RECAPITALIZATION AGREEMENT
----------------------------
among
CITICORP VENTURE CAPITAL, LTD.
BRUCKMANN, XXXXXX, XXXXXXXX & CO., L.P.
the Stockholders Party Hereto
ANVIL VT, INC.
and
ANVIL HOLDINGS, INC.
-----------------------------
February 12, 1997
TABLE OF CONTENTS
PAGE
----
ARTICLE I......................................................................1
DEFINITIONS..............................................................1
ARTICLE II.....................................................................8
THE RECAPITALIZATION.....................................................8
2.1. Recapitalization Transactions..................................8
2.2. Closing........................................................9
2.3. Exchange of Shares.............................................9
ARTICLE III...................................................................10
REPRESENTATIONS AND WARRANTIES OF THE PARTIES...........................10
3.1. Representations and Warranties of the Company. ..............10
3.2. Representations and Warranties of CVC. .......................20
3.3. Representations and Warranties of BRS. .......................20
3.4. Representations and Warranties of the Stockholders............21
3.5. Representations and Warranties of Anvil VT....................22
3.6. Representations and Warranties of the Management Stockholders.23
ARTICLE IV....................................................................24
COVENANTS OF THE PARTIES................................................24
4.1. Mutual Covenants..............................................24
4.2. Covenants of the Acquiring Investors..........................24
4.3. Covenants of the Company......................................24
4.4. Covenants of the Stockholders.................................27
ARTICLE V.....................................................................27
CONDITIONS PRECEDENT TO
OBLIGATIONS OF THE PARTIES..........................................27
5.1. Conditions Precedent to the Acquiring Investors' Obligations..27
5.2. Conditions Precedent to the Company's Obligations.............29
5.3. Conditions Precedent to the Stockholders' Obligations.........30
ARTICLE VI....................................................................30
TERMINATION.............................................................30
6.1. Termination of Agreement......................................30
6.2. Effect of Termination.........................................31
ARTICLE VII...................................................................31
MISCELLANEOUS...........................................................31
7.1. Survival. ....................................................31
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7.2. Interpretive Provisions. ....................................31
7.3. Press Releases and Announcements. ...........................32
7.4. Entire Agreement. ............................................32
7.5. Succession and Assignment.....................................32
7.6. Counterparts. ...............................................32
7.7. Headings. ....................................................32
7.8. Notices. ....................................................32
7.9. Governing Law. ...............................................33
7.10. Amendments and Waivers. ......................................34
7.11. Severability. ...............................................34
7.12. Expenses. ....................................................34
7.13. Construction. ...............................................35
7.15. Other Agreements..............................................35
Exhibit A Capital Contributions/ Issuance of Capital Stock
Exhibit B Redemption/Issuance of Capital Stock
Exhibit C Financial Statements
Exhibit D Divisional Financial Statements
Exhibit E Management Bonus
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RECAPITALIZATION AGREEMENT
This Recapitalization Agreement (this "Agreement") is entered into as of
February 12, 1997 by and among Citicorp Venture Capital, Ltd., a New York
corporation ("CVC"), Bruckmann, Xxxxxx, Xxxxxxxx & Co., L.P., a Delaware limited
partnership ("BRS") (collectively, the "Acquiring Investors"), the stockholders
and the voting trust certificateholders named on the signature pages hereto and
who execute this Agreement (collectively, the "Stockholders"), Anvil VT, Inc., a
Delaware corporation ("Anvil VT") and Anvil Holdings, Inc., a Delaware
corporation (the "Company"). The Acquiring Investors, the Stockholders, Anvil VT
and the Company are each referred to individually as a "Party" and collectively
as the "Parties."
RECITALS
WHEREAS, the board of directors of the Company has determined that the
recapitalization of the Company in accordance with the terms of this Agreement
is in the best interests of the Stockholders of the Company and, by resolutions
duly adopted, have approved and adopted this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the Parties agree as
follows.
ARTICLE I
DEFINITIONS
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Anvil" means Anvil Knitwear, Inc., a Delaware corporation.
"Anvil VT" has the meaning set forth in the preface above.
"Acquiring Investors" has the meaning set forth in the preface above.
"Acquiring Investors' Certificates" has the meaning set forth in Section
5.2(c) below.
"BRS" has the meaning set forth in the preface above.
"Business Day" means any day that is not a Saturday, Sunday, or any other
day on which banks in the State of New York are authorized or required by law to
close.
"CVC" has the meaning set forth in the preface above.
"CERCLA" has the meaning set forth in Section 3.1(l) below.
"Certificate" has the meaning set forth in Section 2.3 below.
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"Class A Common" means the Class A Common Stock, par value $.01 per share,
of the Company.
"Class B Common" means the Class B Common Stock, par value $.01 per share,
of the Company.
"Class C Common" means the Class C Common Stock, par value $.01 per share,
of the Company.
"Class A Preferred" means the 12.5% Class A Preferred Stock, par value $.01
per share, of the Company.
"Class B Preferred" means the 12.5% Class B Convertible Preferred Stock,
par value $.01 per share, of the Company.
"Class C Preferred" means the 12.5% Class C Convertible Preferred Stock,
par value $.01 per share, of the Company.
"Closing" has the meaning set forth in Section 2.2 below.
"Closing Date" has the meaning set forth in Section 2.2 below.
"Closing Transactions" has the meaning set forth in Section 2.1(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means, collectively the Class A Common, Class B Common and
Class C Common.
"Common Stock Consideration" means (i) $111,400,000 plus (ii) $100,000 per
day beginning March 15, 1997 through and including the Closing Date.
"Company" has the meaning set forth in the preface above.
"Company's Certificate" has the meaning set forth in Section 5.1(c) below.
"Company Transaction Expenses" means all expenses incurred by the Company
in connection with the negotiation of this Agreement, including the fees and
expenses of consultants, financial advisers, lawyers and accountants, and any
fees payable to Vestar or any of its Affiliates (other than the Recapitalization
Consideration payable to such entities pursuant to Section 2.1) which fees
payable to Vestar or its Affiliates shall not exceed $1,000,000; provided,
however that the Company Transaction Expenses shall not include any expenses
incurred in connection with the Recapitalization.
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"Competing Transaction" has the meaning set forth in Section 4.3(d) below.
"Compliance Certificates" has the meaning set forth in Section 5.3(c)
below.
"Condition Letter" means that letter by and among CVC, BRS, Vestar and the
Company of even date herewith relating to certain Closing conditions and
obligations.
"Confidential Information" means any non-public information concerning the
businesses and affairs of the Company.
"Confidentiality Agreement" means the confidentiality agreement dated as of
February 12, 1997 among the Company, CVC and BRS.
"Contracts" has the meaning set forth in Section 3.1(j) below.
"Cottontops DE" means Cottontops, Inc., a Delaware corporation.
"Cottontops NC" means Cottontops, Inc., a North Carolina corporation.
"Cottontops Note" means that certain Non-Negotiable Promissory Note issued
on January 31, 1997, by Cottontops DE to Cottontops NC in the initial principal
amount of $250,000.
"Credit Agreement" means the Credit Agreement dated as of January 30, 1995,
among Anvil, as Borrower, the Company and certain subsidiaries, as Guarantors,
the Banks identified therein as lending institutions, NationsBank, N.A.
(Carolinas), as Agent, and The Chase Manhattan Bank, N.A., as Documentation
Agent, as amended, restated or modified from time to time.
"Czech" means Anvil (Czech), Inc., a Delaware corporation.
"Defaulting Party" has the meaning set forth in Section 6.2 below.
"Disclosure Schedule" has the meaning set forth in Section 3.1 below.
"Division" has the meaning set forth in Section 3.1(f) below.
"Divisional Financial Statements" has the meaning set forth in Section
3.1(f) below.
"Encumbrances" has the meaning set forth in Section 3.1(m) below.
"Employment Agreements" means (i) the Employment Agreement, dated as of
January 31, 1995, between Anvil and Xxxxxxx Xxxxxx, (ii) the Employment
Agreement, dated as of January 31, 1995, between Anvil and Xxxxxxx Xxxxxxx,
(iii) the Employment Agreement,
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dated as of January 31, 1995, between Anvil and Xxxxx Xxxxxxxxx, and (iv) the
Employment Agreement, dated as of January 31, 1995, between Anvil and Xxxxxxx
Xxxxxx, in each case as amended, restated or modified from time to time.
"Environmental and Safety Requirements" means all federal, state and local
statutes, regulations, ordinances and similar provisions having the force and
effect of law, all judicial and administrative orders and all common law
concerning employee health and safety, pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, processing, discharging, release, or
threatened release, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation.
"ERISA" has the meaning set forth in Section 3.1(p) below.
"ERISA Affiliate" means any person who, together with the Company, is
treated as a single employer under Sections 414(b), 414(c), 414(m) or 414(o) of
the Code.
"Financial Statements" has the meaning set forth in Section 3.1(f) below.
"Funded Indebtedness" means, with respect to the Company and its
Subsidiaries, the sum of all obligations for indebtedness for borrowed money and
capitalized leases (as determined in accordance with GAAP), including, without
limitation, all obligations for principal, interest, premiums, fees, expenses,
overadvances, overdrafts, reimbursement obligations, breakage costs and
indemnities due in connection therewith, as of the Closing Date, including,
without limitation, all amounts required to be paid pursuant to the Credit
Agreement at the Closing; provided, however, that in no event shall Funded
Indebtedness include the Seller Notes or the Cottontops Note.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time, applied on a consistent basis.
"Governmental Entity" has the meaning set forth in Section 3.1(c) below.
"Holder" has the meaning set forth in Section 2.3 below.
"Intellectual Property Rights" has the meaning set forth in Section 3.1(n)
below.
"Leases" means any lease or sublease in which the Company or any Subsidiary
has a leasehold or subleasehold interest.
"Liquidation Value" means, with respect to any share of Preferred Stock,
$100.
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"Majority-in-Interest" means a majority of all Shares of Common Stock (in
the case of Shares of Common Stock subject to the Voting Trust Agreement, the
Voting Trust Certificates representing such Shares) which are issued and
outstanding before giving effect to the transactions contemplated hereby and the
Recapitalization, without regard to whether such shares are voting or
non-voting.
"Management Loans" means the unpaid principal balance under (i) the
Promissory Note issued on January 30, 1995, by Xxxxxxx Xxxxxx to Anvil in the
initial principal amount of $125,000, and (ii) the Promissory Note issued on
January 30, 1995, by Xxxxxxx Xxxxxxx to Anvil in the initial principal amount of
$125,000 (collectively, the "Promissory Notes"), plus all accrued and unpaid
interest on such Promissory Notes through the Closing Date.
"Management Bonus" means the bonus, in the aggregate amount of $500,000, to
be paid to the Management Stockholders in the amounts set forth on Exhibit E,
attached hereto.
"Management Stockholders" means Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxxx, Xxxxx
Xxxxxxxxx and Xxxxxxx Xxxxxx.
"Material Adverse Effect" means, (i) with respect to the Company and its
Subsidiaries, a material adverse effect on the properties, assets, business,
results of operations or financial condition of the Company and its
Subsidiaries, taken as a whole, or on the ability of the Company, Anvil or Anvil
VT to consummate the transactions contemplated hereby, (ii) with respect to the
Acquiring Investors, a material adverse effect on the ability of the Acquiring
Investors to consummate the transactions contemplated hereby, and (iii) with
respect to any Stockholder, a material adverse effect on the ability of such
Stockholder to consummate the transactions contemplated hereby.
"Most Recent Financial Statements" has the meaning set forth in Section
3.1(f) below.
"New Common Stock" means the common stock of the Company, par value $.01
per share.
"Notes Offering Memorandum" means a draft of that certain Offering
Memorandum, dated as of February 2, 1997, for $130,000,000 in Senior Notes due
in 2007, to be issued by Anvil.
"Option" means the options to acquire 600,0000 shares of Class A Common at
an exercise price of $.64 per share (of which 525,000 remaining outstanding as
of the date hereof), issued pursuant to part IV of Exhibit A to the Employment
Agreements.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Owned Real Property" has the meaning set forth in Section 3.1(m) below.
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"PBGC" has the meaning set forth in Section 3.1(p) below.
"Party" and "Parties" has the meaning set forth in the preface above.
"Permits" has the meaning set forth in Section 3.1(i) below.
"Permitted Encumbrances" has the meaning set forth in Section 3.1(m) below.
"Phantom Payment" means the payment of $5,250,000 to be made pursuant to
the Phantom Equity Plan (the terms of which are set forth in part V of Exhibit A
to the Employment Agreements).
"Plan" has the meaning set forth in Section 3.1(p) below.
"Preferred Stock" means, collectively, the Class A Preferred, Class B
Preferred and Class C Preferred.
"Preferred Stock Consideration" means the aggregate Liquidation Value of
all shares of Preferred Stock issued and outstanding at Closing, plus all
accrued and unpaid dividends in respect of such Preferred Stock through the
Closing Date, payable in cash.
