EXHIBIT 2.3
Conformed Copy
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SECURITIES PURCHASE AGREEMENT
DATED JANUARY 15, 2002
BY AND AMONG
U.S. INDUSTRIES, INC.,
JUSI HOLDINGS, INC.
&
USI GLOBAL CORP.,
AS THE SELLERS,
AND
CERTAIN ENTITIES ON THE SIGNATURE PAGES HERETO
STRATEGIC INDUSTRIES, LLC
STRATEGIC FINANCE COMPANY, AS AGENT
&
STRATEGIC FINANCE, LLC, AS AGENT
AS THE PURCHASERS
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT dated as of January 15, 2002 by and among
STRATEGIC INDUSTRIES, LLC, a Delaware limited liability company ("SILLC"),
ATECH TURBINE COMPONENTS, INC., a Massachusetts corporation ("Atech"), HURON
INC., a Delaware corporation ("Huron"), SCF INDUSTRIES, INC., an Alabama
corporation ("SCF"), BILTBEST PRODUCTS, INC., a Delaware corporation
("BiltBest"), XXXX PLASTICS INC., a Delaware corporation ("Xxxx"), STRATEGIC
FINANCE COMPANY, a Delaware corporation ("SFC"), SFC FINANCE, LLC, a Delaware
limited liability company ("Finance LLC," and together with SILLC, Atech,
Huron, SCF, Biltbest, Xxxx and SFC, the "Purchasers"), U.S. INDUSTRIES, INC., a
Delaware corporation ("USI"), JUSI Holdings, Inc., a Delaware corporation
("JUSI"), and USI GLOBAL CORP., a Delaware corporation ("Global," and together
with USI, and JUSI, the "Sellers").
WHEREAS, the Sellers presently own 12.5% Senior Notes due 2007 issued by
SFC in the aggregate principal amount of $156,944,079 (the "Notes"), with SFC
acting as borrowing agent for each of the subsidiaries of SILLC Holdings, LLC,
a Delaware limited liability company, that are guarantors of the Notes (the
"Subsidiaries"); this Agreement shall be interpreted consistently therewith so
that all references to SFC shall mean "Strategic Finance Company, as agent";
WHEREAS, the Sellers are willing to sell Notes in the aggregate principal
amount of $105,687,200 for an aggregate price of $105,687,200 and a payment of
$1,650,000 in full satisfaction of all accrued but unpaid interest thereon, and
the Purchasers desire to purchase such Notes, on the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, JUSI consents to canceling Notes issued to JUSI in the aggregate
principal amount of $51,256,879, including all accrued but unpaid interest
thereon, as a reduction in purchase price for stock owned by JUSI that was
redeemed by certain of the Subsidiaries, on the terms and subject to the
conditions set forth in this Agreement;
THEREFORE, INTENDING TO BE LEGALLY BOUND, and in consideration of the
mutual representations, warranties and covenants contained herein, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
ARTICLE 1
THE TRANSACTION
1.1. Sale and Purchase of Notes. Subject to the terms and conditions
hereof, at the Closing (defined in Section 1.4), USI will cause the Sellers to
sell and transfer to, and the Sellers will transfer to: (a) SFC, and SFC will
purchase from the Sellers, Notes in the aggregate principal amount of Thirty
Four Million Four Hundred Thirty Seven Thousand Two Hundred Dollars
($34,437,200) (the "SFC Notes") for a cash payment in the amount of Thirty Four
Million Four Hundred Thirty Seven Thousand Two Hundred Dollars ($34,437,200)
(the "SFC Purchase Price"), and (b) Finance LLC, acting as agent for SFC and
the Subsidiaries, and
Finance LLC in such capacity will purchase from the Sellers, Notes in the
aggregate principal amount of Seventy One Million Two Hundred Fifty Thousand
Dollars ($71,250,000) (the "Finance LLC Notes") for a cash payment in the
amount of Seventy One Million Two Hundred Fifty Thousand Dollars ($71,250,000)
(the "Finance LLC Purchase Price"), all such Notes being free and clear of all
liens, security interests, restrictions, charges, claims and encumbrances, in
each case.
