................................................ 11
6.7 Public Announcements................................................... 11
6.8 Notice................................................................. 12
(i)
3
PAGE
----
SECTION 7. CONDITIONS............................................................. 12
7.1 Conditions to the Obligations of each of the Stockholders with Respect
to the Recapitalization................................................ 12
7.2 Conditions to the Obligations of the Company with Respect to the
Recapitalization....................................................... 13
7.3 Conditions to the Obligations of Buyer with Respect to the Stock
Purchase............................................................... 13
7.4 Conditions to the Obligations of the Stockholders with Respect to the
Stock Purchase......................................................... 16
SECTION 8. TERMINATION OF AGREEMENT............................................... 17
8.1 Termination............................................................ 17
8.2 Effect of Termination.................................................. 18
8.3 Amendment.............................................................. 18
8.4 Extension; Waiver...................................................... 18
SECTION 9. RIGHTS AND OBLIGATIONS SUBSEQUENT TO STOCK PURCHASE CLOSING............ 18
9.1 Survival of Representations and Warranties............................. 18
9.2 Further Action......................................................... 18
SECTION 10. MISCELLANEOUS.......................................................... 18
10.1 Notices................................................................ 18
10.2 Descriptive Headings................................................... 21
10.3 Counterparts........................................................... 21
10.4 Waiver of Certain Rights............................................... 22
10.5 Entire Agreement; Assignment........................................... 22
10.6 Governing Law.......................................................... 22
10.7 Remedies............................................................... 22
10.8 Expenses............................................................... 22
10.9 Parties in Interest.................................................... 22
10.10 Severability........................................................... 22
10.11 Termination of Other Agreements........................................ 23
10.12 Rescission of Recapitalization and Stock Purchase Closings............. 23
10.13 Further Assurances; Post-Closing Cooperation........................... 23
10.14 Limited Recourse....................................................... 23
10.15 Certain Definitions.................................................... 24
(ii)
4
RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
AGREEMENT dated as of August 13, 1996 by and among MS ACQUISITION CORP., a
Delaware corporation (the "Company"); THE BERKSHIRE FUND, a Massachusetts
limited partnership ("Berkshire"), BERKSHIRE PARTNERS LLC, a Massachusetts
limited liability company ("Berkshire Partners"), as Escrow Agent, BRADLEY M.
BLOOM, J. CHRISTOPHER CLIFFORD, RUSSELL L. EPKER, CARL FERENBACH, RICHARD K.
LUBIN, LEA ANNE S. OTTINGER and KEVIN T. CALLAGHAN (collectively, together with
Berkshire and Berkshire Partners, the "Berkshire Stockholders"); THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA, a New Jersey mutual insurance company
("Prudential"); PRUCO LIFE INSURANCE COMPANY, an Arizona corporation ("Pruco");
STATE TREASURER OF THE STATE OF MICHIGAN, AS CUSTODIAN OF THE PUBLIC SCHOOL
EMPLOYEES' RETIREMENT SYSTEM, STATE EMPLOYEES' RETIREMENT SYSTEM, MICHIGAN STATE
POLICE RETIREMENT SYSTEM, JUDGES' RETIREMENT SYSTEM, AND PROBATE JUDGES'
RETIREMENT SYSTEM (collectively, "Michigan"); and JEROME SINGER, DOUGLAS A.
THAL, ROBERT J. KLEIN, and STEVEN SINGER (the "Former Management Stockholders"),
who are all the holders of the Company's capital stock (herein collectively
referred to as the "Stockholders" and individually as a "Stockholder"); and
CITICORP VENTURE CAPITAL, LTD., a New York corporation ("Buyer").
WITNESSETH
WHEREAS, the Stockholders own of record and beneficially all of the issued
and outstanding capital stock of the Company, consisting of the shares of the
Company's Class A Common Stock, par value $.01 per share ("Old Class A Common
Stock") and Class B Common Stock, par value $.01 per share ("Old Class B Common
Stock" and, together with the Old Class A Common Stock, the "Old Common Stock")
and the shares of the Company's Series A Participating Preferred Stock, par
value $.01 per share ("Old Series A Preferred Stock") and Series B Participating
Preferred Stock, par value $.01 per share ("Old Series B Preferred Stock" and,
together with the Old Series A Preferred Stock, the "Old Preferred Stock"; the
Old Common Stock and the Old Preferred Stock are hereinafter collectively
referred to as the "Old Stock") all as set forth on EXHIBIT A hereto; and
WHEREAS, Berkshire Partners holds shares of Old Stock as Escrow Agent
pursuant to Escrow Agreements dated as of March 3, 1989 and April 23, 1991, as
amended, by and among Berkshire Partners and certain other Berkshire
Stockholders, Prudential, Pruco and Michigan, as set forth on EXHIBIT A attached
hereto; and
WHEREAS, the Company desires to cause a reclassification of the capital
stock of the Company (the "Recapitalization") whereby the Stockholders shall
exchange all shares (the "Old Shares") of Old Stock held by the Stockholders for
shares (the "New Shares") of the Company's Class A Common Stock, par value $.01
per share ("New Class A Common Stock"), the Company's Class B Common Stock, par
value $.01 per share (New "Class B
5
Common Stock" and, together with the New Class A Common Stock, the "New Common
Stock") and the Company's Series A Cumulative Convertible Preferred Stock,
par value $.01 per share ("New Series A Preferred Stock"; the New Common Stock
and the New Series A Preferred Stock are hereinafter collectively referred to as
the "New Stock"), as set forth on EXHIBIT A attached hereto; and
WHEREAS, immediately following the Recapitalization, each Stockholder
desires to sell to Buyer a portion of the New Shares (collectively, the "Stock
Purchase Shares") held by such Stockholder, and Buyer desires to acquire the
Stock Purchase Shares (the "Stock Purchase"); and
WHEREAS, the Stockholders are contemporaneously herewith entering into an
agreement (the "Aetna Holdings Agreement") to sell to Aetna Holdings, Inc., a
Delaware corporation ("Aetna Holdings"), an additional portion of the New Shares
held by the Stockholders.
NOW, THEREFORE, in order to consummate said Recapitalization and Stock
Purchase and in consideration of the mutual agreements set forth herein, the
parties hereto agree as follows:
SECTION 1. THE RECAPITALIZATION.
1.1 The Recapitalization Closing. Subject to Section 10.12, or unless this
Agreement shall have been terminated and the transactions herein contemplated
shall have been abandoned pursuant to Section 8, the closing of the
Recapitalization (the "Recapitalization Closing") will be held at 10:00 a.m. on
August 13, 1996 at the offices of Morgan, Lewis & Bockius LLP, 101 Park Avenue,
New York, New York 10178 (or such other time, date and place as the parties may
agree). At the Recapitalization Closing, each Stockholder shall receive for each
share of Old Stock, in accordance with the Amended and Restated Certificate (as
defined below), .34217407 shares of New Class A Common Stock, 1.75384365 shares
of New Class B Common Stock and .26776881 shares of New Series A Preferred
Stock. Upon the Recapitalization Closing, each Stockholder shall deliver or
cause to be delivered to the Company certificates representing the Old Shares
owned by such Stockholder, and the Company shall deliver to such Stockholder
certificates representing the New Shares owned, following the Recapitalization
Closing, by such Stockholder.