"Pro Rata Share" means the percentage resulting from dividing the number
one (1) by the aggregate number of issued and outstanding shares of Preferred
Stock as of the Closing Date in the case of Preferred Stock and the aggregate
number of issued and outstanding shares of Common Stock (including as issued all
shares of Common Stock which may be acquired pursuant to unexercised Options and
any other options, warrants or securities convertible into or exchangeable for
Common Stock) as of the Closing Date in the case of Common Stock (immediately
prior to giving effect to the issuance of any shares of New Common Stock
pursuant to Section 2.1 below or in connection with the transactions
contemplated by the Units Offering Memorandum).
"Recapitalization" means the transactions contemplated by the Notes
Offering Memorandum and the Units Offering Memorandum.
"Recapitalization Consideration" has the meaning set forth in Section 2.3
below.
"Redeemed Shares" has the meaning set forth in Section 2.1(d) below.
"Refinancing Transactions" means (1) the issuance of Senior Notes and
Senior Preferred Units as contemplated in the Notes Offering Memorandum and
Units Offering Memorandum, respectively, and (2) the consummation of a revolving
credit facility in an approximate amount of $50,000,000.
"Required Consents" has the meaning set forth in Section 5.1(e) below.
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"Required Governmental Consents" has the meaning set forth in Section
5.1(f) below.
"Retained Shares" has the meaning set forth in Section 2.1(d) below.
"SWDA" has the meaning set forth in Section 3.1(l) below.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Securityholders Agreement" means the Securityholders Agreement dated as of
January 30, 1995, among the Company and the parties thereto, as amended,
restated or modified from time to time.
"Seller Note Amount" means the unpaid principal under that certain
Subordinated Promissory Note issued on January 30, 1995, by the Company to
Culligan International Company (the "Payee") in the initial principal amount of
$7,500,000 and subsequent notes issued to the Payee as payments of interest (the
original note and all notes subsequently issued in respect of such note are the
"Seller Notes"), plus all accrued and unpaid interest, and any premiums and
penalties payable, on the Seller Notes through the Closing Date.
"Share" means any share of Common Stock and any share of Preferred Stock,
as applicable.
"Stockholder" has the meaning set forth in the preface above.
"Subsidiary" means the entities set forth in Section 3.1(e) of the
Disclosure Schedule.
"Tax" means any federal, state, local or foreign income, gross receipts,
franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer,
real property gains, registration, value added, excise, natural resources,
severance, stamp, occupation, windfall profits, environmental (liability under
Section 59A of the Code), customs, duties, real property, personal property,
capital stock, social security, unemployment, disability, payroll, license,
employee or other withholding, or other tax, of any kind whatsoever, including
any interest, penalties or additions to tax or similar items in respect of the
foregoing (whether disputed or not).
"Tax Return" means any return, report, declaration, claim for refund,
information return or other document (including any related or supporting
schedule, statement or information and any amendment to any of the foregoing)
filed or required to be filed in connection with the determination, assessment
or collection of any Tax of any party or the administration of any laws,
regulations or administrative requirements relating to any Tax.
"Termination Date" has the meaning set forth in Section 7.12 below.
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"Title Company" has the meaning set forth in Section 5.1(p) below.
"Units Offering Memorandum" means a draft of that certain Offering
Memorandum, dated as of February 1, 1997, for Units, consisting of Senior
Exchangeable Preferred Stock of the Company and common stock.
"Vestar" means Vestar Capital Partners, a New York general partnership.
"Voting Trust Agreement" means the Voting Trust Agreement, dated as of
January 30, 1995, among the Company, Anvil VT and the Stockholders party
thereto, as amended, restated or modified from time to time.
"Voting Trust Certificate" means the Voting Trust Certificates representing
beneficial ownership of the Shares of Common Stock subject to the Voting Trust
Agreement.
ARTICLE II
THE RECAPITALIZATION
2.1. Recapitalization Transactions. Pursuant to the terms and subject to
the conditions of this Agreement, at the Closing (as defined below):
(a) Acquiring Investors Obligations. BRS (and its Affiliates and
designees) shall make the capital contributions set forth opposite their
respective names on Exhibit A hereto in exchange for the number of shares of New
Common Stock set forth opposite their respective names on Exhibit A.
(b) Anvil VT Obligations. Anvil VT shall take all commercially
reasonable actions necessary to cause the termination of the Voting Trust
Agreement and upon such termination shall surrender to the Company certificates
for all Shares of Common Stock and Preferred Stock held by Anvil VT duly
endorsed in blank, with stock powers duly executed in blank, in proper form for
transfer.
(c) Stockholders Obligations. Each Stockholder (including CVC (or any
of its Affiliates) in its capacity as a Stockholder) shall (i) surrender to the
Company certificates for the number of Shares of Common Stock (in the case of
Stockholders that are party to the Voting Trust Agreement, the Voting Trust
Certificates representing such number of Shares of Common Stock) and the number
of Shares of Preferred Stock (in the case of Stockholders that are party to the
Voting Trust Agreement, the Voting Trust Certificates representing such number
of Shares of Preferred Stock) set forth opposite such Stockholder's name on
Exhibit B hereto, with stock powers duly executed in blank, in proper form for
transfer, (ii) exchange any remaining Shares of Common Stock (in the case of
Stockholders that are party to the Voting Trust Agreement, the Voting Trust
Certificates representing such number of Shares of Common Stock) held by such
Stockholder for the number of shares of New Common Stock set forth opposite such
Stockholder's name on Exhibit B hereto, and (iii) take all commercially
reasonable actions,
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including voting the voting securities held by such Stockholder, necessary to
(A) terminate the Voting Trust Agreement, (B) terminate the Securityholders
Agreement, (C) enable the Refinancing Transactions to be consummated, and (D)
cause the Company to consummate the Closing Transactions (provided that with
respect to CVC and its Affiliates, their obligations under clauses (C) and (D)
above shall be governed by Section 4.1 below).
(d) Company Obligations. The Company shall (i) issue New Common Stock
to the Acquiring Investors in the amounts set forth opposite their respective
names on Exhibit A hereto, (ii) redeem all of the issued and outstanding Shares
of Preferred Stock (in the case of Stockholders that are party to the Voting
Trust Agreement, the Voting Trust Certificates representing such number of
Shares of Preferred Stock) in exchange for the Preferred Stock Consideration
pursuant to Section 2.3 below, (iii) redeem from each Stockholder the number of
shares of issued and outstanding Shares of Common Stock (in the case of
Stockholders that are party to the Voting Trust Agreement, the Voting Trust
Certificates representing such number of Shares of Common Stock) set forth
opposite such Stockholder's name on Exhibit B hereto in exchange for a pro-rata
share of the Common Stock Consideration pursuant to Section 2.3 below (the
"Redeemed Shares"), (iv) issue to CVC (or one of its Affiliates) and the
Management Stockholders the number of shares of New Common Stock set forth
opposite their respective names on Exhibit B hereto in exchange for the Voting
Trust Certificates representing Shares of Common Stock not required to be
redeemed pursuant to this Section 2.1 (the "Retained Shares"), (v) pay or cause
to be paid (A) the Seller Note Amount, (B) the Funded Indebtedness, (C) the
Company Transaction Expenses and all expenses incurred by the Company in
connection with the Recapitalization through the Closing Date, (D) the Phantom
Payment, and (E) the Management Bonus, by wire transfer of immediately available
funds to such bank account or accounts as per written instructions of the
parties receiving payments pursuant to this Section 2.1(d), given to the Company
at least two Business Days prior to the Closing Date, and (vi) upon the
consummation of the Refinancing Transactions, enter into, or cause any of its
Subsidiaries to enter into, such other agreements as are required to consummate
the Refinancing Transactions (collectively, the "Closing Transactions").
(e) Management Loans. The Stockholders who are obligors under the
Management Loans shall cause such Management Loans to be repaid in accordance
with their terms.
2.2. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxxx & Xxxxx,
000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, commencing at 10:00 a.m. local
time on the second Business Day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Parties may mutually determine (the "Closing Date").
2.3. Exchange of Shares. Upon surrender to the Company by a Stockholder of
a certificate representing a Share or in the case of Shares subject to the
Voting Trust Agreement, a Voting Trust Certificate representing a number or
Shares (each, a "Certificate") pursuant to
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Section 2.1 above, the holder of such Certificate (the "Holder") shall
receive in exchange therefor (i) with respect to each share of Preferred Stock,
an amount of cash equal to a Pro Rata Share of the Preferred Stock
Consideration, (ii) with respect to each Redeemed Share, an amount of cash equal
to a Pro Rata Share of the Common Stock Consideration, or (iii) with respect to
each Retained Share, 1 share of New Common Stock, as the case may be
(collectively, the "Recapitalization Consideration"). All cash consideration
payable in respect of such Shares under clauses (i) and (ii) above, shall be
paid by wire transfer of immediately available funds to such bank account or
accounts as per written instructions of the Stockholder receiving such payment,
given to the Company at least two Business Days prior to the Closing Date. The
Certificates surrendered pursuant to this Section 2.3 shall be canceled. In the
event any Certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the registered holder of such lost, stolen or
destroyed Certificate in form and substance acceptable to the Company and the
Acquiring Investors, the Company will issue in exchange for such lost, stolen or
destroyed Certificate the Recapitalization Consideration due in respect thereof
in the manner set forth in this Section 2.3.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
3.1. Representations and Warranties of the Company. The Company represents
and warrants to the Acquiring Investors and the Stockholders that the statements
contained in this Section 3.1 are correct and complete as of the date of this
Agreement, except as disclosed in the disclosure schedule delivered in
connection with Article III hereof on or prior to the date of this Agreement
(the "Disclosure Schedule").
(a) Organization, Qualification, and Corporate Power. The Company is a
corporation validly existing and in good standing under the laws of the State of
Delaware. The Company is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction in which the nature of its
businesses or the ownership or leasing of its properties requires such
qualification, except where the lack of such qualification would not have a
Material Adverse Effect. The Company has full corporate power and authority and
all material licenses, permits and authorizations necessary to carry on the
businesses in which it is engaged and to own and use the material properties
owned and used by it.
(b) Authority. The Company has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Company, except for
such approval of the Stockholders as may be required by law. This Agreement has
been duly executed and delivered by the Company, and constitutes a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms. Section 3.1(b) of the Disclosure Schedule sets forth a list of
the officers and directors of the Company.
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(c) No Conflicts. The execution and delivery of this Agreement do not,
and the consummation by the Company of the transactions contemplated hereby and
by the Recapitalization in accordance with the terms of this Agreement will not,
result in any violation of or default under (with or without notice or lapse of
time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation under, (i) any provision of the certificate of
incorporation or bylaws of the Company or any of its Subsidiaries, or (ii) any
material agreement, indenture, instrument, order, judgment or decree applicable
to the Company or any of its Subsidiaries or their properties or assets. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality (a "Governmental Entity"), is required
by or with respect to the Company in connection with the execution and delivery
of this Agreement or the consummation by the Company of the transactions
contemplated hereby or by the Recapitalization.
(d) Capitalization. The entire authorized capital stock of the Company
consists of (i) 10,605,000 shares of Class A Common, of which 5,830,000 shares
are issued and outstanding, and owned beneficially and of record by the persons
set forth on Section 3.4(d) of the Disclosure Schedule, as of the date hereof,
(ii) 3,200,000 shares of Class B Common, of which 2,600,000 shares are issued
and outstanding and owned beneficially, and of record by the persons set forth
on Section 3.4(d) of the Disclosure Schedule, as of the date hereof, (iii)
1,650,000 shares of Class C Common, of which 1,650,000 shares are issued and
outstanding, and owned beneficially and of record by the persons set forth on
Section 3.4(d) of the Disclosure Schedule, as of the date hereof, (iv) 205,010
shares of Class A Preferred, of which 129,584 are issued and outstanding, and
owned beneficially and of record by the persons set forth on Section 3.4(d) of
the Disclosure Schedule, as of the date hereof, (v) 70,420 shares of Class B
Preferred, of which 70,416 are issued and outstanding, and owned beneficially
and of record by the persons set forth on Section 3.4(d) of the Disclosure
Schedule, as of the date hereof, and (vi) 5,000 shares of Class C Preferred,
none of which are outstanding as of the date hereof. As of the date hereof, the
Company had outstanding incentive and other stock options exercisable for an
aggregate of 525,000 shares of Class A Common. Except as set forth above or in
the Company's certificate of incorporation, there are no outstanding options,
warrants, rights, contracts, calls, puts, rights to subscribe, conversion
rights, or other agreements or commitments to which the Company is a party or
which are binding upon the Company providing for the issuance, disposition, or
acquisition of any of its capital stock. There are no outstanding stock
appreciation, phantom stock, or similar rights with respect to the Company. All
of the issued and outstanding Shares have been duly authorized and are validly
issued, fully paid, and nonassessable.