1.2. Cancellation of Notes. The Notes issued to JUSI in the aggregate
principal amount of Fifty One Million Two Hundred Fifty Six Thousand Eight
Hundred Dollars ($51,256,800) that were issued by SFC on behalf of the
Subsidiaries noted on Exhibit A (the "Cancellation Notes") shall be cancelled
as a reduction in purchase price for the redemption of stock formerly held by
JUSI in each such Subsidiary, in accordance with that certain Amended and
Restated Securities Purchase Agreement by and among USI, JUSI, SILLC and
Automotive Interior Products LLC, a Delaware limited liability company dated as
of January 15, 2000 and amended and restated as of March 24, 2000, it being
understood and agreed that unless otherwise required by reason of a change in
law that occurs after the Closing, SILLC and any subsidiary of SILLC and the
Sellers and any of USI's other affiliates that file or filed a Federal, state
or local consolidated or combined income or other tax return with USI or JUSI,
will each treat the full amount of such cancellation for all purposes,
including for any tax filings, as effecting a purchase price reduction for such
redeemed stock in the amounts set forth on Exhibit A, pursuant to Section
108(e)(5) of the Internal Revenue Code of 1986, as amended (the "Code"), and
any comparable provision of state or local law, or otherwise, with the cash
being paid under this Agreement being applied in the manner set forth in
Sections 1.1 and 1.3 hereof. Nothing in this Agreement shall be construed as
limiting any party's right to settle, compromise or agree to any adjustment
proposal on audit once such party receives a notice of deficiency under Section
6212 of the Code (or comparable provision of state or local law); provided,
that any such compromise, settlement or agreement prior thereto shall be
permitted if consented to by the other parties hereto, which consent shall not
be unreasonably withheld.
1.3. Interest. The Purchasers shall pay to the Sellers the amount of One
Million Six Hundred Fifty Thousand Dollars ($1,650,000) (the "Interest
Payment") in full satisfaction of all accrued but unpaid interest on the Notes
as of the Closing Date (as defined in Section 1.4).
1.4. Closing.
1.4.1. Time and Place of Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") will take place at the offices
of Dechert, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, XX 00000 at 9:30 A.M. (local time)
on the date hereof (the "Closing Date").
1.4.2. Deliveries and Proceedings at Closing.
1.4.2.1. Deliveries by the Sellers. At the Closing, the Sellers will
deliver:
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1.4.2.1.1. to SFC the SFC Notes duly endorsed for transfer;
1.4.2.1.2. to the Purchasers the Cancellation Notes duly endorsed for
transfer; and
1.4.2.1.3. to Finance LLC the Finance LLC Notes duly endorsed for
transfer.
1.4.2.2. Deliveries by the Purchasers. At the Closing:
1.4.2.2.1. SFC will deliver to the Sellers the SFC Purchase Price in
immediately available funds, to an account designated by the Sellers in writing
not less than two days prior to Closing;
1.4.2.2.2. Finance LLC will deliver to the Sellers the Finance LLC
Purchase Price in immediately available funds, to an account designated by the
Sellers in writing not less than two days prior to Closing; and
1.4.2.2.3. the Purchasers shall deliver the Sellers the Interest Payment
in immediately available funds, to an account designated by the Sellers in
writing not less than two days prior to Closing.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Each Seller hereby jointly and severally represents and warrants to the
Purchasers as follows:
2.1. Note Ownership; Authority to Transfer. The Sellers own the Notes of
record and beneficially, free and clear of any pledge, lien, encumbrance,
equity, voting trust, security interest or claim of any kind or character,
except for the lien in favor of certain creditors for borrowed money of USI
which lien will be released upon consummation of the Closing. The Sellers have
full legal right, power and authority to transfer the Notes and to enter into
this Agreement and to perform their respective obligations hereunder. The
delivery of the Notes duly endorsed for transfer will transfer valid title to
the Purchasers, free and clear of all pledges, liens, encumbrances, equities,
voting trusts, security interests, options and claims.