1.2 Certificate of Incorporation. Immediately prior to the Recapitalization
Closing, the Certificate of Incorporation of the Company shall be amended and
restated in the form of EXHIBIT B attached hereto (the "Amended and Restated
Certificate"), and, as so amended, shall become the Certificate of Incorporation
of the Company following the Recapitalization until further amended or restated
as provided therein. The Amended and Restated Certificate shall provide, among
other things, that the total number of shares of capital stock that the Company
shall have the authority to issue shall be 12,293,123.320 of which 5,000,000
shares shall be
2
6
New Class A Common Stock, 5,000,000 shares shall be New Class B Common Stock,
293,123.320 shares shall be New Series A Preferred Stock and 2,000,000 shares
shall be of a class of preferred stock, $.01 par value per share, all of which
shall have the relative rights and preferences as set forth in the Amended and
Restated Certificate which is attached as Exhibit B attached hereto.
SECTION 2. SALE OF THE STOCK PURCHASE SHARES.
2.1 Transfer of the Stock Purchase Shares. At the Stock Purchase Closing
(as defined below), each Stockholder (other than Berkshire Partners) shall
deliver or cause to be delivered to Buyer certificates representing the Stock
Purchase Shares owned by such Stockholder to be purchased by Buyer, as set forth
in Exhibit A. Such stock certificates shall be duly endorsed in blank for
transfer or shall be presented with stock powers duly executed in blank, free
and clear of any and all Liens.
2.2 Purchase Price and Payment. At the Stock Purchase Closing, Buyer shall
pay $9,999,997, such amount being the aggregate cash amount owing to all of the
Stockholders hereunder, to an account established by the Company, as agent, on
behalf of the Stockholders. At the Closing, the Company shall distribute to the
Stockholders by bank cashier check or by wire transfer of immediately available
funds, at the election of each Stockholder, the amounts contributed to said
account by Buyer, in the amounts indicated on Exhibit A attached hereto with
respect to each such Stockholder.
2.3 Time and Place of Closing. Subject to Section 10.12, the closing of the
purchase and sale of the Stock Purchase Shares provided for in this Agreement
(herein called the "Stock Purchase Closing") shall be held at the offices of
Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York 10178 on the
same day and immediately following the Recapitalization Closing or at such other
place or a later date or time as may be mutually agreed upon by the parties.
2.4 Stockholders' Representative.
(a) In order to administer efficiently (i) the implementation of the
Agreement by certain of the Stockholders, (ii) the waiver of any condition to
the obligations of such Stockholders to consummate the transactions
contemplated hereby, and (iii) the settlement of any dispute with respect to
this Agreement, the Former Management Stockholders and the Berkshire
Stockholders, with the exception of Berkshire and Berkshire Partners, (the
"Designating Stockholders") hereby designate Russell L. Epker as their
representative (the "Stockholders' Representative").
(b) The Designating Stockholders hereby authorize the Stockholders'
Representative (i) to take all action necessary in connection with the
implementation of the Agreement on behalf of the Designating Stockholders, the
waiver of any condition to the obligations of the Designating Stockholders to
consummate the transactions contemplated
3
7
hereby, and the settlement of any dispute, (ii) to give and receive all notices
required to be given under the Agreement with respect to the Designating
Stockholders and (iii) to take any and all additional action as is contemplated
to be taken by or on behalf of the Designating Stockholders by the terms of this
Agreement, including without limitation, the execution and delivery of documents
to transfer the Stock Purchase Shares to Buyer.
(c) Each Designating Stockholder hereby specifically authorizes and
directs the Stockholders' Representative to execute on behalf of such
Designating Stockholder the certificates to be delivered to Buyer by the
Company and the Stockholders pursuant to Section 7.3(b) unless such
authorization and direction shall have been revoked in writing by such
Designating Stockholder prior to the Stock Purchase Closing.
(d) In the event that the Stockholders' Representative dies, becomes
legally incapacitated or resigns from such position, Robert J. Small shall fill
such vacancy and shall be deemed to be the Stockholders' Representative
for all purposes of this Agreement unless otherwise determined by the
Designating Stockholders owning a majority of the shares of New Stock held (on a
fully diluted basis) by all Designating Stockholders; however, no change in the
Stockholders' Representative shall be effective until Buyer is given notice of
it by one or more of the Designating Stockholders.
(e) All decisions and actions by the Stockholders' Representative in
accordance with this Agreement shall be binding upon all of the Designating
Stockholders, and no Designating Stockholder shall have the right to object,
dissent, protest or otherwise contest the same.
(f) By their execution of this Agreement, the Designating Stockholders
agree that:
(i) Buyer shall be able to rely conclusively on the instructions
and decisions of the Stockholders' Representative as to any actions
required or permitted to be taken by the Designating Stockholders or the
Stockholders' Representative hereunder, and no party hereunder shall
have any cause of action against Buyer for any action taken by Buyer in
reliance upon the instructions or decisions of the Stockholders'
Representative;
(ii) all actions, decisions and instructions of the Stockholders'
Representative shall be conclusive and binding upon all of the
Designating Stockholders and no Designating Stockholder shall have any
cause of action against the Stockholders' Representative for any action
taken, decision made or instruction given by the Stockholders'
Representative under this Agreement, except for fraud or willful breach
of this Agreement by the Stockholders' Representative;
(iii) remedies available at law for any breach of the provisions of
this Section 2.4 are inadequate; therefore, Buyer shall be entitled to
temporary and
4
8
permanent injunctive relief without the necessity of proving damages
if Buyer brings an action to enforce the provisions of this Section 2.4;
and
(iv) the provisions of this Section 2.4 are independent and
severable, shall constitute an irrevocable power of attorney, coupled
with an interest and surviving death, granted by the Designating
Stockholders to the Stockholders' Representative and shall be binding
upon the executors, heirs, legal representatives and successors of each
Designating Stockholder.
(g) All fees and expenses incurred by the Stockholders' Representative
shall be paid pro rata by the Designating Stockholders in accordance with their
ownership of New Common Stock.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY TO BUYER.
3.1 Making of Representations and Warranties. As a material inducement to
Buyer to enter into this Agreement and consummate the Recapitalization and Stock
Purchase contemplated hereby, the Company hereby makes to Buyer, except as set
forth on a disclosure schedule (the "Recapitalization and Stock Purchase
Disclosure Schedule") with respect to the representations and warranties in
Section 3.3 (to be delivered to Buyer prior to the Stock Purchase Closing), the
representations and warranties contained in this Section 3.
3.2 Organization of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Aetna Industries, Inc. ("Aetna") is a corporation duly organized,
validly existing and in good standing under the laws of the State of Michigan.
Aetna Export Sales Corp. ("Export") is a corporation duly organized, validly
existing and in good standing under the laws of the United States Virgin
Islands. Aetna and Export are the only subsidiaries of the Company. The Company
and each of its subsidiaries have the requisite corporate power and authority to
own, lease and operate their properties and to conduct their businesses as
currently conducted. Each of the Company and its subsidiaries is duly qualified
as a foreign corporation to do business in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its business
makes such qualification necessary, except where the failure to be so qualified
would not have a Company Material Adverse Effect (as defined below). The term
"Company Material Adverse Effect" means any change or effect that is or would be
materially adverse to the business, assets, results of operations or financial
condition of the Company and its subsidiaries taken as a whole. Except for its
ownership of the subsidiaries, the Company does not directly or indirectly own
any equity or similar interest in, or any interest convertible, exchangeable or
exercisable for or into, any equity or similar interest in any person.