(e) Subsidiaries. Section 3.1(e) of the Disclosure Schedule sets forth
for each Subsidiary of the Company (i) its name and jurisdiction of
incorporation, (ii) the number of shares of authorized capital stock of each
class of its capital stock, (iii) the number of issued and outstanding shares of
each class of its capital stock (if applicable), the names of the holders
thereof, and the number of shares held by each such holder, (iv) the number of
shares of its capital stock held in treasury, and (v) its directors and
officers. Each Subsidiary of the Company is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each Subsidiary of the Company is duly authorized to conduct
- 11 -
business and is in good standing under the laws of each jurisdiction where such
qualification is required, except where the lack of such qualification would not
have a Material Adverse Affect on Company or such Subsidiary. Each Subsidiary of
the Company has full corporate power and authority to carry on the businesses in
which it is engaged and to own and use the properties owned and used by it.
Except as set forth above or in the certificate of incorporation of any
Subsidiary, there are no outstanding options, warrants, rights, contracts,
calls, puts, rights to subscribe, conversion rights, or other agreements or
commitments to which any Subsidiary is a party or which are binding upon any
Subsidiary providing for the issuance, disposition, or acquisition of any of its
capital stock. There are no outstanding stock appreciation, phantom stock, or
similar rights with respect to any Subsidiary. All of the issued and outstanding
shares of capital stock of each Subsidiary have been duly authorized and are
validly issued, fully paid, and nonassessable. One of the Company and its
Subsidiaries holds of record and owns beneficially all of the outstanding shares
of each Subsidiary of the Company.
(f) Financial Statements. Attached hereto as Exhibit C are the
following financial statements (collectively the "Financial Statements"): (i)
audited consolidated balance sheet and statement of income and cash flows as of
and for the fiscal year ended January 27, 1996, for the Company and its
Subsidiaries, and (ii) unaudited consolidated balance sheet and statement of
income and cash flows (the "Most Recent Financial Statements") as of and for the
eleven months ended December 28, 1996, for the Company and its Subsidiaries. The
Financial Statements (including the notes thereto) have been prepared from the
books and records of the Company in accordance with GAAP applied on a consistent
basis throughout the period covered thereby and present fairly the financial
position of the Company and its Subsidiaries as of such dates and the results of
operations of the Company and its Subsidiaries for such period; provided,
however, that the Most Recent Financial Statements are subject to normal
year-end adjustments and lack footnotes and other presentation items. Attached
hereto as Exhibit D are the audited combined balance sheets as of January 28,
1995 and January 29, 1994, and the statements of earnings and cash flows for the
year ended January 28, 1995, the seven months ended January 29, 1994, the five
months ended June 30, 1993 and year ended January 31, 1993, for Anvil Knitwear
(the "Division"), a division of XxXxxxxx Corporation (the "Divisional Financial
Statements"). The Divisional Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis (except as disclosed therein)
throughout the periods covered thereby and present fairly the financial position
of the Division as of such dates and the results of operations of the Division
for such periods.
(g) Events Subsequent to Most Recent Financial Statements. Since the
Most Recent Financial Statements, there has not been any material adverse change
in the assets, liabilities, business, financial condition, operations or results
of operations of the Company and its Subsidiaries taken as a whole. Without
limiting the generality of the foregoing, except as set forth on Section 3.1(g)
of the Disclosure Schedule or as expressly contemplated by this Agreement, since
the date of the Most Recent Financial Statements, none of the Company nor any of
its Subsidiaries has:
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(i) experienced any material changes in any relationship with its
suppliers, customers, distributors, brokers, lessors or others, other than
changes in the Ordinary Course of Business;
(ii) sold, leased, transferred, or assigned any of its material
assets, tangible or intangible (including, without limitation, the
Intellectual Property Rights) other than for fair consideration in the
Ordinary Course of Business;
(iii) engaged in any activity which has resulted in any
acceleration or delay of the collection of its material accounts or notes
receivable or any delay in the payment of its material accounts payable, in
each case other than in the Ordinary Course of Business;
(iv) accelerated, terminated, modified or canceled any permit or
agreement, contract, lease, or license involving more than $200,000,
individually, to which it is a party or by which it is bound;
(v) suffered any material damage, destruction, or loss, whether or
not covered by insurance, affecting any material property or assets owned
or used by it;
(vi) adopted, modified, amended, or terminated, in any material
respect, any bonus, profit-sharing, incentive, severance, or other similar
plan, contract, or commitment for the benefit of any of its directors,
officers, or employees, or otherwise made any material change in the
employment terms (including any increase in the base compensation) for any
of its officers and employees except in the Ordinary Course of Business;
(vii) made any capital expenditure or any other investment (or
series of related investments) in excess of $200,000, other than in the
Ordinary Course of Business.
(viii) issued any note, bond, or other debt security, or created,
incurred, assumed, or guaranteed any indebtedness involving more than
$200,000, individually, or in the aggregate;
(ix) canceled, compromised, waived, or released any right or claim
(or series of related rights and claims) either involving more than
$200,000, individually or in the aggregate, or outside the Ordinary Course
of Business;
(x) made or authorized any change in its certificate of
incorporation or bylaws;
(xi) issued, sold, or otherwise disposed of any of its capital
stock, or granted, modified, or amended any options, warrants, stock
appreciation rights, or other
- 13 -
rights to purchase or obtain (including upon conversion, exchange,
or exercise) any of its capital stock or participate in any change in the
value thereof;
(xii) made or been subject to any material change in its
accounting practices, procedures, or methods, or in its cash management
practices;
(xiii) entered into or become party to any agreement, arrangement,
or transaction with any of its Affiliates or any of their respective
directors, officers, employees (other than in the Ordinary Course of
Business, consistent with past custom and practice), shareholders or
relatives, including, without limitation, any (A) loan or
advance of funds, or made any other payments, to any of its directors,
officers, employees, shareholders, or Affiliates, (B) creation
or discharge of any intercompany account, or (C) any payment or declaration
of any dividend, redemption or other distribution with respect to their
respective capital stock;
(xiv) granted any license or sublicense of any rights under,
allowed to lapse, disposed of, or otherwise experienced any material
adverse changes with respect to the Intellectual Property Rights;
(xv) experienced any material changes in the amount or scope of
coverage of insurance now carried by them; or
(xvi) committed to do any of the foregoing.
(h) Absence of Liabilities. Except as set forth on the Financial
Statements (or in the notes thereto), neither the Company nor any of its
Subsidiaries has any obligation or liability (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due), that is
material to the Company or any of its Subsidiaries and required to be reported
as a liability on the consolidated financial statements of the Company and its
Subsidiaries or in the footnotes (if any) thereto under GAAP, other than
borrowings under its existing loan agreements in the Ordinary Course of Business
and other liabilities arising or incurred since the Most Recent Financial
Statements in the Ordinary Course of Business (none of which are liabilities for
breach of agreement, breach of warranty, tort, infringement, violation of law,
or an environmental liability).
(i) Compliance With Laws. The Company and its Subsidiaries are in
compliance, in all material respects, with all applicable laws, rules,
regulations, ordinances, decrees or orders of any Governmental Entity. The
Company and its Subsidiaries have all material governmental permits, licenses
and authorizations necessary for the conduct of their businesses as presently
conducted in all material respects ("Permits") and are in compliance, in all
material respects, with the terms of the Permits.
(j) Contracts. Section 3.1(j) of the Disclosure Schedule contains a
complete and correct list of all material agreements, contracts, commitments,
Leases, and other material instruments and arrangements (whether written or
oral) to which the Company or any of its
- 14 -
Subsidiaries is a party (the "Contracts"); provided, however that the Company
shall not be required to disclose on Section 3.1(j) of the Disclosure Schedule
any purchase or sale orders incurred in the Ordinary Course of Business. The
Company has made available to Acquiring Investors complete and correct copies of
all written Contracts, together with all amendments thereto, and accurate
descriptions of all oral Contracts which, if reduced to written form, would be
required to be set forth in Section 3.1(j) of the Disclosure Schedule. All
Contracts are in full force and effect. There does not exist under any Contract
any event of default or event or condition that, after notice or lapse of time
or both, would constitute a violation, breach or event of default thereunder on
the part of the Company or any of its Subsidiaries or, to the best knowledge of
Company, any other party thereto except as set forth in Section 3.1(j) of the
Disclosure Schedule. Except as set forth in Section 3.1(j) of the Disclosure
Schedule, no consent of any third party is required under any Contract as a
result of or in connection with, and the enforceability of any contract will not
be affected in any manner by, the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby and the
Recapitalization.
(k) Litigation. There are no material actions, suits, proceedings,
orders, investigations or claims pending or, to the knowledge of the Company's
officers and directors, threatened against the Company or any of its
Subsidiaries at law or in equity, or before or by any Governmental Entity. There
are no material arbitration proceedings pending against the Company or any of
its Subsidiaries, including without limitation proceedings under collective
bargaining agreements. To the knowledge of the Company's officers and directors,
there are no federal, state or local governmental inquiries involving the
Company or any of its Subsidiaries, including without limitation inquiries as to
the qualification of the Company or any of its Subsidiaries to hold or receive
any license or permit.
(l) Environmental Matters. Except as would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect, to the
knowledge of the Company: (i) the Company and its Subsidiaries are in compliance
with all Environmental and Safety Requirements; (ii) the Company and its
Subsidiaries have obtained and are in compliance with all permits, licenses and
other authorizations required pursuant to Environmental and Safety Requirements
for the occupation of their facilities and properties and the operation of their
businesses; (iii) neither the Company nor any Subsidiary has received any notice
regarding any actual or alleged violation of Environmental and Safety
Requirements, or any liabilities or potential liabilities arising under
Environmental and Safety Requirements; (iv) none of the following exists at any
property or facility currently owned or operated by the Company or any
Subsidiary: (A) underground storage tanks, (B) friable asbestos-containing
material, (C) materials or equipment containing polychlorinated biphenyls, or
(D) landfills, surface impoundments, or disposal areas; (v) neither the Company
nor any Subsidiary has treated, stored, disposed of, arranged for or permitted
the disposal of, transported, handled, or released any substance, including
without limitation any hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or will give rise to material liabilities,
including any material liability for response costs, corrective action costs,
personal injury, property damage, natural resources damages or attorney fees, or
any investigative, corrective or remedial obligations, pursuant to the
- 15 -
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA") or the Solid Waste Disposal Act, as amended ("SWDA") or any
other Environmental and Safety Requirements; (vi) neither the Company nor any
Subsidiary has assumed or undertaken either expressly or by operation of law any
liability, including without limitation any obligation for corrective or
remedial action, of any other person or entity arising under Environmental and
Safety Requirements. The Acquiring Investors and the Company agree that this
Section 3.1(l) contains the sole and exclusive representations and warranties of
the Company regarding environmental, health, or safety matters, including
without limitation, any matters arising under Environmental and Safety
Requirements.
(m) Title to Assets and Real Property.
(i) Each of the Company and its Subsidiaries has good title (or
leasehold interest with respect to capital leases) to all of the assets and
properties which are material to the conduct of the business of the Company
(including those reflected on the Financial Statements), except for assets
and properties sold, consumed or otherwise disposed of in the Ordinary
Course of Business since the date of the Most Recent Financial Statements,
free and clear of all imperfections to title, liens, claims, security
interests, pledges, charges or other encumbrances ("Encumbrances"), except
(i) mechanic's, materialmen's, landlord's, carrier's, warehousemen's and
other similar Encumbrances and Encumbrances incurred in the Ordinary Course
of Business in connection with workers compensation, unemployment
insurance, social security benefits and other similar matters for sums (A)
not yet due and payable or (B) being contested in good faith, (ii) purchase
money liens and Encumbrances securing rental payments under capital lease
arrangements, (iii) with respect to Owned Real Property only, all
covenants, conditions, easements, rights-of-way, restrictions, utility
agreements, consents, agreements, reservations, encroachments, patents, all
other matters of public record, imperfections of title and other similar
charges and Encumbrances which do not affect materially and adversely the
ability of the Company to conduct its business as currently conducted or
materially increases its cost of doing business, (iv) with respect to Owned
Real Property only, zoning, entitlement, building, environmental and other
land use rules, laws and regulations which are applicable to the Owned Real
Property, (v) with respect to Owned Real Property only, matters that would
be disclosed by an accurate survey conforming to 1992 ALTA/ACSM Minimum
Standard Detail Requirements so long as such matters do not have a Material
Adverse Effect, (vi) matters and Encumbrances set forth or identified in
the documents listed in Section 3.1(m) of the Disclosure Schedule, and
(vii) liens for Taxes not yet due and payable or being contested in good
faith by appropriate proceedings (the matters set forth in the foregoing
clauses being referred to herein as the "Permitted Encumbrances").