2.2. Organization, No Conflict. Each Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, with full legal right, power and authority to enter into this
Agreement and perform its respective obligations hereunder. The transactions
contemplated by this Agreement will not conflict with, result in any breach of
any provision of or constitute a default under any material agreement,
obligation or other instrument to which such Seller is a party or by which it
is bound, conflict with any law, rule or regulation, order, judgment or decree
that applies to or to which such Seller is subject, or
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require the consent of any third party (other than lender consents that have
already been obtained and are currently effective).
2.3. Authority Relative to this Agreement. Each Seller has all requisite
corporate authority and power to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement, and the other agreements and instruments to be executed in
connection herewith and the consummation of the transactions contemplated
hereby by such Seller have been duly and validly authorized by all required
action on the part of such Seller, and no other proceedings on the part of such
Seller are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by such Seller and, assuming this Agreement has been
duly authorized, executed and delivered by the Purchasers, constitutes a valid
and binding agreement of such Seller, enforceable against such Seller in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally. As of the Closing, the other
agreements and instruments contemplated hereby will have been duly and validly
executed and delivered by such Seller and, assuming due authorization,
execution and delivery by such other parties thereto, will constitute valid and
binding agreements of such Seller, enforceable against such Seller in
accordance with their terms.
2.4. Tax Matters. The Sellers have at all times and for all purposes,
including for any tax filings, treated the Cancellation Notes as having been
issued to JUSI as payment for the redemption of the stock formerly held by JUSI
in each of the Subsidiaries, in accordance with Exhibit A. The Sellers have at
all times and for all purposes, including tax filings, treated such redemption
of stock as a purchase of stock by each of the Subsidiaries from JUSI.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers hereby jointly and severally represents and
warrants as follows:
3.1. Organization, No Conflict. SFC is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
with full legal right, power and authority to enter into this Agreement and
perform its obligations hereunder, and Finance LLC is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware, each with full legal right, power and authority to enter
into this Agreement and perform its obligations hereunder. The transactions
contemplated by this Agreement will not conflict with, result in any breach of
any provision of or constitute a default under any material agreement,
obligation or other instrument to which such Purchaser is a party or by which
it is bound, conflict with any law, rule or regulation, order, judgment or
decree that applies to or to which such Purchaser is subject, or require any
consent of any third party (other than lender consents that have already been
obtained and are currently effective).
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3.2. Authority Relative to this Agreement. Such Purchaser has all
requisite corporate authority and power to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the other agreements and instruments to be
executed by such Purchaser in connection herewith and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
required corporate or limited liability company action, as applicable, on the
part of each Purchaser, and no other corporate or limited liability company
proceedings, as applicable, on the part of such Purchaser are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by such
Purchaser and, assuming this Agreement has been duly authorized, executed and
delivered by the Sellers, constitutes a valid and binding agreement of such
Purchaser, enforceable against such Purchaser in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally. As of the Closing, the other agreements and instruments
contemplated hereby will have been duly and validly executed and delivered by
such Purchaser and, assuming due authorization, execution and delivery by such
other parties thereto, will constitute valid and binding agreements of such
Purchaser, enforceable against such Purchaser in accordance with their terms.
3.3. Tax Matters. The Purchasers have at all times and for all purposes,
including for any tax filings, treated the Cancellation Notes as having been
issued to JUSI as payment for the redemption of the stock formerly held by JUSI
in each of the Subsidiaries, in accordance with Exhibit A. The Purchasers have
at all times and for all purposes, including tax filings, treated such
redemption of stock as a purchase of stock by each of the Subsidiaries from
JUSI.
ARTICLE 4
CONDITIONS OF CLOSING AS TO THE PURCHASERS
The obligations of the Purchasers hereunder are subject to the fulfillment
prior to or at the Closing of the following conditions:
4.1. SILLC Financing. SILLC and the Purchasers shall have consummated all
equity and debt financings necessary, on terms and conditions satisfactory to
SILLC, to raise the capital to carry out their obligations hereunder.