5
9
3.3 Capital Stock of the Company. The authorized capital stock of the
Company consists solely of (i) 1,040,000 shares of Old Class A Common Stock,
(ii) 1,040,000 shares of Old Class B Common Stock, (iii) 80,168 shares of Old
Series A Preferred Stock, and (iv) 250,000 shares of Old Series B Preferred
Stock. As of the date hereof, there are no other shares of capital stock
outstanding or reserved for issuance except pursuant to the Company's Executive
Stock Option Plan, as amended. Upon the Recapitalization Closing, the authorized
capital stock of the Company will consist solely of (i) 5,000,000 shares of New
Class A Common Stock, (ii) 5,000,000 shares of New Class B Common Stock, (iii)
293,123.320 shares of New Series A Preferred Stock and (iv) 2,000,000 shares of
a class of preferred stock, $.01 par value per share. Following the
Recapitalization, all of the outstanding shares of New Stock will (i) have been
duly authorized, validly issued and fully paid and will be non-assessable free
and clear of all Liens and (ii) be the only issued and outstanding capital stock
of the Company. The Company owns all of the outstanding shares of capital stock
of Aetna (consisting of 1,000 shares of common stock) and Aetna owns all of the
outstanding shares of capital stock of Export (consisting of 1,000 shares of
common stock), and all such shares are duly authorized, validly issued, fully
paid and non-assessable, and free and clear of all preemptive rights and all
Liens. There are no agreements or understandings to which the Company or any
subsidiary of the Company is a party with respect to the voting of, or other
interest in, any shares of Old Stock or New Stock or which restricts the
transfer of any such shares. There are no outstanding contractual obligations of
the Company or any subsidiary of the Company to repurchase, redeem or otherwise
acquire any shares of capital stock or Option of the Company or any subsidiary
of the Company, or to make any investment in any subsidiary or any other person.
3.4 Authority of the Company. The Company has full right, authority and
power to enter into this Agreement and each agreement, document and instrument
to be executed and delivered by the Company pursuant to this Agreement and to
carry out the transactions contemplated hereby and thereby. The execution,
delivery and performance by the Company of this Agreement and each such other
agreement, document and instrument have been duly authorized by all necessary
action of the Company and no other corporate action on the part of the Company
is required in connection therewith. This Agreement and each agreement, document
and instrument executed and delivered by the Company pursuant to this Agreement
constitutes, or when executed and delivered will constitute, valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms. The execution, delivery and performance of this Agreement and each
such agreement, document and instrument does not and will not violate any
provision of the organizational documents of the Company or any laws of the
United States or any state or other jurisdiction applicable to the Company, or,
except for agreements which will be terminated at the closing of the
transactions contemplated by the Aetna Holdings Agreement, require the
Company to obtain any approval, consent or waiver from, or make any filing with,
any person or entity (governmental or otherwise) that has not been obtained or
made or will not be obtained or made prior to the Recapitalization Closing.
6
10
SECTION 4. REPRESENTATIONS AND WARRANTIES OF EACH OF THE STOCKHOLDERS TO THE
COMPANY AND BUYER.
4.1 Making of Representations and Warranties. As a material inducement to
the Company and Buyer to enter into this Agreement and consummate the
Recapitalization and Stock Purchase, each Stockholder, with respect to such
Stockholder individually, hereby makes to the Company and Buyer, except as set
forth on the Recapitalization and Stock Purchase Disclosure Schedule with
respect to the representations and warranties in Section 4.2, the
representations and warranties contained in this Section 4.
4.2 Ownership of the Shares. Such Stockholder owns beneficially and of
record the Old Shares set forth opposite such Stockholder's name on Exhibit A
hereto free and clear of any and all Liens. The Stock Purchase Shares will be,
when delivered by such Stockholder to Buyer pursuant to this Agreement, free and
clear of any and all Liens and Buyer will have good and marketable title to the
Stock Purchase Shares (except for any liens, encumbrances, charges or claims set
forth in the Stockholders Agreement to be entered into contemporaneously with
the Stock Purchase Closing in substantially the form attached hereto as Exhibit
C (the "Stockholders Agreement") or set forth in the Company's Certificate of
Incorporation, as then in effect, or any Liens granted by or created through
Buyer). There are no voting trusts, voting agreements, proxies or other
agreements, instruments or undertakings with respect to the voting of the Stock
Purchase Shares to which such Stockholder is a party, except for any agreement
to which Buyer is or will be a party. None of the transactions contemplated by
this Agreement or the Aetna Holdings Agreement will give rise to or result in
(with or without lapse of time or both) any antidilution adjustment (other than
in connection with the Recapitalization), acceleration of vesting or other
change under or to any Option to which such Stockholder is a party which will
remain outstanding after the consummation of the closing of the transactions
contemplated by the Aetna Holdings Agreement.
4.3 Authority. Such Stockholder has full right, authority, power and
capacity to own the Old Shares and the New Shares, enter into this Agreement and
each agreement, document and instrument to be executed and delivered by or on
behalf of such Stockholder pursuant to this Agreement and to carry out the
Recapitalization and the other transactions contemplated hereby and thereby. Any
such Stockholder which is a corporation is in good standing under the laws of
its state of incorporation. This Agreement and each agreement, document and
instrument executed and delivered by such Stockholder pursuant to this Agreement
constitutes a valid and binding obligation of such Stockholder, enforceable in
accordance with their respective terms, and has been duly authorized by all
necessary action of such Stockholder's board of directors or partners, as the
case may be, or by such other action as is required with respect to a
Stockholder that is not a corporation or partnership. The execution, delivery
and performance of this Agreement and each such agreement, document and
instrument does not and will not violate any provision of the organizational
documents of such Stockholder which is not a natural person, or any laws of the
United States or any state or other jurisdiction applicable to such Stockholder,
or, except for agreements which will be terminated pursuant to Section 10.11
hereof, require such Stockholder to obtain any approval,
7
11
consent or waiver from, or make any filing with, any person or entity
(governmental or otherwise) that has not been obtained or made or will not be
obtained or made prior to the Recapitalization Closing.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER TO THE STOCKHOLDERS AND THE
COMPANY.
5.1 Making of Representations and Warranties. As a material inducement to
the Stockholders and the Company to enter into this Agreement and consummate the
purchase and sale of the Stock Purchase Shares contemplated hereby, Buyer hereby
makes the representations and warranties to the Stockholders and the Company
contained in this Section 5.
5.2 Organization of Buyer. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of New York.
5.3 Authority of Buyer. Buyer has full right, authority and power to enter
into this Agreement and each agreement, document and instrument to be executed
and delivered by Buyer pursuant to this Agreement and to carry out the Stock
Purchase contemplated hereby. The execution, delivery and performance by Buyer
of this Agreement and each such other agreement, document and instrument have
been duly authorized by all necessary corporate action of Buyer and no other
corporate action on the part of Buyer is required in connection therewith. This
Agreement and each other agreement, document and instrument executed and
delivered by Buyer pursuant to this Agreement constitute, or when executed and
delivered will constitute, valid and binding obligations of Buyer enforceable
against Buyer in accordance with their terms. The execution, delivery and
performance of this Agreement and each such agreement, document and instrument
does not and will not violate any provision of the organizational documents of
Buyer or any laws of the United States or any state or other jurisdiction
applicable to Buyer, or require Buyer to obtain any approval, consent or waiver
from, or make any filing with, any person or entity (governmental or otherwise)
that has not been obtained or made or will not be obtained or made prior to the
Stock Purchase Closing.
SECTION 6. COVENANTS PRIOR TO THE STOCK PURCHASE CLOSING.
