FIRST AMENDMENT TO CONTRIBUTION AGREEMENT
Exhibit
10.1
FIRST
AMENDMENT TO CONTRIBUTION AGREEMENT
This
First Amendment to the Contribution Agreement (this “Amendment”) dated as of
March 31, 2006, is entered into by and among Hercules Incorporated, a Delaware
corporation (“Hercules”),
WSP,
Inc., a Delaware corporation (“WSP”)
and a
wholly-owned subsidiary of Hercules, SPG/FV Investor LLC, a Delaware limited
liability company (“SPG”)
and
FiberVisions Delaware Corporation, a Delaware corporation (including any
predecessor entity, the “Company”).
RECITALS
WHEREAS,
Hercules, WSP, SPG and the Company are parties to that certain Contribution
Agreement dated as of January 31, 2006 (the “Contribution
Agreement”).
Unless otherwise defined herein or the context otherwise requires, terms used
in
this Amendment, including its preamble and recitals, shall have the meanings
provided in the Contribution Agreement.
WHEREAS,
the parties hereto have requested certain modifications to the Contribution
Agreement to clarify the language and intent of the parties
therein;
NOW
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto agree as follows:
AGREEMENT
1. The
Contribution Agreement is hereby amended as follows:
(a)
|
Section
5.18(a) of the Contribution Agreement is hereby amended and restated
to
read in full as follows:
|
“(a) Before
the Closing, the Company, Hercules and WSP shall cause all of the third party
debt of the Company and its Subsidiaries and all Intercompany Balances among
Hercules and its Affiliates (other than the Company and its Subsidiaries),
on
the one hand, and the Company and its Subsidiaries, on the other hand, to be
paid in full or otherwise fully satisfied, except for the $250,000 payment
due
in the year 2020 in connection with the Lease Agreement between Athens-Xxxxxx
County Industrial Development Authority and Danaklon Americas, Inc. presently
known as FiberVisions Products, Inc. dated December 1, 1996 (the “Athens
Lease”). The Intercompany Balances among members of the FiberVisions Group shall
continue through Closing in accordance with their respective terms, provided,
however, that Hercules shall, and shall cause the Company, to settle before
the
Closing (i) approximately $7,200,000 of intercompany debt between FiberVisions
Products Inc. and FiberVisions A/S, and (ii) approximately $2,900,000 of
intercompany debt between FiberVisions GmbH and FiberVisions A/S.”
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(b) Section
5.18(b) is hereby amended and restated to read in full as follows:
“(b) As
of the
Closing, the Company shall have cash (i) in the amount of $300,000 plus an
amount equal to any tax refund received by the Company or Hercules or any
Affiliate thereof in respect of 2005 losses at FiberVisions Products, Inc.,
(ii)
in a restricted deposit account for letters of credit outstanding as of the
Closing Date with respect to polymer purchases from Daelim in Korea,
(iii)
in
the amount of $700,000 for reimbursement of unused vacation, and (iv) in the
amount of $85,336 in compensation for the Company retaining the obligation
to
make a $250,000 payment upon termination of the Athens Lease in the year 2020.
As of the Closing, if the cash (except for cash related to subsection (ii)
above) in the Company exceeds $1,085,336, SPG shall remit the amount over
$1,085,336 to Hercules.”
(c) The
following new Section 5.26 is hereby added to the Contribution
Agreement:
“5.26 FiberVisions
AG. At
Hercules’ cost and expense, the parties shall reasonably cooperate with each
other to effectuate the liquidation of FiberVisions AG as soon as possible
after
the Closing Date.”
(d)
|
The
following new Section 5.27 is hereby added to the Contribution
Agreement:
|
“5.27
Adjustment
to Redemption Price Based on EBITDA Results.
Hercules shall make the following payments to the Company in the event of an
EBITDA
Shortfall
(as defined below) upon the terms and conditions set forth herein.