4.2. SILLC Consents. SILLC and its subsidiaries shall have received a
consent and agreement from SILLC's senior lenders in a form and substance
satisfactory to SILLC and USI.
4.3. USI Consents. USI and its subsidiaries shall have received a consent
and agreement from USI's senior lenders in the form attached as Exhibit B
hereto (the "USI Consent and Agreement").
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4.4. Opinion. USI shall have received an opinion of its outside financial
advisor in the form attached as Exhibit C hereto (the "Opinion").
4.5. Closing Deliveries. The relevant parties shall have made all the
deliveries to the Purchasers required by Section 1.4 hereof.
ARTICLE 5
CONDITIONS OF CLOSING AS TO THE SELLERS
The obligations of the Sellers hereunder are subject to the fulfillment
prior to or at the Closing of the following conditions:
5.1. SILLC Consents. SILLC and its subsidiaries shall have received a
consent and agreement from SILLC's senior lenders in a form and substance
satisfactory to SILLC and USI.
5.2. USI Consents. USI and its subsidiaries shall have received the USI
Consent and Agreement.
5.3. Opinion. USI shall have received the Opinion.
5.4. Closing Deliveries. The relevant parties shall have made all the
deliveries to the Sellers required by Section 1.4 hereof.
ARTICLE 6
MISCELLANEOUS
6.1. Indemnification. Following the Closing, the Sellers shall jointly and
severally indemnify and defend the Purchasers and each of their respective
directors, officers and employees and shall hold each of them harmless from and
against any losses, claims, damages, liabilities, costs, expenses, judgments
and amounts paid in settlement in connection with any claim, action, suit or
proceeding (the "Indemnifiable Claim"), which arises out of any
misrepresentation or breach of any representation or warranty made by the
Sellers in this Agreement or by a breach of their agreement to treat the
cancellation of the Cancellation Notes as a purchase price reduction as set
forth in Section 1.2 hereof, and will pay as incurred and reimburse all
expenses, including reasonable attorneys' fees, of the Purchasers incurred in
connection with such Indemnifiable Claim or in enforcing the indemnity provided
for in this Agreement. Following the Closing, the Purchasers shall jointly and
severally indemnify and defend the Sellers and each of their respective
directors, officers and employees and shall hold each of them harmless from and
against any Indemnifiable Claim which arises out of any misrepresentation or
breach of any representation or warranty made by the Purchasers in this
Agreement, and will pay as incurred and reimburse all expenses, including
reasonable attorneys' fees, of the Sellers incurred in connection with such
Indemnifiable Claim or in enforcing the indemnity provided for in this
Agreement.
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6.2. Nature and Survival of Representations. All representations,
warranties and agreements shall survive the Closing hereunder.
6.3. Further Assurances. Each party hereto shall, from and after the
Closing, execute and deliver such documents and perform such acts as may be
reasonably necessary or appropriate to cause the satisfactory completion and
consummation of the transactions contemplated by this Agreement.
6.4. Costs. Each party hereto shall bear its own costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby.
6.5. Amendment and Modification. This Agreement may be amended, modified
or supplemented at any time by the parties hereto only by an instrument in
writing duly signed by the parties hereto.
6.6. Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, among the
parties or any of them with respect to the subject matter hereof.
6.7. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
6.8. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or by facsimile transmission or telexed or three days
after being mailed by registered or certified mail (return receipt requested),
postage prepaid, and one business day after deposited with an overnight courier
service if delivered by overnight courier, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice; provided, that notices of a change of address shall be effective only
upon receipt thereof):
(a) if to the Sellers, to:
c/o U.S. Industries, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
(b) if to the Purchasers, to:
c/o Strategic Industries, LLC
Raritan Plaza 0
Xxxxxxx Xxxxxx, 0xx Xxxxx
0
Xxxxxx, XX 00000
Attention: CFO
Telecopy: (000) 000-0000
with a required copy to:
Dechert
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxx X. XxXxxxx, Esq.