6.1 Conduct of Business of the Company. Except as otherwise provided for
in this Agreement or the Aetna Holdings Agreement or agreed to by Buyer and the
Stockholders in writing, the Company covenants and agrees as to itself and each
of its subsidiaries that between the date of this Agreement and the Stock
Purchase Closing, it shall carry on its respective businesses in the usual,
regular and ordinary course, consistent with past practice. Without limiting the
generality of the foregoing, neither the Company nor either of its subsidiaries
shall, between the date of this Agreement and the Stock Purchase Closing,
directly
8
12
or indirectly, do any of the following without the prior written consent of
Buyer and the Stockholders, except as provided for in this Agreement or the
Aetna Holdings Agreement:
(a) (i) Declare, set aside or pay any dividend or other distribution
(whether in cash, stock, or property or any combination thereof) in respect of
any of its capital stock or make any other payment to a stockholder of the
Company in such person's capacity as a stockholder of the Company; (ii) split,
combine, reclassify or subdivide any of its capital stock; or (iii) repurchase,
redeem or otherwise acquire any of its capital stock;
(b) Authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver any shares of stock of any class or any other
securities or equity equivalents, including in connection with the exercise of
options to purchase shares of Class A Common Stock (the "Employee Options")
outstanding as of the date of this Agreement;
(c) Acquire, sell, lease, transfer or dispose of any assets other than
in the ordinary course of business consistent with past practice, except
pursuant to obligations or capital expenditure programs in effect on the date
hereof;
(d) Except in the ordinary course of business consistent with past
practice or pursuant to credit facilities in existence on the date hereof, incur
any indebtedness for borrowed money, guarantee any indebtedness, issue or sell
debt securities or warrants or rights to acquire any debt securities, guarantee
(or otherwise become liable or potentially liable for) any debt of others, make
any loans, advances or capital contributions, mortgage, pledge or otherwise
encumber any material assets, or create or suffer any material lien, charge,
security interest, encumbrance, equity, claim or option of any kind whatsoever
thereupon;
(e) Change any of the accounting principles or practices used by it;
(f) Increase the compensation payable or to become payable to its
executive officers or employees, except for increases in the ordinary course of
business consistent with past practice which do not result in a material
increase in benefits or compensation expense to the Company or its subsidiaries
taken as a whole, or grant any severance or termination pay to, or enter into
any employment or severance agreement with, any director or executive officer of
it or any of its subsidiaries other than in the ordinary course of business, or
establish, adopt, enter into or, except as required by or contemplated by this
Agreement or the Aetna Holdings Agreement (including, without limitation, the
cancellation of Employee Options outstanding as of the date hereof), amend in
any material respect or take action to accelerate any rights or benefits under
any collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any director, executive officer or employee
except as is provided therein;
9
13
(g) Enter into any transaction with an affiliate of the Company other
than in the ordinary course of business and except for the payment of a bonuses
to management in the amount of $350,000 (less any applicable withholding
taxes) and the payment of deferred compensation to Jerome Singer in the amount
of $225,186 (less any applicable withholding taxes), such amounts to be paid at
the Closing;
(h) Enter into any transaction with any Berkshire Stockholder,
Prudential, Pruco or Michigan except as disclosed in Section 6.1(h) of the
Recapitalization and Stock Purchase Disclosure Schedule;
(i) Amend or otherwise change the Company's certificate of
incorporation or by-laws; or
(j) Enter into an agreement to take any of the foregoing actions.
6.2 No Solicitation. Unless this Agreement is terminated in accordance
with its terms, neither the Company nor any of its subsidiaries shall, and the
Company shall use reasonable efforts to ensure that none of its affiliates,
officers, directors, representatives or agents shall, directly or indirectly,
solicit, knowingly encourage or enter into any agreement with respect to or
participate in negotiations with, provide any confidential information to, or
otherwise cooperate in any way in connection with, or enter into any agreement
with respect to, any Third Party (as hereinafter defined) concerning any merger
or any other business combination, sale of a substantial portion of the assets
of the Company and its subsidiaries, or any similar transaction involving the
Company and its subsidiaries (each, a "Business Combination," provided, however,
that no transaction contemplated by this Agreement or the Aetna Holdings
Agreement or involving Buyer or any affiliate thereof shall be a Business
Combination). For purposes of this Agreement, "Third Party" shall mean any
person or persons other than Buyer, any affiliate of Buyer, or any of Buyer's
directors, officers, employees, representatives, and agents. The Company agrees
to terminate, immediately following the execution of this Agreement, any pending
discussions or negotiations with Third Parties with respect to any possible
Business Combination. If, prior to the earlier of the Stock Purchase Closing or
the termination of this Agreement, the Company, any subsidiary of the Company or
any Stockholder shall enter into any agreement with a Third Party relating to
any Business Combination, the Company shall reimburse Buyer for all of the fees
and expenses (including fees and expenses of counsel and accountants) incurred
by Buyer in connection with the transactions contemplated by this Agreement.
6.4 Access to Information; Confidentiality.
(a) From the date hereof to the Stock Purchase Closing, the Company
shall (and shall cause its subsidiaries and officers, directors, employees,
auditors and agents to) afford the officers, employees and agents of Buyer (the
"Representatives") reasonable access at mutually convenient times to its
officers, employees, agents, properties, offices, plants and
10
14
other facilities, books and records, and shall furnish such Representatives
with all financial, operating and other data and information as may be
reasonably requested by Buyer.
(b) All information obtained by Buyer pursuant to this Section 6.3
shall, to the extent required thereby, be kept confidential in accordance
with the terms of the Confidentiality Agreement dated January 13, 1995 between
Aetna and Buyer (the "Confidentiality Agreement").
6.4 Reasonable Efforts. Upon the terms and subject to the conditions
hereof, each of the parties hereto shall use its reasonable efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated herein including,
without limitation, using its reasonable efforts to obtain all licenses,
permits, consents, approvals, authorizations, qualifications and orders of any
governmental and regulatory authorities ("Governmental Entities") as are
necessary for the consummation of the transactions contemplated herein. Each
party shall promptly consult with the other with respect to, provide any
necessary information with respect to and provide the other (or its counsel)
with copies of, (i) all filings made by such party with any Governmental
Entities or any other person in connection with the execution of this Agreement
and the consummation of the transactions contemplated hereby and (ii) all other
written materials submitted or prepared by any such party in connection with
obtaining all licenses, permits, consents, approvals, authorizations and orders
that are required to be obtained in connection with the execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement.
6.5 Stockholders Meeting or Consent. Prior to the Recapitalization
Closing, the Company shall circulate a written consent of Stockholders for the
purposes of obtaining the requisite stockholder approval to approve the
Amended and Restated Certificate and to take any other action as may be
required for the consummation of the transactions contemplated by this
Agreement or the Aetna Holdings Agreement.
6.6 Actions by Stockholders. Each Stockholder agrees that it will, prior
to the Recapitalization Closing, vote the Old Shares held by such Stockholder
(i) to approve the Amended and Restated Certificate in the form attached hereto
as Exhibit B and (ii) to approve any other actions required to be taken to
consummate the Recapitalization and Stock Purchase and to consummate the
transactions contemplated by the Aetna Holdings Agreement.
6.7 Public Announcements. The Company and Buyer shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to this Agreement or any transaction contemplated herein and shall
not issue any such press release or make any such public statement without the
prior consent of the other party, which consent shall not be unreasonably
withheld; provided, however, that a party may, without the prior consent of the
other party, issue such press release or make such public statement as may be
11
15
required by law if it has used all reasonable efforts to consult with the other
party and to obtain such party's consent but has been unable to do so in a
timely manner.
6.8 Notice. The Company will notify Buyer promptly in writing of, and
contemporaneously will provide Buyer with, true and complete copies of any and
all information or documents relating to, any event, transaction or circumstance
occurring after the date of this Agreement that causes or will cause any
covenant or agreement to be performed prior to the Stock Purchase Closing of the
Company or the Stockholders under this Agreement or the Aetna Holdings Agreement
to be breached in any material respect or that renders or will render untrue in
any material respect any representation or warranty of the Company or the
Stockholders contained in this Agreement or the Aetna Holdings Agreement as if
the same were made on or as of the date of such event, transaction or
circumstance. No notice given pursuant to this Section shall have any effect on
the representations, warranties, covenants or agreements contained in this
Agreement or the Aetna Holdings Agreement for purposes of determining
satisfaction of any condition contained herein or therein or shall in any way
limit Buyer's right, if any, to seek relief with respect to the matters referred
to in such notice hereunder or under the Aetna Holdings Agreement.