(a) Fiscal
2006 EBITDA Shortfall.
Hercules shall, within five business days after the Company’s determination of
its Earnout EBITDA for each fiscal quarter in 2006 following the Closing as
presented to the lenders pursuant to the Company’s senior credit facilities, pay
to the Company the positive difference, if any, between the amount of Earnout
EBITDA projected for such quarter as set forth in the forecast attached hereto
as Schedule
5.27
(the sum
of such amounts, the “Projected 2006 EBITDA”) minus the actual Earnout EBITDA
for such quarter (any such positive amount, a “2006 EBITDA Shortfall”), subject
to adjustment as set forth below; provided, however that Hercules shall not
be
obligated to pay the Company more than $4.5 million in respect of the aggregate
amount of 2006 EBITDA Shortfalls (such amount, the “2006 EBITDA Shortfall
Cap”).
(b) Fiscal
2007 EBITDA Shortfall.
Hercules shall, within five business days after the Company’s determination of
its Earnout EBITDA for each fiscal quarter in 2007 as presented to the lenders
pursuant to the Company’s senior credit facilities, pay to the Company the
positive difference, if any, between the amount of Earnout EBITDA projected
for
such quarter as set forth in the forecast attached hereto as Schedule
5.27
(the sum
of such amounts, the “Projected 2007 EBITDA”) minus the actual Earnout EBITDA
for such
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quarter
(any such positive amount, a “2007 EBITDA Shortfall”; any 2006 EBITDA Shortfall
and 2007 EBITDA Shortfall is referred to as an “EBITDA Shortfall”), subject to
adjustment as set forth below; provided, however that Hercules shall not be
obligated to pay the Company more than the sum of $1.2 million plus any portion
of the 2006 EBITDA Shortfall Cap (not in excess of $2.25 million) not previously
paid pursuant to clause (a) above in respect of the aggregate amount of 2007
EBITDA Shortfalls (such amount, the “2007 EBITDA Shortfall Cap”; each of the
2006 EBITDA Shortfall Cap and the 2007 EBITDA Shortfall Cap is referred to
as an
“EBITDA Shortfall Cap”).
(c) Annual
True-up.
Within
five business days following the Company’s annual audit for 2006 or 2007, as the
case may be, the Company shall deliver a statement to Hercules of its audited
Earnout EBITDA for such fiscal year. In the event that the positive difference,
if any, between the Projected 2006 EBITDA or Projected 2007 EBITDA, as the
case
may be, minus the audited Earnout EBITDA
for such
fiscal year (such difference, the “Annual True-up Amount”) is less than the
total EBITDA Shortfalls for such fiscal year, then the Company shall promptly
pay to Hercules the difference between the payments made by Hercules pursuant
to
clauses (a) or (b) above, as the case may be, and such Annual True-up Amount;
provided, that in no event shall the Company be obligated to pay Hercules an
amount in excess of the amounts received pursuant to either clause (a) or clause
(b), as the case may be, with respect to such fiscal year. In the event that
the
Annual True-up Amount is greater than the total EBITDA Shortfalls for such
fiscal year, then Hercules shall promptly pay to the Company the difference
between such Annual True-up Amount and the payments made by Hercules pursuant
to
clauses (a) or (b) above, as the case may be; provided, that Hercules shall
not
be obligated to pay more than the applicable EBITDA Shortfall Cap with respect
to either fiscal year. The audited Earnout EBITDA shall be determined in
accordance with Section 5.2(c)(ii) and any disputes regarding the computation
of
annual Earnout EBITDA shall be resolved in accordance with Section
5.2(c)(iii).
(d) General
Provisions.
(i) Neither
SPG nor Hercules shall be permitted to setoff any amount to which it may be
entitled under this Agreement.
(ii) No
payments made pursuant to this Section 5.27 shall be taken into account in
determining Estimated Earnout EBITDA or Earnout EBITDA.
(iii) All
payments made under this Section 5.27 shall be made by wire transfer of
immediately available funds as directed by the receiving party.