(ii) Section 3.1(m) of the Disclosure Schedule sets forth a list
of all owned U.S. real property and owned foreign real property
(collectively, the "Owned Real Property") used by the Company and its
Subsidiaries in the
- 16 -
operation of the business of the Company and its Subsidiaries. With respect
to each such parcel of Owned Real Property: (i) such parcel is free and
clear of all Encumbrances, except Permitted Encumbrances, (ii) there are no
leases, subleases, licenses, concessions, or other agreements, written or
oral, granting to any person the right of use or occupancy of any portion
of such parcel; and (iii) there are no outstanding actions or rights of
first refusal to purchase such parcel, or any portion thereof or interest
therein. Except as set forth in Section 3.1(m) of the Disclosure Schedule,
there is no material real property other than the Owned Real Property which
is owned by the Company or any of its Subsidiaries in connection with the
business of the Company or its Subsidiaries.
(n) Intellectual Property. Section 3.1(n) of the Disclosure Schedule
contains a complete and accurate list or description of all material (i)
trademarks, trade names, service marks, and all registrations, applications and
renewals therefor, (ii) registered and unregistered copyrights, applications and
renewals therefor, and (iii) patents and patent applications, presently owned or
used by the Company or any of its Subsidiaries in the conduct of the business of
the Company and its Subsidiaries. The foregoing items and any goodwill
associated therewith, along with all other material trade dress, logos,
inventions, discoveries, processes, improvements, technical and computer data,
documentation and software, trade secrets, know-how and other confidential and
proprietary information owned or used by the Company or any Subsidiary, and the
Company's and any such Subsidiary's rights under any license or other agreement
relating to such intellectual property (whether as licensee or licensor
thereunder), are referred to in this Agreement as the "Intellectual Property
Rights." Except as indicated on Section 3.1(n) of the Disclosure Schedule, (A)
the Company or one of its Subsidiaries owns or has the right to use, pursuant to
a valid and enforceable license, all Intellectual Property Rights, except where
the failure to own or have such right to use would not, in the aggregate, have a
Material Adverse Effect, and the Intellectual Property Rights comprise all of
the intellectual property rights necessary for the conduct of the business of
the Company and its Subsidiaries in all material respects in the same manner as
the business of the Company and each of the Subsidiaries has been conducted
prior to the date hereof, (B) neither the Company nor any Subsidiary has
received any written notice of a claim or demand of any person or entity
relating to, or any proceedings which are pending or threatened which challenge,
the rights of the Company or any Subsidiary in respect of any material
Intellectual Property Rights, and (C) to the knowledge of the Company, neither
the Company nor any Subsidiary has infringed upon or misappropriated any
material intellectual property rights of a third party. The Company and its
Subsidiaries have taken all necessary action to maintain and protect the
registered or patented intellectual Property Rights or applications therefor,
except to the extent that failure to maintain and protect the same would not
have a Material Adverse Effect.
(o) Taxation Matters.
(i) Each of Company and its Subsidiaries has (A) filed, or timely
applied for extensions of time in which to file, all required material Tax
Returns and all such Tax Returns are true and correct in all material
respects, (B) paid all material Taxes which it owes or which it is
obligated to withhold from
- 17 -
amounts owing to any employee, creditor or third party, except with respect
to matters contested in good faith and for which adequate reserves have
been provided, and (C) not waived any statute of limitation with respect to
Taxes or agreed to any extension of time with respect to a tax assessment
or deficiency;
(ii) There are no pending (or, to the knowledge of the officers
and directors of the Company, threatened) audits, examinations,
investigations or other proceedings in respect of Taxes or Tax matters;
(iii) Neither the Company nor any Subsidiary has made any
payments, is not obligated to make any payments, nor is a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Section 280G of the Code;
(iv) No claim has ever been made in writing to the Company by a
taxing authority in a jurisdiction where the Company or any Subsidiary does
not pay Taxes or file Tax Returns that the Company or any Subsidiary is or
may be subject to Taxes assessed by such jurisdiction;
(v) Neither the Company nor any Subsidiary is a party to any Tax
allocation or sharing agreement; and
(vi) Neither the Company nor any Subsidiary (A) has been a member
of an affiliated group filing a consolidated federal income Tax Return
other than an affiliated group of which the Company is the common parent or
(B) has any liability for the Taxes of any person, corporation, association
or business entity (other than the Company or any Subsidiary) under Treas.
Reg. ss.1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
(p) ERISA Matters.
(i) Section 3.1(p) of the Disclosure Schedule sets forth all of
the Company's and its Subsidiaries' material bonus, deferred or incentive
compensation, profit sharing, retirement, vacation, sick leave,
hospitalization or severance plans, and all "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) or "employee welfare benefit
plans" (as defined in Section 3(1) of ERISA) (the "Plans"). None of the
Plans are subject to Title IV of ERISA nor provide for medical or life
insurance benefits to retired or former employees of the Company (other
than as required under Code Section 4980B, or similar state law). The
Company is not a participating or contributing employer in any
"multiemployer plan" (as defined in Section 3(37) of ERISA) with respect to
employees of the Company or its Subsidiaries nor has the Company or its
Subsidiaries incurred any withdrawal liability with respect to any
multiemployer
- 18 -
plan or any liability in connection with the termination or reorganization
of any multiemployer plan;
(ii) Each Plan is in all material respects in compliance, and has
been administered in all material respects in accordance, with the
applicable provisions of ERISA and the Code and all other applicable laws,
rules and regulations, including, but not limited to, medical continuation
under Code Section 4980B. Neither the Company nor any Subsidiary has
engaged in any non-exempt transaction prohibited by ERISA or the Code;
(iii) All contributions, premiums or payments which are due on or
before the Closing Date have been paid or properly accrued;
(iv) Each Plan which is intended to be qualified under Section
401(a) of the Code has received a determination from the Internal Revenue
Service that such Plan is so qualified, and nothing has occurred since the
date of such determination that would result in the loss of such
qualification;
(v) Neither the Company nor any Subsidiary has incurred and has
any reason to expect that it will incur, any liability to the Pension
Benefit Guaranty Corporation ("PBGC") (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal liability) or
under the Code with respect to any "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) that the Company or any ERISA Affiliate
maintains or ever has maintained or to which any of them contributes, ever
has contributed, or ever has been required to contribute.
(q) Insurance. Section 3.1(q) of the Disclosure Schedule sets forth a
description of each material insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and bond and
surety arrangements) with respect to which any of the Company and its
Subsidiaries is a party, a named insured, or otherwise the beneficiary of
coverage. With respect to each such insurance policy: (i) to the knowledge of
the Company, the policy is in full force and effect in all material respects;
(ii) all premiums have been paid, to the extent currently due and payable, and
(iii) the Company has not received any notice of termination and the
consummation of the transactions contemplated by this Agreement and the
Recapitalization will not cause any termination, modification, or acceleration,
under such policy. Section 3.1(q) of the Disclosure Schedule describes any
material self-insurance arrangements affecting any of the Company and its
Subsidiaries.
(r) Employees. Neither the Company nor any of its Subsidiaries is a
party to or bound by any collective bargaining agreement, nor has the Company or
any of its Subsidiaries experienced any strike or material grievance, claim of
unfair labor practices, or other collective bargaining dispute within the past
three years. Neither the Company nor any of its Subsidiaries has committed any
material unfair labor practice. The Company has no knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with
- 19 -
respect to employees of the Company or any of its Subsidiaries. Section 3.1(r)
of the Disclosure Schedule sets forth a list of all employees of the Company or
any of its Subsidiaries that receive an annual salary in excess of $50,000.
Within the past six months, neither the Company nor any of its Subsidiaries has
implemented any plant closing or mass layoff of employees that could implicate
the Worker Adjustment Retraining and Notification Act of 1988, as amended, or
any similar state or local law or regulation, and no such layoffs will be
implemented before Closing without advance notification to the Acquiring
Investors.
(s) Certain Business Relationships With the Company and Its
Subsidiaries. None of the Stockholders and their Affiliates has been involved in
any material business arrangement or relationship with any of the Company and
its Subsidiaries within the past 12 months, and none of the Stockholders and
their Affiliates owns any material asset, tangible or intangible, which is used
in the business of the Company or any of its Subsidiaries.
(t) Records. The minute books of the Company are complete and correct
in all material respects and the books of account of the Company are sufficient
to prepare the Financial Statements.
(u) Company Transaction Expenses. The Company Transaction Expenses
shall not exceed $1,500,000.
(v) Brokers' Fees. The Company has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Acquiring Investors,
Anvil VT, any Subsidiary or the Stockholders could become liable or obligated.
3.2. Representations and Warranties of CVC. CVC (in its capacity as an
Acquiring Investor only) represents and warrants to the Company and the
Stockholders that the statements contained in this Section 3.2 are correct and
complete as of the date of this Agreement, except as disclosed in the Disclosure
Schedule.
(a) Organization. CVC is a corporation validly existing and in good
standing under the laws of the jurisdiction of its incorporation.
(b) Authority. CVC has all requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
action on the part of CVC. This Agreement has been duly executed and delivered
by CVC and constitutes a valid and binding obligation of CVC, enforceable
against CVC in accordance with its terms.
(c) No Conflicts. The execution and delivery of this Agreement do not,
and the consummation by CVC of the transactions contemplated hereby in
accordance with the terms of this Agreement will not, result in any violation of
or default under (with or without notice or lapse of time, or both), or give
rise to a right of termination, cancellation or acceleration of any
- 20 -
obligation under, (i) any provision of the certificate of incorporation or
bylaws of CVC or (ii) any material agreement, indenture, instrument, order,
judgment or decree applicable to CVC or its properties or assets. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to CVC in
connection with the execution and delivery of this Agreement or the consummation
by CVC of the transactions contemplated hereby.
(d) Brokers' Fees. CVC has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Company, Anvil VT, any Subsidiary
or the Stockholders could become liable or obligated.
3.3. Representations and Warranties of BRS. BRS represents and warrants to
the Company and the Stockholders that the statements contained in this Section
3.3 are correct and complete as of the date of this Agreement, except as
disclosed in the Disclosure Schedule.
(a) Organization. BRS is a limited partnership validly existing and in
good standing under the laws of the jurisdiction of its formation.
(b) Authority. BRS has all requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
action on the part of BRS. This Agreement has been duly executed and delivered
by BRS and constitutes a valid and binding obligation of BRS, enforceable
against BRS in accordance with its terms.
(c) No Conflicts. The execution and delivery of this Agreement do not,
and the consummation by BRS of the transactions contemplated hereby in
accordance with the terms of this Agreement will not, result in any violation of
or default under (with or without notice or lapse of time, or both), or give
rise to a right of termination, cancellation or acceleration of any obligation
under, (i) any provision of the certificate of limited partnership or limited
partnership agreement of BRS or (ii) any material agreement, indenture,
instrument, order, judgment or decree applicable to BRS or its properties or
assets. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to BRS in connection with the execution and delivery of this Agreement
or the consummation by BRS of the transactions contemplated hereby.
(d) Brokers' Fees. BRS has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Company, Anvil VT, any Subsidiary
or the Stockholders could become liable or obligated.
3.4. Representations and Warranties of the Stockholders. Each of the
Stockholders represents and warrants to the Company and the Acquiring Investors
that the statements
- 21 -
contained in this Section 3.4 are correct and complete as of the date of this
Agreement, except as disclosed in the Disclosure Schedule.
(a) Organization of Certain Stockholders. If such Stockholders is a
corporation it is duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation and if such Stockholder is a
limited partnership it is duly organized, validly existing, and in good standing
under the jurisdiction of its formation.
(b) Authority. Such Stockholder has full power and authority
(including, if such Stockholder is a corporation, full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of such Stockholder, enforceable in accordance with its terms and conditions.
Such Stockholder is not required to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any Governmental Entities in
order to consummate the transactions contemplated by this Agreement.
(c) No Conflicts. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby and by
the Recapitalization, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any Governmental Entities, or court to which such Stockholders is subject,
(ii) if such Stockholder is a corporation, violate any provision of its
certificate of incorporation or bylaws, (iii) if such Stockholder is a limited
partnership, violate any provision of its certificate of limited partnership or
limited partnership agreement, or (iv) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any material agreement, contract, lease, license, instrument, or other
arrangement to which such Stockholders is a party or by which he or it is bound
or to which any of his or its assets is subject. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to such Stockholder in connection with the
execution and delivery of this Agreement or the consummation by such Stockholder
of the transactions contemplated hereby.
(d) Company Shares. Such Stockholder holds of record or owns
beneficially, and as of the Closing Date shall hold of record or own
beneficially, the number of Shares set forth next to such Stockholders name in
Section 3.4(d) of the Disclosure Schedule, free and clear of any restrictions on
transfer (other than restrictions under the Securities Act and state securities
laws), taxes, Encumbrances, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. Such Stockholder is not a party to
any option, warrant, purchase right, or other contract or commitment that could
require such Stockholder to sell, transfer, or otherwise dispose of any capital
stock of the Company (other than this Agreement). Such Stockholder is not a
party to any voting trust, proxy, or other agreement or understanding with
respect to the voting of any capital stock of the Company, except for this
Agreement.