SECTION 7. CONDITIONS.
7.1 Conditions to the Obligations of each of the Stockholders with Respect
to the Recapitalization. The obligations of each of the Stockholders to effect
the Recapitalization are subject to the satisfaction or waiver of the following
conditions:
(a) Consents. All authorizations, consents, orders or approvals of, or
declarations or filings with, any Governmental Entity necessary in order to
permit the consummation of the transactions contemplated by this Agreement and
the Aetna Holdings Agreement, shall have occurred or shall have been obtained.
(b) No Violation of Law. There shall not be in effect on the date of
the Stock Purchase Closing any law or other governmental regulation restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement or the Aetna Holdings Agreement
and there shall not be pending on the day of the Stock Purchase Closing any
proceeding or any action (i) wherein an unfavorable judgment, decree or order
would prevent the carrying out of this Agreement or the Aetna Holdings
Agreement or any of the transactions or events contemplated hereby or thereby or
declare unlawful the transactions or events contemplated by this Agreement or
the Aetna Holdings Agreement or (ii) which could reasonably be expected to
result in the issuance of any such judgment, decree or order.
(c) Other Agreements. The Aetna Holdings Agreement shall be in full
force and effect on the date of the Stock Purchase Closing.
12
16
7.2 Conditions to the Obligations of the Company with Respect to the
Recapitalization. The obligations of the Company to effect the Recapitalization
are subject to the satisfaction or waiver of the following conditions:
(a) Consents. All authorizations, consents, orders or approvals of, or
declarations or filings with, any Governmental Entity necessary in order to
permit the consummation of the transactions contemplated by this Agreement
and the Aetna Holdings Agreement, shall have occurred or shall have been
obtained.
(b) No Violation of Law. There shall not be in effect on the date of
the Stock Purchase Closing any law or other governmental regulation restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement or the Aetna Holdings
Agreement and there shall not be pending on the day of the Stock Purchase
Closing any proceeding or any action (i) wherein an unfavorable judgment, decree
or order would prevent the carrying out of this Agreement or the Aetna Holdings
Agreement or any of the transactions or events contemplated hereby or thereby or
declare unlawful the transactions or events contemplated by this Agreement or
the Aetna Holdings Agreement or (ii) which could reasonably be expected to
result in the issuance of any such judgment, decree or order.
(c) Other Agreements. The Aetna Holdings Agreement shall be in full
force and effect on the date of the Stock Purchase Closing.
7.3. Conditions to the Obligations of Buyer with Respect to the Stock
Purchase. The obligations of Buyer to effect the Stock Purchase are subject to
the satisfaction or waiver of the following conditions:
(a) Prior Closing. The Recapitalization Closing shall have occurred.
(b) Representations; Warranties; Covenants. Each of the
representations and warranties of the Company contained in Section 3 and of the
Stockholders contained in Section 4 shall be true and correct in all material
respects as of the date of the Agreement and as of the date of the Stock
Purchase Closing as though made on and as of the date of the Stock Purchase
Closing (except as otherwise specifically described in this Agreement or arising
out of or related to the transactions contemplated by this Agreement and except
as to any representation or warranty which specifically relates to an earlier
date) and the Company and Stockholders shall have delivered a certificate,
executed by each Stockholder (except that the Stockholders' Representative may
sign on behalf of the Designating Stockholders), with respect to such
Stockholder, to such effect to Buyer. The Company and the Stockholders shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by them on
or prior to the date of the Stock Purchase Closing and the Company and
Stockholders shall have delivered a certificate, executed by each Stockholder
(except that the Stockholders' Representative may
13
17
sign on behalf of the Designating Stockholders), with respect to such
Stockholder, to such effect to Buyer.
(c) Aetna Holdings Agreement. Each of the representations and
warranties contained in Sections 2 and 3 of the Aetna Holdings Agreement shall
be true and correct in all material respects at the time of the Stock Purchase
Closing as though made on and as of the date of the Stock Purchase Closing
(except as otherwise specifically described in this Agreement or the Aetna
Holdings Agreement or arising out of or related to the transactions
contemplated by this Agreement or the Aetna Holdings Agreement and except as to
any representation or warranty which specifically relates to an earlier date)
and the Stockholders shall have performed or complied in all material respects
with all agreements and covenants required by the Aetna Holdings Agreement to be
performed or complied with by them on or prior to the date of the closing of the
transactions contemplated by the Aetna Holdings Agreement.
(d) Consents. All authorizations, consents, orders or approvals of, or
declarations or filings with, any Governmental Entity necessary in order to
permit the consummation of the transactions contemplated by this Agreement and
the Aetna Holdings Agreement, shall have occurred or shall have been obtained in
form reasonably satisfactory to Buyer.
(e) Third Party Consents. The consents (or in lieu thereof waivers)
disclosed in the Disclosure Letter to be delivered pursuant to the Aetna
Holdings Agreement, if any, and all other consents (or in lieu thereof waivers)
to the performance by the Stockholders, the Company and Buyer of their
obligations under this Agreement or the Aetna Holdings Agreement or to the
consummation of the transactions contemplated hereby and thereby as are required
under any contract to which the Stockholders, the Company, either subsidiary
thereof, or Buyer is a party or by which any of their respective assets and
properties are bound and where the failure to obtain any such consent (or in
lieu thereof waiver) will have individually or in the aggregate with other such
failures, a Company Material Adverse Effect, shall have been obtained and be in
full force effect and shall be in form and substance reasonably satisfactory to
Buyer.
(f) Financing. Buyer or Aetna shall have obtained debt financing on
terms and conditions satisfactory to Buyer in amounts sufficient to provide
for the payment and full satisfaction of all obligations of the Company as
contemplated by the Aetna Holdings Agreement.
(g) Stockholders Agreement. The Stockholders Agreement shall have been
executed by the parties thereto.
(h) FIRPTA Certificates. Each Stockholder shall have delivered to
Buyer a duly executed FIRPTA certificate in a form that satisfies the
requirements set forth in Section 1.1445-2(b)(2) of the Treasury Regulations.
14
18
(i) Opinions of Counsel. Buyer shall have received the opinion of each
of (i) Goodwin, Procter & Hoar LLP, dated as of the date of the Stock Purchase
Closing and (ii) Willkie Farr & Gallagher, counsel to Prudential, Pruco and
Michigan, or other counsel satisfactory to Buyer, dated as of the date of the
Stock Purchase Closing, and each of these opinions shall be in a form
satisfactory to Buyer.
(j) Approval of Bank. NBD Bank shall have entered into Amendment No. 1
to the existing Credit Agreement between Aetna and NBD.
(k) Good Standing Certificates. The Company shall have delivered to
Buyer certificates from the Secretary of State or other appropriate official
of the respective jurisdictions of incorporation to the effect that the Company
and its subsidiaries are in good standing in such jurisdiction.
(l) Employment Agreements. The Company shall have entered into
employment agreements with Ueli Spring, Harold Brown and Gary Easterly in a
form reasonably satisfactory to Buyer.
(m) Amendment to Certificate of Incorporation. The Stockholders shall
have approved the Amended and Restated Certificate of Incorporation in the
form attached hereto as Exhibit B and it shall have become effective.
(n) Disclosure Schedules. The Disclosure Letter (as such term is
defined in the Aetna Holdings Agreement) shall have been delivered to Aetna
Holdings and the Recapitalization and Stock Purchase Disclosure Schedule shall
have been delivered to Buyer.