(iv) For
the
avoidance of doubt, Hercules shall not be obligated to pay in any event or
under
any circumstances the Company more than $5.7 million pursuant to this Section
5.27.
Any
payment in respect of an EBITDA Shortfall or annual true-up shall be treated
as
an adjustment to the Redemption Price for tax purposes, unless otherwise
required by applicable law.”
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(e)
|
The following new subsection (x) is hereby added to Section 8.1(a)
of the
Contribution Agreement:
|
“(x) any
and
all liability for costs (e.g. attorneys’ fees and filing fees) and Taxes related
to the liquidation of FiberVisions AG.”
(f)
|
Schedule 1.2
of
the Contribution Agreement is hereby amended and replaced with
Schedule
1.2
attached hereto.
|
(g)
Schedule
1.3
of the
Contribution Agreement is hereby amended and replaced with Schedule
1.3
attached
hereto.
(h)
Schedule
5.2
of the
Contribution Agreement is hereby amended and replaced with Schedule
5.2
attached
hereto.
(i) The
new
Schedule
5.27
attached
hereto is hereby added to the Contribution Agreement.
2. Amendment
to the Contribution Agreement.
All
references to the Contribution Agreement in the Stockholders’ Agreement, the
Option Agreement, the Transition Services Agreement or any other document
delivered in connection herewith (collectively, the “Transaction Documents”)
shall be deemed to refer to the Contribution Agreement as amended
hereby.
3. Ratification
of the Contribution Agreement.
Notwithstanding anything to the contrary herein contained or any claims of
the
parties to the contrary, the parties agree that the Contribution Agreement
is in
full force and effect and shall remain in full force and effect, as further
amended by this Amendment and each of the parties thereto, hereby ratifies
and
confirms its obligations thereunder.
4. References;
No Waiver.
All
references in the Contribution Agreement to “this Agreement,” “hereof,” “hereto”
and “hereunder” shall be deemed to be references to the Contribution Agreement
as amended hereby, and all references in any of the Transaction Documents to
the
Contribution Agreement shall be deemed to be to the Contribution Agreement
as
amended hereby.
5. Governing
Law.
This
Amendment shall be governed by and construed in accordance with the laws of
the
State of Delaware.
[SIGNATURES
ARE ON THE FOLLOWING PAGE]
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IN
WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
day
and year first above written.
HERCULES
INCORPORATED
By:
Name:
Title:
WSP,
INC.
By:
Name:
Title:
SPG/FV
INVESTOR LLC
By:
Name:
Title:
FIBERVISIONS
DELAWARE CORPORATION
By:
Name:
Title:
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Schedule
1.2
Permitted
Encumbrances
1. |
See
Item 1(ii) of Schedule 3.2.
|
2. |
Georgia
Department of Transportation (“DOT”) is in the process of purchasing
approximately 0.741 acres as a right of way (“R/W”) from the Company along
Alcovy Road in connection with a road widening project. DOT is offering
$121,455.00 as fair market value for the property and damages. At
the same
time, the City of Xxxxxxxxx in the County of Xxxxxx, and the State
of
Georgia, (the “City”) is seeking an easement to install a 24” water main
on FiberVisions’ property along Alcovy Road, part of which would be in the
requested DOT R/W and would not be part of such R/W. The City and
the DOT
have not yet resolved between themselves whether their plans are
incompatible. These items are pending. FiberVisions expects to complete
the transaction with DOT and address the City after the City and
the DOT
have resolved any issues between them. Compensation from the City
has not
been determined yet.