(e) Brokers' Fees. Such Stockholders has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated
- 22 -
by this Agreement for which the Company, the Acquiring Investors, Anvil VT, any
Subsidiary or any other Stockholder could become liable or obligated.
3.5. Representations and Warranties of Anvil VT. Anvil VT represents and
warrants to the Company, the Acquiring Investors and the Stockholders that the
statements contained in this Section 3.5 are correct and complete as of the date
of this Agreement, except as disclosed in the Disclosure Schedule.
(a) Organization of Anvil VT. Anvil VT is a corporation, duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(b) Authority. Anvil VT has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of Anvil VT, enforceable in accordance with its terms and conditions. Anvil VT
is not required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Entities in order to
consummate the transactions contemplated by this Agreement.
(c) No Conflicts. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby and by
the Recapitalization, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any Governmental Entities, or court to which such Stockholders is subject,
(ii) violate any provision of its certificate of incorporation or bylaws, or
(iii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any material agreement, contract,
lease, license, instrument, or other arrangement to which Anvil VT is a party or
by which he or it is bound or to which any of its assets is subject. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Anvil VT in
connection with the execution and delivery of this Agreement or the consummation
by Anvil VT of the transactions contemplated hereby.
(d) Brokers' Fees. Anvil VT has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Company, the Acquiring
Investors, any Subsidiary or the Stockholders could become liable or obligated.
3.6. Representations and Warranties of the Management Stockholders. Each of
the Management Stockholders represents and warrants to the Company and the
Acquiring Investors that the statements contained in this Section 3.6 are
correct and complete as of the date of this Agreement, except as disclosed in
the Disclosure Schedule.
(a) Such Management Stockholder holds of record or owns beneficially,
and as of the Closing Date shall hold of record or own beneficially, the
number of Options set forth next to such Management Stockholders name in
Section 3.6(a) of the Disclosure Schedule, free and clear of any
restrictions on
- 23 -
transfer (other than restrictions under the Securities Act and state
securities laws), taxes, Encumbrances, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands.
(b) Such Management Stockholder has not assigned to any third party
and as of the Closing Date will not have assigned to any third party, such
Management Stockholder's right to receive the Phantom Payment.
(c) Such Management Stockholder has no right to acquire the capital
stock of the Company other than pursuant to the exercise of the Options and
no right to receive payment from the Company in connection with or as a
result of the consummation of the transactions contemplated by this
Agreement other than the Phantom Payment and the Management Bonus.
ARTICLE IV
COVENANTS OF THE PARTIES
The Parties agree as follows with respect to the period from and after
the execution of this Agreement.
4.1. Mutual Covenants.
(a) General. Each of the Parties will use its commercially reasonable
best efforts to take all action and to do all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement (including satisfying the conditions precedent to the Refinancing
Transactions and obtaining the Required Consents).
(b) Governmental Matters. Each of the Parties will use its
commercially reasonable best efforts to take any additional action that may be
necessary, proper or advisable in connection with any other notices to, filings
with, and authorizations, consents and approvals of Governmental Entities that
it may be required to give, make or obtain (including all Required Government
Consents).
(c) Options. Notwithstanding any performance or other vesting criteria
set forth in the Employment Agreements, each of the Parties agrees that
immediately prior to the Closing all Options shall be fully vested and
exercisable.
4.2. Covenants of the Acquiring Investors.
(a) Indemnification. The Acquiring Investors will cause the Company to
maintain for a period of seven years after the date of this Agreement all
exculpatory, indemnification and expense reimbursement and advance provisions
now existing in the
- 24 -
certificate of incorporation or bylaws of the Company for the benefit of any
individual who served as a director or officer of the Company at any time prior
to the Closing Date.
(b) Insurance. The Acquiring Investors shall cause the Company to
obtain and maintain officers' and directors' liability insurance substantially
similar to that currently maintained by the Company, if available, for a period
of not less than seven years after the Closing Date; provided that the Company
may substitute therefor policies of insurers with at least equal rating with at
least the same coverage containing terms and conditions which are no less
advantageous to the beneficiaries thereof and that the premiums for such
coverage shall not exceed 250% of the premiums paid during the first full fiscal
year after the Closing Date.
4.3. Covenants of the Company.
(a) Full Access. From and after the date of this Agreement until the
consummation of the transactions contemplated hereunder (or the termination of
this Agreement), the Company will, and will cause the Subsidiaries to, permit
representatives of the Acquiring Investors and its financing sources to have
full access at all reasonable times, and in a manner so as not to interfere with
the normal business operations of the Company, to all premises, personnel,
properties, customers, suppliers, books, records, contracts, tax records and
documents of or pertaining to the Company and its Subsidiaries, including all
information necessary to satisfy closing conditions for obtaining the financing
for the transactions contemplated hereby. The Acquiring Investors will treat and
hold as confidential any Confidential Information it receives from the Company
and its Subsidiaries in the course of the review contemplated by this Section
4.3(a), will not, prior to the consummation of the transactions contemplated
hereby, use any of the Confidential Information except in connection with this
Agreement and, if this Agreement is terminated for any reason whatsoever, agrees
to return to the Company all tangible embodiments (and all copies) thereof which
are in its possession; provided, however, that this sentence shall not apply to
any information (i) which, at the time of disclosure, is available publicly, or
(ii) which, after disclosure, becomes available publicly through no fault of the
Acquiring Investors.
(b) Operation of the Company's Business. During the period from the
date of this Agreement to the time of consummation of the transactions
contemplated by this Agreement, except as contemplated hereby, the Company
shall, and will cause its Subsidiaries to, conduct its operations in the
Ordinary Course of Business and shall use commercially reasonable best efforts
to:
(i) keep in full force and effect its corporate existence and all
material rights, franchises, Intellectual Property Rights, and goodwill
relating to its business;
(ii) cause each of the Company and its Subsidiaries to be duly
qualified and in good standing as a foreign corporation in each
jurisdiction in which the nature of its business or the ownership of its
property makes such qualification necessary, except where the failure to be
so qualified does not have a Material Adverse Effect;
- 25 -
(iii) preserve its present material relationships with customers,
suppliers, contractors, and distributors;
(iv) maintain the Intellectual Property Rights so as not to affect
adversely any registration or application for registration thereof or the
validity or enforcement thereof, maintain its other assets in customary
repair, order and condition and maintain insurance reasonably comparable to
that in effect on the date of this Agreement, in each case, in a manner
consistent with past practice;
(v) perform in all material respects all of its obligations under
all Contracts to which the Company or any Subsidiary is a party or by which
any of them, or any of their respective properties or assets, may be bound
and not enter into, assume or amend any such contract or commitment other
than in the Ordinary Course of Business;
(vi) prepare and file all Tax Returns and other Tax reports,
filings and amendments thereto required to be filed by it, on a timely
basis; and
(vii) to retain the services of its officers and key employees.
Without limiting the generality of the foregoing, during the period from the
date of this Agreement to the consummation of the transactions contemplated by
this Agreement, the Company shall not, except as expressly provided herein or in
the Disclosure Schedules, without the prior written consent of the Acquiring
Investors:
(i) (A) adjust, split, combine or reclassify its capital stock,
(B) make, declare or pay any dividend or distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or exchangeable for
any shares of its capital stock, (C) grant any person any right to acquire
any shares of its capital stock, or (D) issue, deliver or sell or agree to
issue, deliver or sell any additional shares of its capital stock or any
securities or obligations convertible into or exchangeable or exercisable
for any shares of its capital stock or such securities (except pursuant to
the exercise of any outstanding Options or the conversion of any
outstanding Shares);
(ii) sell, transfer, pledge, mortgage, encumber or otherwise
dispose of any of its property or assets other than any such disposition
made in the Ordinary Course of Business;
(iii) make or propose any changes in its certificate of
incorporation or bylaws;
(iv) merge or consolidate with any other person or acquire, other
than in the Ordinary Course of Business, in excess of $200,000 of the
assets of any other person; and
- 26 -
(v) incur, create, assume or otherwise become liable for any
indebtedness in an amount in excess of $200,000, other than in the Ordinary
Course of Business.
(vi) change any of its material accounting policies or cash
management practices;
(vii) incur, create, or suffer to exist any Encumbrance on (A) the
shares of capital stock of its Subsidiaries, or (B) any assets of the
Company and the Subsidiaries (other than Permitted Encumbrances); or
(viii) enter into, or become party to, any agreement, arrangement,
or transaction with any of its Affiliates or any of their respective
directors, officers, employees (other than in the Ordinary Course of
Business), shareholders or relatives, including, without limitation, any
(A) loan or advance of funds, or make any other payments, to any of its
directors, officers, employees, shareholders, or Affiliates, except for the
Management Loans, or (B) creation of any intercompany account.
(c) Transaction Expenses. The Company shall cause each of the persons
entitled to payments which constitute Company Transaction Expenses and other
amounts payable under Section 2.1(d)(v)(C) to provide a final xxxx for such fees
and expenses prior to the Closing Date.
(d) No Negotiations, etc. The Stockholders will not, and the Company
will not, and the Company will cause its directors, officers, employees, agents,
Subsidiaries, Stockholders and their Affiliates not to, directly or indirectly,
make, solicit, initiate, negotiate, discuss, or encourage the submission of
inquiries, proposals, or offers from any person (including any of its officers
or employees) relating to any merger, consolidation or other business
combination involving the Company or any of its Subsidiaries, any sale of all or
any substantial portion of the assets of the Company or any of its Subsidiaries,
or the sale of any material equity interest in the Company or any of its
Subsidiaries (any of the foregoing, a "Competing Transaction") or enter into any
agreement requiring it to abandon or terminate the transactions contemplated
hereby. The Company and Stockholders will not, directly or indirectly,
participate in any negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to effect any Competing Transaction, and the Company and Stockholders
shall immediately cease and cause to be terminated all such contacts or
negotiations with third parties. The Company and the Stockholders will notify
the Acquiring Investors of any proposals or inquiries received with respect to
any Competing Transactions. Neither the Company or any of its Subsidiaries nor
any of the Stockholders is bound by any agreement with respect to any Competing
Transactions other than this Agreement.
4.4. Covenants of the Stockholders.
- 27 -
(a) Obligations of the Stockholders. Each Stockholder agrees that it
shall be bound by all actions, waivers and agreements related to the
transactions contemplated by this Agreement that are consented to by the
Stockholders (in its capacity as a Stockholder and not as an Acquiring Investor)
holding or beneficially owning a Majority-in-Interest; provided that no
Stockholder shall be bound by any action, waiver or agreement that results in
any share of Preferred Stock being treated differently from any other share of
Preferred Stock or any share of Common Stock being treated differently from any
other share of Common Stock, except as contemplated hereunder.
ARTICLE V
CONDITIONS PRECEDENT TO
OBLIGATIONS OF THE PARTIES
5.1. Conditions Precedent to the Acquiring Investors' Obligations. The
obligations of the Acquiring Investors to consummate the transactions
contemplated hereby (including without limitation, the obligations of CVC (or
its Affiliates) to retain its Retained Shares) are subject to satisfaction (or
written waiver) at or prior to the Closing of the following conditions:
(a) The Company and the Stockholders shall have performed and
complied in all material respects with the agreements and covenants
contained herein to be performed by them on or prior to the Closing Date.
(b) The representations and warranties (without giving effect to
any materiality qualification therein) of the Company and the Stockholders
contained herein shall be true and correct as of the date of this Agreement
and the Closing Date; provided that this condition shall be deemed
satisfied unless such failures to be true and correct, individually or in
the aggregate, are likely to result in a Material Adverse Effect.
(c) The Acquiring Investors shall have received a certificate of
the Company, dated as of the Closing Date and signed by the President and
any Vice President of the Company, certifying the fulfillment by the
Company of the conditions set forth in this Section 5.1 (the "Company's
Certificate"), together with good standing certificates and certified
copies of stockholders' and board of directors' resolutions.
(d) No order, decree or injunction of any court or government
authority shall be in effect which prohibits the consummation of the
transactions contemplated hereby.
(e) The Company shall have received all material consents,
authorizations and approvals from non-governmental third parties, in form
reasonably acceptable to the Acquiring Investors, which are necessary in
order to enable (i) the Acquiring Investors to consummate the transactions
contemplated hereby and (ii) the Company and its Subsidiaries to conduct
their businesses after the Closing Date on the same basis as conducted
prior to the date hereof (except with respect to clauses (i) and (ii)
- 28 -
for consents necessary to permit outstanding indebtedness to remain
outstanding after the Closing Date) (the "Required Consents").
(f) All consents, approvals, authorizations, exemptions and
waivers from Governmental Entities that shall be required in order to (i)
enable the Acquiring Investors to consummate the transactions contemplated
hereby (except for such consents, approvals, authorizations, exemptions and
waivers, the absence of which would not prohibit consummation of such
transactions or render such consummation illegal) and (ii) enable the
Company and its Subsidiaries to conduct their businesses after the Closing
Date on the same basis as conducted prior to the date hereof shall have
been obtained (the "Required Government Consents").