(o) No Violation of Law. There shall not be in effect on the date of
the Stock Purchase Closing any law or other governmental regulation
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or the
Aetna Holdings Agreement and there shall not be pending on the day of the Stock
Purchase Closing any proceeding or any action (i) wherein an unfavorable
judgment, decree or order would prevent the carrying out of this Agreement or
the Aetna Holdings Agreement or any of the transactions or events contemplated
hereby or thereby, or declare unlawful the transactions or events contemplated
by this Agreement or the Aetna Holdings Agreement or (ii) which could reasonably
be expected to result in the issuance of any such judgment, decree or order.
(p) Payment of Bonuses. The Company or Aetna shall, at or prior to the
Stock Purchase Closing, have paid to each of the persons listed on Exhibit D
attached hereto the full amounts of bonus payments or deferred compensation
due them under any agreement, arrangement or understanding with them or for
their benefit.
15
19
(q) Board of Directors. Russell L. Epker, Robert J. Small, James
Bakken, Douglas A. Thal and Jerome Singer, members of the board of
directors of the Company, shall have tendered their resignations effective at
the time of the Stock Purchase Closing.
(r) Other Agreements. The Aetna Holdings Agreement shall be in full
force and effect.
(s) Payment of Debt. The Company shall have made binding arrangements
for the payment of Aetna's 14% Senior Subordinated Notes due 1999 in full
accordance with the terms of the Securities Purchase Agreements dated as of
March 3, 1989, as amended, and the Senior Subordinated Notes thereunder, prior
to the closing of the transactions contemplated by the Aetna Holdings Agreement.
7.4 Conditions to the Obligations of the Stockholders with Respect to the
Stock Purchase. The obligations of the Stockholders to effect the Stock Purchase
are subject to the satisfaction or waiver of the following conditions:
(a) Recapitalization Closing. The Recapitalization Closing shall have
occurred.
(b) Representations; Warranties; Covenants. Each of the
representations and warranties of Buyer contained in Section 5 shall be true and
correct in all material respects as of the date of the Agreement and as
of the date of the Stock Purchase Closing as though made on and as of the date
of the Stock Purchase Closing (except as otherwise specifically contemplated by
this Agreement or arising out of or related to the transactions contemplated by
this Agreement and except as to any representation or warranty which
specifically relates to an earlier date) and Buyer shall have delivered a
certificate, executed by an authorized officer of Buyer, to such effect to the
Stockholders. Buyer shall have performed or complied in all material respects
with all agreements and covenants required by this Agreement to be performed or
complied with by it on or prior to the date of the Stock Purchase Closing and
Buyer shall have delivered a certificate, executed by an authorized officer of
Buyer, to such effect to the Stockholders.
(c) Consents. All authorizations, consents, orders or approvals of, or
declarations or filings with, any Governmental Entity necessary in order to
permit the consummation of the transactions contemplated hereby, shall have
occurred or shall have been obtained.
(d) Stockholders Agreement. The Stockholders Agreement shall have been
executed by the parties thereto.
(e) Payment of Debt. The Company shall have made arrangements for the
payment of Aetna's 14% Senior Subordinated Notes due 1999 in full accordance
with the terms of the Securities Purchase Agreements dated as of March 3, 1989,
as amended, and the
16
20
Senior Subordinated Notes thereunder, prior to the closing of the transactions
contemplated by the Aetna Holdings Agreement.
(f) No Violation of Law. There shall not be in effect on the date of
the Stock Purchase Closing any law or other governmental regulation restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement or the Aetna Holdings
Agreement and there shall not be pending on the day of the Stock Purchase
Closing any proceeding or any action (i) wherein an unfavorable judgment, decree
or order would prevent the carrying out of this Agreement or the Aetna Holdings
Agreement or any of the transactions or events contemplated hereby or thereby,
or declare unlawful the transactions or events contemplated by this Agreement or
the Aetna Holdings Agreement or (ii) which could reasonably be expected to
result in the issuance of any such judgment, decree or order.
(g) Opinion of Counsel. The Stockholders shall have received the
opinion of Morgan Lewis & Bockius LLP, counsel to Buyer, dated as of the
date of the Stock Purchase Closing, in a form satisfactory to the Stockholders.
(h) Other Agreements. The Aetna Holdings Agreement shall have been
duly executed and delivered by the respective parties thereto and shall be
in full force and effect on the date of the Stock Purchase Closing.
SECTION 8. TERMINATION OF AGREEMENT.
8.1 Termination. This Agreement may be terminated at any time prior to the
Recapitalization Closing as follows:
(a) by mutual written consent of all the parties hereto;
(b) by any of the parties hereto if any United States federal or state
court of competent jurisdiction or any Government Entity shall have issued
an injunction, order, decree or ruling (an "Injunction") or taken any other
action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby and such Injunction or other action shall have
become final and non-appealable; or
(c) by the Company, the Stockholders or Buyer, if the Recapitalization
Closing shall not have occurred on or before August 16, 1996 and such failure
is not caused by breach of this Agreement by the terminating party.
The right of any party hereto to terminate this Agreement pursuant to this
Section 8.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective
17
21
employees, officers, directors, agents, representatives or advisors, whether
prior to or after the execution of this Agreement.
8.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.1 hereof, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party hereto
or its affiliates, directors, officers or stockholders and all rights and
obligations of any party hereto shall cease, other than the provisions of
Sections 6.3 and 10.8.
8.3 Amendment. This Agreement may be amended by the parties hereto at any
time prior to the Recapitalization Closing. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
8.4 Extension; Waiver. At any time prior to the Recapitalization Closing,
the parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of any other party hereto, (ii) waive any inaccuracies
in the representations and warranties of any other party contained herein or in
any document delivered pursuant hereto and (iii) waive compliance by any other
party with any of the agreements or conditions contained herein (except that the
Stockholders' Representative may take such action on behalf of the Designating
Stockholders). Any agreement on the part of a party hereto to any such extension
or waiver shall be valid only if set forth in a written instrument signed on
behalf of such party (except that the Stockholders' Representative may sign such
instrument on behalf of the Designating Stockholders).
SECTION 9. RIGHTS AND OBLIGATIONS SUBSEQUENT TO STOCK PURCHASE CLOSING.
9.1 Survival of Representations and Warranties. The representations and
warranties made in this agreement shall terminate upon the fourth anniversary of
the Stock Purchase Closing and shall have no further force and effect, or be
relied upon in any manner or for any reason, after such date.
9.2 Further Action. In case at any time after the Stock Purchase Closing
any further action is necessary or desirable to carry out the purposes of this
Agreement, each party or the proper officers and directors of each party to this
Agreement shall use their reasonable efforts to take all such action.
SECTION 10. MISCELLANEOUS.
10.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon receipt if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at
18
22
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to the Company, to
MS Acquisition Corp.
c/o Aetna Industries, Inc.
24331 Sherwood Avenue
Centerline, Michigan 48015-0067
Attention: Ueli Spring
Telephone: (810) 759-2200
Facsimile: (810) 759-2209
with a copy to:
MS Acquisition Corp.
c/o Berkshire Partners LLC
One Boston Place
Boston, Massachusetts 02108
Attention: Russell L. Epker
Telephone: (617) 227-0050
Facsimile: (617) 227-6105
and with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attention: Stephen W. Carr, P.C.
Telephone: (617) 570-1000
Facsimile: (617) 523-1231
(b) if to the Stockholders, to
Berkshire Partners LLC
One Boston Place
Boston, Massachusetts 02108
Attention: Russell L. Epker
Robert J. Small
Telephone: (617) 227-0050
Facsimile: (617) 227-6105
with a copy to:
19
23
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attention: Stephen W. Carr, P.C.