Telecopy: (000) 000-0000
6.9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws
thereof.
6.10. Specific Performance. The parties hereto agree that if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
6.11. Public Disclosure. Notwithstanding anything herein to the contrary,
each of the parties to this Agreement hereby agrees with the other party or
parties hereto that, except as may be required to comply with the requirements
of any applicable laws or the rules and regulations of any stock exchange upon
which the securities of one of the parties (or its affiliate) is listed, in
which case the party making the release or announcement shall provide a copy of
such release or announcement 24 hours in advance to the other parties, no press
release or announcement with respect to the transactions contemplated by this
Agreement shall be issued by any party to this Agreement prior to the Closing
without the advance consent of the other parties.
6.12. Descriptive Headings. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning interpretation of this Agreement.
6.13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.14. Facsimiles. This Agreement, and any amendments hereto, to the extent
signed and delivered by means of a facsimile machine, shall be treated in all
manner and respects as an original agreement or instrument and shall be
considered to have the same binding effect as
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if it were the original signed version thereof delivered in person. At the
request of any party hereto, each other party hereto shall re-execute original
forms thereof and deliver them to all other parties. No party hereto shall
claim that this Agreement is invalid, not binding or unenforceable based upon
the use of a facsimile machine to deliver a signature, or the fact that any
signature or agreement or instrument was transmitted or communicated through
the use of a facsimile machine, and each such party forever waives any such
claim or defense.
6.15. Return or Replacement of Notes Under Certain Circumstances.
Notwithstanding anything herein to the contrary, in the event and to the extent
that the Sellers deliver one or more of the Notes in accordance with the terms
hereof, but the Purchasers fail to deliver the purchase price therefor as set
forth in Section 1.1 hereof, then the Purchasers agree to cause new Notes in
the appropriate principal amounts to be issued to the appropriate Seller.
6.16. Integrated Transaction. The parties agree that the purchase of Notes
under this Agreement is conditioned upon the consummation of the transactions
contemplated by the Securities Purchase Agreement dated as of the date hereof
by and among Strategic, certain subsidiaries of Strategic and USI and certain
subsidiaries of USI and, for avoidance of doubt, the parties acknowledge and
agree that the acquisition of securities under such agreement and the
acquisition of the Notes under this Agreement was negotiated and consummated as
an integrated transaction, and not as separate and distinct transactions, and
should in all events be construed as an integrated transaction.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to
be signed by its duly authorized officers as of the date first above written.
U.S. INDUSTRIES, INC.
By: /s/ Xxxxxx Xxxxx
----------------------------------
Title: Vice President & Secretary
JUSI HOLDINGS, INC.
By: /s/ Xxxxxx Xxxxx
----------------------------------
Title: Vice President & Secretary
USI GLOBAL CORP.
By: /s/ Xxxxxx Xxxxx
----------------------------------
Title: Vice President & Secretary
STRATEGIC INDUSTRIES, LLC
By: /s/ Xxxxx X. Xxxxxx
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Title: Vice President
STRATEGIC FINANCE COMPANY
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Title: Vice President
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SFC fINANCE, LLC
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Title: Vice President
ATECH TURBINE COMPONENTS, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Title: Vice President
HURON INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Title: Vice President
SCF INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Title: Vice President
BILTBEST PRODUCTS, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Title: Vice President
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XXXX PLASTICS, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Title: Vice President
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EXHIBIT A
NOTES OWED TO JUSI PREVIOUSLY ISSUED IN REDEMPTION OF STOCK TO BE
CANCELLED BY THE FOLLOWING ISSUING COMPANIES
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ISSUER AMOUNT OF CANCELLED NOTES
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Atech Turbine Components, Inc. $4,607,000
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Huron Inc. $31,973,000
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SCF Industries, Inc. $4,315,000
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BiltBest Products, Inc. $4,709,000
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Xxxx Plastics Inc. $5,652,800
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