(g) To the extent requested by the Acquiring Investors, the
Company shall have obtained "payoff" letters or similar customary documents
or comparable arrangements, in a form reasonably satisfactory to the
Acquiring Investors, from the lenders releasing the Company from all
liability for obligations then due and payable under the Credit Agreement
and the Seller Notes as of the Closing Date, together with releases
(including UCC-3 termination statements), in appropriate forms, of all
security interests in assets of the Company and its Subsidiaries securing
such obligations, in each case to become effective upon full payment of all
amounts then due and payable under the Credit Agreement, the Seller Notes
and related documents.
(h) since the Most Recent Financial Statements, there shall have
been no facts or circumstances which constitute a Material Adverse Effect;
(i) the Refinancing Transactions shall have been consummated and
the cash proceeds from the Refinancing Transactions together with the
capital contributions to be made pursuant to Section 2.1 above shall be
sufficient to allow the Company to consummate the Closing Transactions, pay
related fees and expenses, and to fund the working capital requirements of
the Company and its Subsidiaries after the Closing on terms reasonably
satisfactory to the Acquiring Investors;
(j) the Acquiring Investors shall have received the resignations,
effective as of the Closing, of each director of the Company and its
Subsidiaries unless notified otherwise by the Acquiring Investors;
(k) the Acquiring Investors shall have received evidence
reasonably satisfactory to them that all arrangements and obligations among
the Stockholders (and their Affiliates) regarding the Common Stock and the
Preferred Stock, including without limitation the Voting Trust Agreement,
the Securityholders Agreement the Options and the Phantom Payment, shall be
terminated as of the Closing;
(l) an amended and restated certificate of incorporation of the
Company authorizing the New Common Stock and the Units described in the
Units Offering Memorandum shall have been filed as of the Closing;
- 29 -
(m) the Management Stockholders shall have executed releases with
respect to the Options and the Phantom Payment reasonably satisfactory to
the Acquiring Investors;
(n) the Management Loans shall have been repaid in accordance with
their terms as of the Closing;
(o) the Company shall have received all certificates for all
issued and outstanding Shares held by the Stockholders, duly endorsed in
blank, with stock powers duly executed in blank, in proper form for
transfer, in accordance with Section 2.1 above;
5.2. Conditions Precedent to the Company's Obligations. The obligations of
Company to consummate the transactions contemplated hereby are subject to
satisfaction (or written waiver) at or prior to the Closing of the following
conditions:
(a) The Acquiring Investors each shall have performed and complied in
all material respects with the agreements and covenants contained herein to
be performed by them on or prior to the Closing Date.
(b) The representations and warranties of Acquiring Investors
contained herein shall be true and correct in all material respects as of
the date of this Agreement; provided that this condition shall be deemed
satisfied unless such failures to be true and correct, individually or in
the aggregate, result in a Material Adverse Effect.
(c) The Company shall have received certificates from the Acquiring
Investors, dated as of the Closing Date and signed by two officers from
each of the Acquiring Investors, certifying the fulfillment by the
Acquiring Investors of the conditions set forth in this Section 5.2 (the
"Acquiring Investors' Certificate").
(d) No order, decree or injunction of any court or government
authority shall be in effect which prohibits the consummation of the
transactions contemplated hereby.
5.3. Conditions Precedent to the Stockholders' Obligations. The obligations
of the Stockholders to consummate the transactions contemplated hereby are
subject to satisfaction (or written waiver) at or prior to the Closing of the
following conditions:
(a) The Acquiring Investors each shall have performed and complied in
all material respects with the agreements and covenants contained herein to
be performed by them on or prior to the Closing Date.
(b) The Company shall have proffered to the Stockholders the
Recapitalization Consideration pursuant to the terms of Section 2.1 above.
(c) The representations and warranties of Acquiring Investors
contained herein shall be true and correct in all material respects as of
the date of this Agreement;
- 30 -
provided that this condition shall be deemed satisfied unless such failures
to be true and correct, individually or in the aggregate, result in a
Material Adverse Effect.
(d) The Company shall have received certificates from the Acquiring
Investors and the Company, dated as of the Closing Date and signed by two
officers from each of the Acquiring Investors and the Company, certifying
the fulfillment by such Parties of the conditions set forth in this Section
5.3 (the "Compliance Certificates").
ARTICLE VI
TERMINATION
6.1. Termination of Agreement. This Agreement may be terminated at any time
prior to the Closing:
(a) By the mutual written consent of the Acquiring Investors and the
Company; or
(b) By either the Company or the Acquiring Investors in writing,
without liability to the terminating Party on account of such termination
(except as otherwise provided in Section 6.2), if the Closing shall not
have occurred on or before March 31, 1997; provided that the right to
terminate this Agreement under this Section 6.1(b) shall not be available
to the party whose action or failure to act has been the cause of or
resulted in the failure of the consummation of the transactions
contemplated by this Agreement on or before such date if such action or
failure to act constitutes a breach of this Agreement; or
(c) By either the Company or the Acquiring Investors if any permanent
injunction or other order of a Governmental Entity preventing the
consummation of the transactions contemplated by this Agreement shall have
become final and non-appealable.
(d) By the Acquiring Investors by written notice to the Company on
or before February 20, 1997, in the event that the Acquiring Investors are (i)
not reasonably satisfied with the results of the accounting due diligence review
conducted by Price Waterhouse, L.L.P. or (ii) not able to agree with the
Management Stockholders on the terms of employment agreements and
securityholders agreements on terms reasonably satisfactory to the Acquiring
Investors.
6.2. Effect of Termination. Termination of this Agreement pursuant to this
Article VI shall terminate all obligations of the Parties hereunder, except for
the obligations under Sections 6.2, 7.3, 7.9 and 7.12 and the Confidentiality
Agreement; provided, however, that nothing in this Section 6.2 shall relieve or
limit the liability or obligations hereunder of any Party (the "Defaulting
Party") to the other Party or Parties on account of a breach of a covenant or
agreement contained herein, or any willful misrepresentation or willful breach
of warranty
- 31 -
contained herein by the Defaulting Party. In the case of such a willful and
intentional breach or fraud, in addition to any damages for which the Defaulting
Party may be liable, the Defaulting Party shall reimburse the other Party or
Parties for any expenses incurred by such Party or Parties in order to enforce
its or their rights under this Agreement (including reasonable attorney's fees
and expenses).
ARTICLE VII
MISCELLANEOUS
7.1. Survival. None of the representations and warranties in this Agreement
or any certificate delivered pursuant to this Agreement shall survive the
Closing Date.
7.2. Interpretive Provisions. Whenever used in this Agreement, "to the
Company's knowledge" or "to the knowledge of the Company" shall mean the actual
knowledge of those persons who are listed on Schedule 7.2(a) and "to Acquiring
Investors' knowledge" or "to the knowledge of Acquiring Investors" shall mean
the actual knowledge of the persons listed on Schedule 7.2(b). The inclusion of
any information on the Disclosure Schedule shall not be deemed to be an
admission or acknowledgment by the Company, in and of itself, that such
information is required to be listed on the Disclosure Schedules or is material
to or outside the ordinary course of the business of the Company and its
Subsidiaries.
7.3. Press Releases and Announcements. Prior to Closing, no Party shall
issue any press release or announcement relating to the subject matter of this
Agreement without the prior written approval of the other Parties; provided,
however, that any Party may make any public disclosure required by law or
regulation (in which case the disclosing Party will advise the other Parties
prior to making the disclosure). At Closing, Vestar and the Acquiring Investors
may each issue a press release or announcement relating to the subject matter of
this Agreement; provided that Vestar and the Acquiring Investors give each give
the other the opportunity to review and approve (which approval shall not be
unreasonably withheld) any such press release or announcement prior to its
release or distribution.
7.4. Entire Agreement. This Agreement (including the Disclosure Schedule
and all Exhibits hereto), the Confidentiality Agreement and the Condition Letter
constitute the sole understanding of the Parties with respect to the subject
matter hereof. Matters the nature of which are obvious on their face that are
disclosed in the Disclosure Schedule pursuant to any Section of this Agreement
shall be deemed to be disclosed with respect to all other relevant Sections of
this Agreement.
7.5. Succession and Assignment. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the Parties hereto; provided, however, that this Agreement may not be
assigned by any Party without the prior written consent of the other Parties and
any such attempted assignments shall be null and
- 32 -
void, except that the Acquiring Investors may assign this Agreement to any
of their affiliates, but no such assignment shall release the Acquiring
Investors from any liability hereunder.
7.6. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
7.7. Headings. The headings of the Articles, Sections and paragraphs of
this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
7.8. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Company: with a copy to:
Anvil Holdings, Inc. Xxxxxxxx & Xxxxx
c/o Vestar Capital Partners 000 Xxxxxxxxx Xxxxxx, X.X.
000 Xxxx Xxxxxx, 00xx Xxxxx Xxxxx 0000
Xxx Xxxx, XX 00000 Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxxx Attn: Xxxx X. Xxxxx
Fax: 000-000-0000 Fax: 000-000-0000
Anvil Knitwear, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxx
Fax: (000) 000-0000
If to the Acquiring Investors: with a copy to:
Citicorp Venture Capital Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxx, 00xx Floor 000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxx Attn: Xxxx X. Xxxxx
Fax: 000-000-0000 Fax: 000-000-0000
and
Bruckmann, Xxxxxx, Xxxxxxxx & Co., Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
- 33 -
Attn: Xxxxx X. Xxxxxxxxx
Fax: 000-000-0000
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the individual
for whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
7.9. Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York applicable to agreements made
and to be performed wholly within such jurisdiction. Each of the Parties hereto
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of New York and of the United States of
America, in each ease located in County of New York, for any litigation arising
out of or relating to this Agreement and the transactions contemplated hereby
(and agrees not to commence any litigation relating thereto except in such
courts), and further agrees that: service of any process, summons, notice or
document by U.S. registered mail to its respective address set forth in Section
7.8 shall be effective service of process for any litigation brought against it
in any such court. Each of the Parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any litigation
arising out of this Agreement or the transactions contemplated hereby in the
courts of the State of New York or the United States of America, in each case
located in County of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such litigation brought in any such court has been brought in an
inconvenient forum.
7.10. Amendments and Waivers. No amendment, modification or alteration of
the terms or provisions of this Agreement shall be binding unless the same shall
be in writing and duly executed by the Company, the Acquiring Investors, and the
Stockholders holding or beneficially owning a Majority-in-Interest, except that
any of the terms or provisions of this Agreement may be waived in writing at any
time by the Party which is entitled to the benefits of such waived terms or
provisions. No waiver of any of the provisions of this Agreement shall be deemed
to or shall constitute a waiver of any other provision hereof (whether or not
similar). No delay on the part of any Party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof.
7.11. Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision
- 34 -
that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
7.12. Expenses. The Acquiring Investors shall each pay their own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby and the Company shall pay the
Company Transaction Expenses and all costs and expenses (including legal fees
and expenses) incurred in connection with the Recapitalization; provided,
however, that in the event that this Agreement is terminated pursuant to Section
6.1 above (the "Termination Date"), if a transaction substantially similar to
the Recapitalization or a merger, consolidation or other business combination
involving the Company or any of its Subsidiaries, any sale of all or any
substantial portion of the assets of the Company or any of its Subsidiaries, or
the sale of any material equity interest in the Company or any of its
Subsidiaries does not occur within 90 days of the Termination Date, the
Acquiring Investors shall pay to the Company an amount equal to one- half of all
out-of-pocket third party expenses incurred by the Company in connection with
the Recapitalization provided that the aggregate amount of such out-of-pocket
expenses for purposes of this Section 7.12 shall not exceed $1,000,000. All such
expenses related to the Refinancing Transactions incurred beginning on the date
hereof through the Termination Date shall be expenses of the Acquiring
Investors.
7.13. Construction. The language used in this Agreement will be deemed to
be the language chosen by the Parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against any Party. Any reference
to any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
otherwise requires.
7.14. Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in Section 7.9
above) in addition to any other remedy to which they may be entitled, at law or
in equity.
7.15. Other Agreements. To the extent that any action to be taken pursuant
to the terms of this Agreement violates any provision of (i) the Securityholders
Agreement, (ii) the Employment Agreements (including, without limitation,
arrangements regarding the Phantom Payment and the Options), and (iii) the
Voting Trust Agreement, such violation shall be deemed waived upon the execution
of this Agreement by the Parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 35 -
[SIGNATURE PAGE FOLLOWS]
-36-
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
ANVIL HOLDINGS, INC.
By:
-------------------------------------
Name:
Title:
CITICORP VENTURE CAPITAL, LTD.
By:
-------------------------------------
Name:
Title:
BRUCKMANN, XXXXXX, XXXXXXXX & CO.,
L.P.
By: BRS Partners, Limited Partnership,
its General Partner
By:
-------------------------------------
Name:
Title:
ANVIL VT, INC.