Telephone: (617) 570-1000
Facsimile: (617) 523-1231
and:
The Prudential Insurance Company of America
Pruco Life Insurance Company
c/o Prudential Financial Restructuring Group
Four Gateway Center, 9th Floor
Newark, New Jersey 07102-4069
Attention: Stephen Haeckel
Telephone: (201) 802-2678
Facsimile: (201) 802-2662
with a copy to:
Prudential Law Department
Four Gateway Center, 6th Floor
Newark, New Jersey 07102-4069
Attention: Jack Pfeilsticker
Telephone: (201) 802-9200
Facsimile: (201) 802-3853
and with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677
Attention: Duncan J. Stewart
Telephone: (212) 821-8271
Facsimile: (212) 821-8111
20
24
and:
Michigan Department of Treasury
430 West Allegan
Lansing, Michigan 48922
Attention: Thomas Hufnagel
Telephone: (517) 373-4330
Facsimile: (517) 335-3668
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677
Attention: Duncan J. Stewart
Telephone: (212) 821-8271
Facsimile: (212) 821-8111
(c) if to Buyer, to
Citicorp Venture Capital, Ltd.
399 Park Avenue
New York, New York 10043
Attention: Michael Delaney
Telephone: (212) 559-2056
Facsimile: (212) 888-2940
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attention: Philip H. Werner
Telephone: (212) 309-6080
Facsimile: (212) 309-6273
10.2 Descriptive Headings. The descriptive headings herein are inserted
for convenience only and are not intended to be part of or to affect the
meaning or interpretation of this Agreement.
10.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when
21
25
one or more counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
10.4 Waiver of Certain Rights. The parties hereto agree to waive any
preemptive rights to purchase any shares of stock of the Company issued in
connection with this Agreement or the Aetna Holdings Agreement that such party
may have under the Company's Certificate of Incorporation or otherwise. Such
waiver shall become effective upon the execution of this Agreement.
10.5 Entire Agreement; Assignment. This Agreement (together with the
Confidentiality Agreement and any other documents delivered pursuant hereto) (a)
constitute the entire agreement of the parties and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, including without limitation, the letter
of intent dated March 27, 1996, as amended, and (b) shall not be assigned by
operation of law or otherwise without the written approval of the other parties
hereto; provided, however, that any party may assign the Agreement to an
affiliate of such party, but such assignment will not relieve such party of its
obligations hereunder.
10.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York without regard to any
applicable principles of conflicts of law which might apply the laws of any
other jurisdiction.
10.7 Remedies. The remedies of the parties after the Closing with respect
to this Agreement and any transaction contemplated hereby, including without
limitation any breach of a representation, warranty or covenant contained herein
by any party, shall terminate on the fourth anniversary of the Stock Purchase
Closing.
10.8 Expenses. Whether or not the Recapitalization and Stock Purchase are
consummated, except as otherwise provided herein, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs and expenses, provided,
however, that the Company shall pay all reasonable costs and expenses incurred
by the Company or the Stockholders in connection with the transactions
contemplated by this Agreement, including without limitation, all costs of
obtaining permits, waivers, registrations or consents, all investment banking,
legal and accounting expenses of the Stockholders and all New York State stock
transfer taxes.
10.9 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person or
persons any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
10.10 Severability. The invalidity or unenforceability of a provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
22
26
10.11 Termination of Other Agreements. The parties agree that,
simultaneously with the Stock Purchase Closing, the following agreements shall
terminate and from and after the Stock Purchase Closing shall have no further
force and effect: the Stock Purchase and Stockholders Agreement dated as of
March 3, 1989 by and among the Company and the Purchasers (as defined therein),
the Parallel Exit Agreement dated as of March 3, 1989 by and between the
Stockholders (as defined therein), the Voting Rights Agreement dated as of March
3, 1989 by and among the Company, the Berkshire Group (as defined therein) and
the Management Group (as defined therein), the Designated Shares Agreement dated
as of March 3, 1989 by and between the Company and the Stockholders (as defined
therein), the Registration Rights Agreement dated as of March 3, 1989 by and
among MS and the Berkshire Investors (as defined therein), the Registration
Rights Agreement dated as of March 3, 1989 by and between the Company,
Prudential, Pruco and Michigan and the Management Agreement dated as of March 3,
1989 by and among the Company, Aetna and Berkshire, each as may have been
amended from time to time, and the parties hereto consent to the transactions
contemplated by this Agreement or the Aetna Holdings Agreement, whether or not
such transactions are consistent with the terms of the other agreements referred
to above in this Section 10.11; provided, however, if the transactions
contemplated by the Aetna Holdings Agreement are not consummated by the end of
the business day on which the Stock Purchase Closing occurs, the parties agree
that all such terminations shall be rescinded. Each of the parties hereto
further agrees that, provided such terminations are not rescinded, there shall
be no surviving rights and liabilities or other obligations of any party to the
other agreements referred to in this Section 10.11 and each of the parties
hereto releases all other parties hereto, and their officers, directors,
stockholders, partners, agents and employees from all actions, causes of
actions, suits, debts, sums of money, covenants, controversies, agreements,
damages, judgments, claims and demands, at law or in equity, arising out of such
other agreements which it may now have or has ever had on or prior to the date
hereof.
10.12 Rescission of Recapitalization and Stock Purchase Closings.
Notwithstanding anything herein to the contrary, if the transactions
contemplated by the Aetna Holdings Agreement are not consummated by the end of
the business day on which the Stock Purchase Closing occurs, the parties agree
that the Recapitalization Closing, if the Stockholders' so request, and the
Stock Purchase Closing shall be rescinded.
10.13 Further Assurances; Post-Closing Cooperation. At any time or from
time to time after the Recapitalization Closing, the parties hereto shall
execute and deliver to Buyer or the Company such other documents and
instruments, provide such materials and information and take such other actions
as any party hereto may reasonably request in order that the requested party
fulfill its obligations under this Agreement which were to be performed at or
prior to the Stock Purchase Closing.
10.14 Limited Recourse. Notwithstanding anything in this Agreement, the
Aetna Holdings Agreement or any other document, agreement or instrument
contemplated hereby or thereby to the contrary, the obligations of any entity
hereunder or under the Aetna Holdings Agreement shall be without recourse to any
partner, associate or affiliate of such entity, or any
23
27
other of its respective officers, directors, employees or agents and shall be
limited to the assets of such entity.
10.15 Certain Definitions. For purposes of this Agreement, the term:
(a) "affiliate" means a person that, directly or indirectly, through
one or more intermediaries, controls, is controlled by or is under common
control with, the first mentioned person;
(b) "associate" means with respect to any person, (i) any corporation
or organization of which such person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10 percent or more of any class of equity
securities; (ii) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee or
in a similar fiduciary capacity; and (iii) any relative or spouse of such
person, or any relative of such spouse, who has the same home as such person or
who is a director or officer of such person or any of its parents or
subsidiaries.
(c) "control" (including the terms "controlled," "controlled by" and
"under common control with") means the possession, directly or indirectly
or as trustee or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock or as
trustee or executor, by contract or credit arrangement or otherwise;
(d) "Liens" means any and all liens, security interests, options,
encumbrances, equities, charges or claims of any kind whatsoever, except as
contemplated by this Agreement or the Aetna Holdings Agreement or by the
Company's Certificate of Incorporation (as then in effect).