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3. |
See
Schedule 3.20(j)- Open Relocation Cases
|
4. |
See
Item 1 of Schedule 3.10(b).
|
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Schedule
1.3
Subsidiaries
1. |
FiberVisions
Incorporated
|
2. |
FiberVisions
A/S
|
3. |
Xxxxxxxxx
Holdings, Inc.
|
4. |
Athens
Holdings, Inc.
|
5. |
FiberVisions
Products, Inc.
|
6. |
FiberVisions
GmbH
|
7. |
FiberVisions
(China) A/S
|
8. |
FiberVisions
(China) Textile Products Ltd.
|
9. |
FV
Holdings, Inc.
|
10. |
FiberVisions,
L.P.
|
11. |
ES
FiberVisions, Inc.
|
12. |
ES
FiberVisions Holdings ApS
|
13. |
ES
FiberVisions LP
|
14. |
ES
FiberVisions ApS
|
15. |
ES
FiberVisions Hong Kong Ltd.
|
16. |
FiberVisions
AG
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Schedule
5.2
Earnout
EBITDA
The
Earnout EBITDA shall be calculated as follows for the 2006 and 2007 Preferential
Distribution Payment:
Consolidated
EBITDA*………………
XXX
Adjustment
for Incremental Standalone Costs
Add
back
actual Standalone Costs (see definition below) in excess
of
$
4,000,000 in 2006 and $ 4,000,000 x (1+CPI Inflation Rate) in
2007.
(If
actual Standalone Costs are less than above targets, no
adjustment
will be made.)
XXX
Adjustment
for Acquisitions
Deduct
EBITDA amounts directly attributable to incremental
business
obtained via business combination. EBITDA should
include
as a deduction any one-time transaction or transition costs
related
to the business combination.
XXX
______
Earnout
EBITDA
$
XXX
*
“Consolidated EBITDA” shall have the same meaning as the definition thereof in
the Credit Agreement dated as of March 31, 2006 among the Company, SPG, FV
Denmark, Credit Suisse, Cayman Islands Branch, as Administrative Agent and
Collateral Agent, ________, as Syndication Agent, Societe Generale, as
Documentation Agent, and Credit Suisse Securities (USA) LLC, as sole bookrunner
and sole lead arranger, as it may be amended from time to time, with the
following exceptions:
-The
final two provisos of the definition of “Consolidated EBITDA” (regarding the
Total Leverage Ratio and the deemed Consolidated EBITDA for the fiscal quarters
ended September 30, 2006 and December 31, 2006) shall not be
considered.
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Definitions
Definition
of Incremental Standalone Costs
Incremental
Standalone Costs are selling, general and administrative
and
research and development expenses associated with an increase
in
personnel or real capabilities over and above the personnel and
capabilities
as reported in the S, G&A and R&D (lines 3 and 5) in
the
Financial Statements ended September 30, 2005. Cost increases
attributable
to inflation or ordinary business activities and not
associated
with any expansion of personnel or capabilities should
not
be
included as Incremental Standalone Costs.
Incremental
Standalone Costs contemplated for 2006 are shown below,
but
are
not limited to these costs or capabilities.
Transition
Services obtained from Hercules Incorporated will be
included
as Incremental Standalone Costs.
The
threshold amount for Incremental Standalone Costs for 2006
will
be
$4,000,000. The threshold amount for Incremental Standalone
Costs
for
2007 will be $4,000,000 adjusted by the 2006 full year CPI.
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Schedule
5.27
Projected
2006 and 2007 EBITDA
Projected
2006 EBITDA ($ amounts in millions):
First
Quarter - $4.9*
Second
Quarter - $5.9
Third
Quarter - $6.4
Fourth
Quarter - $7.3
Full
Year
- $24.5
Projected
2007 EBITDA** ($ amount in millions):
First
Quarter - $5.6
Second
Quarter - $6.3
Third
Quarter - $6.1
Fourth
Quarter - $6.5
Full
Year
- $24.5
*
The
first quarter 2006 projected EBITDA is provided for purposes of determining
the
Annual True-up Amount only. No first quarter 2006 EBITDA Shortfall is to be
considered.
**
The
parties acknowledge that the projections to lenders is $27.0 million and the
parties have agreed to the projections above for the purpose of this Section
5.27 only.
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