By:
-------------------------------------
Name:
Title:
STOCKHOLDERS:
VESTAR EQUITY PARTNERS, L.P.
By: Vestar Associates, L.P.,
its general partner
By: Vestar Associates Corporation,
its general partner
By:
-------------------------------------
Name:
Title:
--------------------------------------
XXXXXXX XXXXXXXXX
--------------------------------------
XXXXXXX XXXXXX
--------------------------------------
XXXXXXX XXXXXXX
--------------------------------------
XXXXXXX XXXXXX
--------------------------------------
XXXXX XXXXXXXXX
XXXXXX FAMILY LIFETIME TRUST
By:
-----------------------------------
Name:
Title:
--------------------------------------
XXXXX X. XXXXXXXXX
--------------------------------------
XXXXX XXXXXX
NATASHA PARTNERSHIP
By:
-----------------------------------
Name:
Title:
--------------------------------------
XXXXXXX XXXXXXXX
--------------------------------------
XXXXXX XXXXXXXXX
--------------------------------------
XXXX XXXXX
--------------------------------------
XXXXXX XXXXXXXXX XXXXXX
--------------------------------------
XXXXX XXXX
CCT PARTNERS II, L.P.
By:
-----------------------------------
Name:
Title:
COURT SQUARE CAPITAL LIMITED
By:
-----------------------------------
Name:
Title:
-------------------------------------
XXXXX X. XXXXXXXXXX
CULLIGAN INTERNATIONAL COMPANY
By:
----------------------------------
Name:
Title:
EXHIBIT A
CAPITAL CONTRIBUTIONS/ISSUANCE OF CAPITAL STOCK
CAPITAL SHARES OF NEW
------- -------------
PARTY CONTRIBUTION COMMON STOCK
----- ------------ ------------
BRS $13,012,079.6965 1,238,717.1661
EXHIBIT B
STOCKHOLDER PRE-RECAPITALIZATION REDEEMED SHARES RETAINED SHARES
------------------------------ ------------------------------------------------------------ --------------- ---------------
Class A Class B Class C Total
------------ ------------ ----------- -------------
Vestar Equity Partners, L.P. 3,564,809.00 3,564,809.00 3,564,809.0000 0.0000
Culligan International Company 460,000.00 2,600,000.00 3,060,000.00 3,060,000.0000 0.0000
Xxxxxxx Xxxxxxxxx 1,782.00 1,782.00 1,782.0000 0.0000
Xxxxxxx Xxxxxx 1,050,000.00 1,050,000.00 812,006.2837 237,993.7163
Xxxxxxx Xxxxxxx 350,000.00 350,000.00 270,668.7612 79,331.2388
Xxxxxxx Xxxxxx 350,000.00 350,000.00 270,668.7612 79,331.2388
Xxxxx Xxxxxxxxx 350,000.00 350,000.00 270,668.7612 79,331.2388
Xxxxxx Family Lifetime Trust 3,409.00 3,409.00 3,409.0000 0.0000
Xxxxx Xxxxxxxxx 5,500.00 41,250.00 46,750.00 12,983.6455 33,766.3545
Xxxxx Xxxxxx 5,500.00 41,250.00 46,750.00 12,983.6455 33,766.3545
Natasha Partnership 4,490.00 33,679.00 38,169.00 10,600.4869 27,568.5131
Xxxxxxx Xxxxxxxx 3,616.00 27,123.00 30,739.00 8,536.9899 22,202.0101
Xxxxxx Xxxxxxxxx 1,206.00 9,041.00 10,247.00 2,845.8485 7,401.1515
Xxxx Xxxxx 724.00 5,425.00 6,149.00 1,707.7313 4,441.2687
Xxxxxx Xxxxxxxxx Xxxxxx 482.00 3,616.00 4,098.00 1,138.1172 2,959.8828
Xxxxx Xxxx 482.00 3,616.00 4,098.00 1,138.1172 2,959.8828
CCT Partners II, L.P. 29,700.00 222,750.00 252,450.00 70,111.6855 182,338.3145
399 Venture Partners, Inc. 168,300.00 1,262,250.00 1,430,550.00 397,299.5511 1,033,250.4489
Xxxxx X. Xxxxxxxxxx 5,000.00 5,000.00 5,000.0000 0.0000
------------ ------------ ----------- ------------- -------------- --------------
Total 6,355,000.00 2,600,000.00 1,650,000.00 10,605,000.00 8,778,358.3858 1,826,641.6142
EXHIBIT C
FINANCIAL STATEMENTS
EXHIBIT D
DIVISIONAL FINANCIAL STATEMENTS
EXHIBIT E
MANAGEMENT BONUS
MANAGEMENT STOCKHOLDER BONUS AMOUNT
Xxxxxxx Xxxxxx $250,000
Xxxxxxx Xxxxxxx $83,333.33
Xxxxxxx Xxxxxx $83,333.33
Xxxxx Xxxxxxxxx $83,333.33
AMENDMENT AND CONSENT TO ASSIGNMENT
This AMENDMENT AND CONSENT TO ASSIGNMENT (this "Amendment"), is entered
into as of February 21, 1997, by and among Citicorp Venture Capital, Ltd., a New
York corporation ("CVC"), Bruckmann, Xxxxxx, Xxxxxxxx & Co., L.P., a Delaware
limited partnership ("BRS") (collectively, the "Acquiring Investors"), the
stockholders and the voting trust certificateholders named on the signature
pages hereto (collectively, the "Stockholders"), Anvil VT, Inc., a Delaware
corporation ("Anvil VT") and Anvil Holdings, Inc., a Delaware corporation (the
"Company"). The Acquiring Investors, the Stockholders, Anvil VT and the Company
are each referred to individually as a "Party" and collectively as the
"Parties."
WHEREAS, the Parties desire to amend the Recapitalization Agreement (the
"Recapitalization Agreement"), dated as of February 12, 1997, by and among
Parties hereto.
WHEREAS, Court Square Capital Limited ("CSLP"), one of the Stockholders,
desires to assign 100% of its rights under the Recapitalization Agreement (the
"Assignment") to one of its Affiliates (as defined in the Recapitalization
Agreement), 399 Venture Partners, Inc. ("399 Ventures").
WHEREAS, pursuant to Section 7.5 of the Recapitalization Agreement, the
Assignment requires the consent of the Parties, and the Parties desire to
provide such consent.
NOW, THEREFORE, in consideration of the premises set forth above, the
parties hereto agree as follows.
1. Amendment to Article I (Definitions). The definition of "New Common
Stock" is hereby deleted and replaced, in its entirety, with the following:
"New Common Stock" means, collectively, the Class A Common Stock of the
Company, par value $.01 per share, and the Class B Common Stock of the Company,
par value $.01 per share.
2. Amendment to Exhibit A. Exhibit A (Capital Contributions / Issuance of
Common Stock) is hereby amended to replace (a) the amount "$13,012,079.6965"
with the amount "$11,730,049.03", and (b) the number of shares, "1,238,717.1661"
with "105,643.2987 shares of Class A Common Stock and 1,165,719.1586 shares of
Class B Common Stock".
3. Amendment to Exhibit B. Exhibit B is hereby deleted and replaced, in its
entirety, with the "AMENDED AND RESTATED EXHIBIT B", which is attached hereto.
4. Consent to Assignment. The Parties hereby consent to the Assignment.
* * * * * * *
IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of
the date first above written.
ANVIL HOLDINGS, INC.
By:
------------------------------------
Name:
Title:
CITICORP VENTURE CAPITAL, LTD.
By:
------------------------------------
Name:
Title:
BRUCKMANN, XXXXXX, XXXXXXXX & CO., L.P.
By: BRS Partners, Limited Partnership,
its General Partner
By:
------------------------------------
Name:
Title:
ANVIL VT, INC.
By:
------------------------------------
Name:
Title:
STOCKHOLDERS:
VESTAR EQUITY PARTNERS, L.P.
By:
------------------------------------
Title: General Partner
By:
---------------------------------
Name:
Title:
---------------------------------------
XXXXXXX XXXXXXXXX
---------------------------------------
XXXXXXX XXXXXX
---------------------------------------
XXXXXXX XXXXXXX
---------------------------------------
XXXXXXX XXXXXX
---------------------------------------
XXXXX XXXXXXXXX
XXXXXX FAMILY LIFETIME TRUST
By:
------------------------------------
Name:
Title:
---------------------------------------
XXXXX X. XXXXXXXXX
---------------------------------------
XXXXX XXXXXX
NATASHA PARTNERSHIP
By:
------------------------------------
Name:
Title:
---------------------------------------
XXXXXXX XXXXXXXX
---------------------------------------
XXXXXX XXXXXXXXX
---------------------------------------
XXXX XXXXX
---------------------------------------
XXXXXX XXXXXXXXX XXXXXX
---------------------------------------
XXXXX XXXX
CCT PARTNERS II, L.P.
By:
------------------------------------
Title: General Partner
By:
------------------------------------
Name:
Title:
COURT SQUARE CAPITAL LIMITED
By:
------------------------------------
Name:
Title:
---------------------------------------
XXXXX X. XXXXXXXXXX
CULLIGAN INTERNATIONAL COMPANY
By:
------------------------------------
Name:
Title:
AMENDED AND RESTATED EXHIBIT B
STOCKHOLDER PRE-RECAPITALIZATION REDEEMED SHARES
------------------------------ ---------------------------------------------------------- ---------------
Class A Class B Class C Total
------------ ------------ ------------- -------------
Vestar Equity Partners, L.P. 3,564,809.00 3,564,809.00 3,564,809.0000
Culligan International Company 460,000.00 2,600,000.00 3,060,000.00 3,060,000.0000
Xxxxxxx Xxxxxxxxx 1,782.00 1,782.00 1,782.0000
Xxxxxxx Xxxxxx 1,050,000.00 1,050,000.00 812,006.2837
Xxxxxxx Xxxxxxx 350,000.00 350,000.00 270,668.7612
Xxxxxxx Xxxxxx 350,000.00 350,000.00 270,668.7612
Xxxxx Xxxxxxxxx 350,000.00 350,000.00 270,668.7612
Xxxxxx Family Lifetime Trust 3,409.00 3,409.00 3,409.0000
Xxxxx Xxxxxxxxx 5,500.00 41,250.00 46,750.00 0.0000
Xxxxx Xxxxxx 5,500.00 41,250.00 46,750.00 0.0000
Natasha Partnership 4,490.00 33,679.00 38,169.00 0.0000
Xxxxxxx Xxxxxxxx 3,616.00 27,123.00 30,739.00 0.0000
Xxxxxx Xxxxxxxxx 1,206.00 9,041.00 10,247.00 0.0000
Xxxx Xxxxx 724.00 5,425.00 6,149.00 0.0000
Xxxxxx Xxxxxxxxx Xxxxxx 482.00 3,616.00 4,098.00 0.0000
Xxxxx Xxxx 482.00 3,616.00 4,098.00 0.0000
CCT Partners II, L.P. 29,700.00 222,750.00 252,450.00 0.0000
399 Venture Partners, Inc. 168,300.00 1,262,250.00 1,430,550.00 397,299.5511
Xxxxx X. Xxxxxxxxxx 5,000.00 5,000.00 5,000.0000
------------ ------------ ------------- ------------- --------------
Total 6,355,000.00 2,600,000.00 1,650,000.00 10,605,000.00 8,656,312.1185
STOCKHOLDER RETAINED SHARES
------------------------------ -----------------------------------------------------------
Class A Class B Total
------------ -------------- --------------
Vestar Equity Partners, L.P. 0.0000 0.0000 0.0000
Culligan International Company 0.0000 0.0000 0.0000
Xxxxxxx Xxxxxxxxx 0.0000 0.0000 0.0000
Xxxxxxx Xxxxxx 22,515.5280 248,447.2050 270,962.7329
Xxxxxxx Xxxxxxx 7,505.1760 82,815.7350 90,320.9110
Xxxxxxx Xxxxxx 7,505.1760 82,815.7350 90,320.9110
Xxxxx Xxxxxxxxx 7,505.1760 82,815.7350 90,320.9110
Xxxxxx Family Lifetime Trust 0.0000 0.0000 0.0000
Xxxxx Xxxxxxxxx 4,422.8098 48,803.4181 53,226.2278
Xxxxx Xxxxxx 4,422.8098 48,803.4181 53,226.2278
Natasha Partnership 3,610.9995 39,845.5115 43,456.5110
Xxxxxxx Xxxxxxxx 2,908.0802 32,089.1608 34,997.2410
Xxxxxx Xxxxxxxxx 969.4231 10,697.0829 11,666.5060
Xxxx Xxxxx 581.7296 6,419.0849 7,000.8144
Xxxxxx Xxxxxxxxx Xxxxxx 387.6936 4,277.9980 4,665.6916
Xxxxx Xxxx 387.6936 4,277.9980 4,665.6916
CCT Partners II, L.P. 23,883.1727 263,538.4575 287,421.6302
399 Venture Partners, Inc. 97,751.2336 1,078,634.3018 1,176,385.5354
Xxxxx X. Xxxxxxxxxx 0.0000 0.0000 0.0000
------------ -------------- --------------
Total 184,356.7015 2,034,280.8414 2,218,637.3427
WAIVER AND SECOND AMENDMENT
TO THE RECAPITALIZATION AGREEMENT
This WAIVER AND SECOND AMENDMENT TO THE RECAPITALIZATION AGREEMENT
(this "Second Amendment"), is entered into as of March 13, 1997, by and among
Citicorp Venture Capital, Ltd., a New York corporation ("CVC"), Bruckmann,
Xxxxxx, Xxxxxxxx & Co., L.P., a Delaware limited partnership ("BRS")
(collectively, the "Acquiring Investors"), the stockholders and the voting trust
certificateholders named on the signature pages hereto (collectively, the
"Stockholders"), Anvil VT, Inc., a Delaware corporation ("Anvil VT") and Anvil
Holdings, Inc., a Delaware corporation (the "Company"). The Acquiring Investors,
the Stockholders, Anvil VT and the Company are each referred to individually as
a "Party" and collectively as the "Parties."