(e) "person" means any individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or government or
any agency or political subdivision thereof or any other entity; and
(f) "subsidiary" or "subsidiaries" of the Company or Buyer or any
other person means any corporation, partnership, joint venture or other legal
entity of which the Company or Buyer or such other person, as the case may
be (either alone or through or together with any other subsidiary), owns,
directly or indirectly, 50% or more of the stock or other equity interests, the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
24
28
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
The Company: MS ACQUISITION CORP.
By: /s/ UELI SPRING
-------------------------------
Title: President
The Stockholders and Sellers: THE BERKSHIRE FUND
A LIMITED PARTNERSHIP
BY: BERKSHIRE CAPITAL ASSOCIATES,
LIMITED PARTNERSHIP
Its General Partner
By: /s/ RUSSELL L. EPKER
-------------------------------
A General Partner
/s/ BRADLEY M. BLOOM
------------------------------------
Bradley M. Bloom
*
------------------------------------
J. Christopher Clifford
/s/ RUSSELL L. EPKER
------------------------------------
Russell L. Epker
s/ CARL FERENBACH
------------------------------------
Carl Ferenbach
/s/ RICHARD K. LUBIN
------------------------------------
Richard K. Lubin
*
------------------------------------
Lea Anne S. Ottinger
/s/ KEVIN T. CALLAGHAN
------------------------------------
Kevin T. Callaghan
RUSSELL L. EPKER
- --------------------------------------
*By Power of Attorney
25
29
BERKSHIRE PARTNERS LLC, as Escrow
Agent
By: /s/ RUSSELL EPKER
-------------------------------
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ STEPHEN R. HAECKEL
-------------------------------
Vice President
PRUCO LIFE INSURANCE COMPANY
By: /s/ B. ROSS SMEAD
-------------------------------
Vice President
STATE TREASURER OF THE STATE OF
MICHIGAN, CUSTODIAN OF THE PUBLIC
SCHOOL EMPLOYEES' RETIREMENT
SYSTEM; STATE EMPLOYEES' RETIREMENT
SYSTEM; MICHIGAN STATE POLICE
RETIREMENT SYSTEM; JUDGES'
RETIREMENT SYSTEM; AND PROBATE
JUDGES' RETIREMENT SYSTEM
By: /s/ PAUL H. RICE
-------------------------------
Title
26
30
/s/ JEROME SINGER
-------------------------------
Jerome Singer
/s/ DOUGLAS A. THAL
-------------------------------
Douglas A. Thal
/s/ ROBERT J. KLEIN
-------------------------------
Robert J. Klein
/s/ STEVEN SINGER
-------------------------------
Steven Singer
Buyer: CITICORP VENTURE CAPITAL, LTD.
By: /s/ DAVID HOWE
-------------------------------
27
31
EXHIBIT A
List of Stockholders, Old Stockholdings, New Stockholdings and Consideration to
be Paid for the Stock Purchase Shares
Stock Purchase Shares to be
New Shares to be Received Upon Transferred at the Stock Cash
Old Shares Recapitalization Purchase Closing Consideration
----------------------------------------- ------------------------------ ------------------------- Payable by
Name Old Old Old Old New New New New New New Buyer in the
of Class Class Series Series Series Series Series Series Series Series Stock
Stock- A B A B A B A A B A Purchase
Holder Common Common Preferred Preferred** Common Common Preferred Common Common Preferred Closing
- ------------------------------------------------------------------------------------------------------------------------------------
The
Berkshire
Fund 272,564 0 38,334 40,398 120,204 616,119 94,066,120 60,568 166,545 29,015,330 $3,223,925
- ------------------------------------------------------------------------------------------------------------------------------------
Bradley
M. Bloom 2,126 0 335 353 963 4,935 753.500 485 1,334 232.420 $25,824
- ------------------------------------------------------------------------------------------------------------------------------------
J. Christopher
Clifford 2,126 0 335 353 963 4,935 753.500 485 1,334 232.420 $25,824
- ------------------------------------------------------------------------------------------------------------------------------------
Russell L.
Epker 2,126 0 335 353 963 4,935 753.500 485 1,334 232.420 $25,824
- ------------------------------------------------------------------------------------------------------------------------------------
Carl
Ferenbach 2,126 0 335 353 963 4,935 753.500 485 1,334 232.420 $25,824
- ------------------------------------------------------------------------------------------------------------------------------------
Richard K.
Lubin 2,126 0 335 353 963 4,935 753.500 485 1,334 232.420 $25,824
- ------------------------------------------------------------------------------------------------------------------------------------
Lea Anne S.
Ottinger 1,276 0 0 0 437 2,238 341.670 220 605 105.390 $11,710
- ------------------------------------------------------------------------------------------------------------------------------------
Kevin T.
Callaghan 530 0 75 79 234 1,200 183.150 118 324 56.500 $6,277
- ------------------------------------------------------------------------------------------------------------------------------------
The
Prudential
Insurance
Company
of America 60,374* 268,328 26,889* 28,337* 131,370 673,350 102,803.950 66,195 182,015 31,710.570 $3,523,396
- ------------------------------------------------------------------------------------------------------------------------------------
Pruco
Life
Insurance
Company 4,544* 20,196 2,023* 2,132* 9,887 50,677 7,737.180 4,982 13,699 2,386.590 $265,177
- ------------------------------------------------------------------------------------------------------------------------------------
State
Treasurer
of the State
of Michigan,
as Custodian 25,082* 111,476 11,172* 11,774* 54,578 279,745 42,710.200 27,501 75,619 13,174.250 $1,463,806
- ------------------------------------------------------------------------------------------------------------------------------------
Jerome Singer 50,000 0 0 0 17,109 87,692 13,388.440 8,621 23,704 4,129.760 $458,862
- ------------------------------------------------------------------------------------------------------------------------------------
Douglas A.
Thal 50,000 0 0 0 17,109 87,692 13,388.440 8,621 23,704 4,129.760 $458,862
- ------------------------------------------------------------------------------------------------------------------------------------
Robert J.
Klein 30,000 0 0 0 10,265 52,616 8,033.060 5,172 14,223 2,477.850 $275,317
- ------------------------------------------------------------------------------------------------------------------------------------
Steven Singer 20,000 0 0 0 6,843 35,077 5,355.380 3,448 9,482 1,651.900 $183,544
- ------------------------------------------------------------------------------------------------------------------------------------
- -------------------------
* These shares of Old Stock owned by The Prudential Insurance Company of
America, Pruco Life Insurance Company and State Treasurer of the State of
Michigan, as custodian (the "Non-Berkshire Institutional Stockholders") are
owned by such parties pursuant to options to purchase such shares (the
"Institutional Options") granted by The Berkshire Fund, Bradley M. Bloom, J.
Christopher Clifford, Russell L. Epker, Carl Ferenbach, Richard K. Lubin, Lea
Anne S. Ottinger and Kevin T. Callaghan (the "Berkshire Stockholders") and
certain of such shares are held by Berkshire Partners LLC, as Escrow Agent,
pursuant to Escrow Agreements dated as of March 3, 1989 and April 23, 1991,
as amended. The Institutional Options will be exercised prior to the
Recapitalization Closing and such Escrow Agreements will be terminated.
** Old Series B Preferred Stock issued and outstanding as of July 15, 1996.
28
32
Exhibit B
Form of Amended and Restated
Certificate of Incorporation
of the Company
29
33
Exhibit C
Form of Stockholders Agreement
30
34
Exhibit D
List of Bonus and Deferred Compensation Payments
Jerome Singer $225,186
Ueli Spring $127,000
Harold A. Brown $127,000
Gary Easterly $ 55,000
Jim Bostain $ 20,000
Traci-Ann Gerber $ 7,000
Ellen Lee $ 5,000
Brian Downs $ 1,500
Susan Serra $ 2,500
Cheryl Ruggirello $ 5,000
31