WHEREAS, CVC and certain of its Affiliates (the "CVC Stockholders")
are Stockholders currently holding shares of 12.5% Class A Preferred Stock, par
value $0.01 per share,of the Company ("Class A Preferred"), and in conjunction
with the recapitalization of the Company (the "Recapitalization") pursuant to
the terms of that certain Recapitalization Agreement, by and among Parties
hereto, dated as of February 12, 1997 and amended as of February 21, 1997 (the
"Recapitalization Agreement"), the CVC Stockholders wish to exchange
$3,333,000.00 in original liquidation value of Class A Preferred for
$3,333,000.00 in aggregate principal amount of Units, each consisting of 40
shares of 13% Senior Exchangeable Preferred Stock due 2009 of the Company and 13
shares of Class B Common Stock, par value $0.01 per share, of the Company.
WHEREAS, the Company desires to pay a dividend (the "Dividend") to
certain of the holders of the Class C Common Stock of the Company (the "Class C
Common") in conjunction with the Recapitalization, and whereas Article Fourth,
Part C, Section 2 of the Certificate of Incorporation of the Company, as amended
on January 27, 1995, requires that dividends be paid on all Common Stock ratably
on a per share basis.
WHEREAS, Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxx, Xxxxx Xxxxxxxxx and Xxxxxxx
Xxxxxx (collectively, the "Management Investors"), who shall be the only holders
of Common Stock not holding Class C Common as of the time of payment of the
Dividend, and Xxxxx Xxxxxxxxx and Xxxxxxx Xxxxxxxx (collectively, the "BRS
Investors"), who will be holding Class C Common as of the time of payment of the
Dividend, wish to waive the application of Article Fourth, Part C, Section 2 of
the Certificate of Incorporation of the Company, so as to permit the Dividend to
be paid exclusively to the holders of the Class C Common other than the BRS
Investors.
WHEREAS, the Parties desire to further amend the Recapitalization
Agreement so as to provide for payment of the Dividend, and whereas pursuant to
Section 7.10 of the Recapitalization Agreement, this Second Amendment requires
the consent of the Stockholders holding or beneficially owning a
Majority-In-Interest, and the Stockholders holding or beneficially owning a
Majority-In-Interest desire to provide such consent.
NOW, THEREFORE, in consideration of the premises set forth above, the
parties hereto agree as follows.
1
1. Amendment to Article I (Definitions).
a. The following defined terms are hereby added to Article I of the
Recapitalization Agreement:
"Dividend" means a dividend in the amount of $1,267,073.30.
"New Class B Common" means the Class B Common Stock, par value $.01
per share, of the Company, after giving effect to the Recapitalization.
"Units" means those certain Units to be issued on the Closing Date,
each consisting of 40 shares of 13% Senior Exchangeable Preferred Stock due
2009 of the Company and 13 shares of New Class B Common.
b. The following defined terms are hereby amended and restated in
Article I of the Recapitalization Agreement:
"Company Transaction Expenses" means all expenses incurred by the
Company in connection with the negotiation of this Agreement, including the
fees and expenses of consultants, financial advisers, lawyers and
accountants, and any fees payable to Vestar or any of its Affiliates (other
than the Recapitalization Consideration payable to such entities pursuant
to Section 2.1) which fees payable to Vestar or its Affiliates shall not
exceed $1,285,000; provided, however that the Company Transaction Expenses
shall not include any expenses incurred in connection with the
Recapitalization.
"Preferred Stock Consideration" means, (a) with respect to the
Preferred Stock which is being redeemed pursuant to the provisions of
clause (ii) of Section 2.1(d), the aggregate Liquidation Value of all
shares of Preferred Stock issued and outstanding at Closing, plus all
accrued and unpaid dividends in respect of such Preferred Stock through the
Closing Date, payable in cash, and (b) with respect to the Preferred Stock
which is being exchanged for Units pursuant to the provisions of clause
(iii) of Section 2.1(d), 3,333 Units, plus all accrued and unpaid dividends
in respect of such Preferred Stock through the Closing Date.
2. Amendment to Article II. Article II (The Recapitalization) is
hereby amended and restated in its entirety, and shall after such amendment and
restatement read as follows (with the deleted language deleted and replaced by a
bold and double-underlined carrot and the new language bolded and
double-underlined for the purpose hereof, but not for the purpose of the
Recapitalization Agreement):
2
ARTICLE II
THE RECAPITALIZATION
2.1 Recapitalization Transactions. Pursuant to the terms and subject
to the conditions of this Agreement, at the Closing (as defined below):
(a) Acquiring Investors Obligations. BRS (and its Affiliates and
designees) shall make the capital contributions set forth opposite their
respective names on Exhibit A hereto in exchange for the number of shares
of New Common Stock set forth opposite their respective names on Exhibit A.
(b) Anvil VT Obligations. Anvil VT shall take all commercially
reasonable actions necessary to cause the termination of the Voting Trust
Agreement and upon such termination shall surrender to the Company
certificates for all Shares of Common Stock and Preferred Stock held by
Anvil VT duly endorsed in blank, with stock powers duly executed in blank,
in proper form for transfer.
(c) Stockholders Obligations. Each Stockholder (including CVC (or
any of its Affiliates) in its capacity as a Stockholder) shall (i)
surrender to the Company certificates for the number of Shares of Common
Stock (in the case of Stockholders that are party to the Voting Trust
Agreement, the Voting Trust Certificates representing such number of Shares
of Common Stock) ^ set forth opposite such Stockholder's name on Exhibit B
hereto, with stock powers duly executed in blank, in proper form for
transfer, (ii) surrender to the Company certificates for the number of
Shares of Preferred Stock (in the case of Stockholders that are party to
the Voting Trust Agreement, the Voting Trust Certificates representing such
number of Shares of Preferred Stock) set forth opposite such Stockholder's
name on Exhibit C hereto, with stock powers duly executed in blank, in
proper form for transfer, (iii) exchange any remaining Shares of Common
Stock (in the case of Stockholders that are party to the Voting Trust
Agreement, the Voting Trust Certificates representing such number of Shares
of Common Stock) held by such Stockholder for the number of shares of New
Common Stock set forth opposite such Stockholder's name on Exhibit B
hereto, ^(iv) exchange any remaining Shares of Preferred Stock (in the case
of Stockholders that are party to the Voting Trust Agreement, the Voting
Trust Certificates representing such number of Shares of Preferred Stock)
held by such Stockholder for the number of Units set forth opposite such
Stockholder's name on Exhibit C hereto and a Pro Rata Share of the balance
of the applicable Preferred Stock Consideration, and (v) take all
commercially reasonable actions, including voting the voting securities
held by such Stockholder, necessary to (A) terminate the Voting Trust
Agreement, (B) terminate the Securityholders Agreement, (C) enable the
Refinancing Transactions to be consummated, and (D) cause the Company to
consummate the Closing Transactions (provided that with respect to
3
CVC and its Affiliates, their obligations under clauses (C) and
(D) above shall be governed by Section 4.1 below).
(d) Company Obligations. The Company shall (i) issue New Common
Stock to the Acquiring Investors in the amounts set forth opposite their
respective names on Exhibit A hereto, (ii) redeem ^ from each Stockholder
the number of Shares of Preferred Stock (in the case of Stockholders that
are party to the Voting Trust Agreement, the Voting Trust Certificates
representing such number of Shares of Preferred Stock) set forth opposite
such Stockholder's name on Exhibit C hereto in exchange for a pro-rata
share of the applicable Preferred Stock Consideration pursuant to Section
2.3 below, (iii) issue to CVC (or one of its Affiliates) and its Affiliates
the number of Units set forth opposite their respective names on Exhibit C
hereto, and pay to CVC (or one of its Affiliates) and its Affiliates, in
cash, a pro-rata share of the balance of the applicable Preferred Stock
Consideration, in exchange for the Voting Trust Certificates representing
Shares of Preferred Stock not required to be redeemed pursuant to this
Section 2.1, (iv) redeem from each Stockholder the number of shares of
issued and outstanding Shares of Common Stock (in the case of Stockholders
that are party to the Voting Trust Agreement, the Voting Trust Certificates
representing such number of Shares of Common Stock) set forth opposite such
Stockholder's name on Exhibit B hereto in exchange for a pro-rata share of
the Common Stock Consideration pursuant to Section 2.3 below (the "Redeemed
Shares"), ^(v) issue to CVC (or one of its Affiliates) and the Management
Stockholders the number of shares of New Common Stock set forth opposite
their respective names on Exhibit B hereto in exchange for the Voting Trust
Certificates representing Shares of Common Stock not required to be
redeemed pursuant to this Section 2.1 (the "Retained Shares"), ^(vi) pay or
cause to be paid (A) the Seller Note Amount, (B) the Funded Indebtedness,
(C) the Company Transaction Expenses and all expenses incurred by the
Company in connection with the Recapitalization through the Closing Date,
(D) the Phantom Payment, and (E) the Management Bonus, by wire transfer of
immediately available funds to such bank account or accounts as per written
instructions of the parties receiving payments pursuant to this Section
2.1(d), given to the Company at least two Business Days prior to the
Closing Date, ^(vii) after the consummation of the redemption described in
clause (iv) above, pay the Dividend to the holders of the Class C Common
(other than the BRS Investors), and (viii) upon the consummation of the
Refinancing Transactions, enter into, or cause any of its Subsidiaries to
enter into, such other agreements as are required to consummate the
Refinancing Transactions (collectively, the "Closing Transactions").
(e) Management Loans. The Stockholders who are obligors under the
Management Loans shall cause such Management Loans to be repaid in
accordance with their terms.
2.2 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxxx &
Xxxxx, 153
0
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, commencing at 10:00 a.m. local
time on the second Business Day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as
the Parties may mutually determine (the "Closing Date").
2.3 Exchange of Shares. Upon surrender to the Company by a Stockholder
of a certificate representing a Share or in the case of Shares subject to
the Voting Trust Agreement, a Voting Trust Certificate representing a
number or Shares (each, a "Certificate") pursuant to Section 2.1 above, the
holder of such Certificate (the "Holder") shall receive in exchange
therefor (i) with respect to each share of Preferred Stock being redeemed
in accordance with clause (ii) of Section 2.1(d) above, an amount of cash
equal to a Pro Rata Share of the applicable Preferred Stock Consideration,
(ii) with respect to each share of Preferred Stock being exchanged in
accordance with clause (iii) of Section 2.1(d) above, a Pro Rata Share of
the applicable Preferred Stock Consideration, (iii) with respect to each
Redeemed Share, an amount of cash equal to a Pro Rata Share of the Common
Stock Consideration, ^ and (iv) with respect to each Retained Share,
1 share of New Common Stock, as the case may be (collectively, the
"Recapitalization Consideration"). All cash consideration payable in
respect of such Shares under clauses (i) ^, (ii) and (iii) above, shall be
paid by wire transfer of immediately available funds to such bank account
or accounts as per written instructions of the Stockholder receiving such
payment, given to the Company at least two Business Days prior to the
Closing Date. The Certificates surrendered pursuant to this Section 2.3
shall be canceled. In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
registered holder of such lost, stolen or destroyed Certificate in form and
substance acceptable to the Company and the Acquiring Investors, the
Company will issue in exchange for such lost, stolen or destroyed
Certificate the Recapitalization Consideration due in respect thereof in
the manner set forth in this Section 2.3.
3. Schedule C. A new "Schedule C" is hereby added to the
Recapitalization Agreement, which schedule is attached as Schedule C hereto.
4. Waiver. For the purpose of effectuating the transactions
contemplated by this Second Amendment only, the Management Investors and the BRS
Investors hereby waive the application of Article Fourth, Part C, Section 2 of
the Certificate of Incorporation of the Company, with the specific intent of
permitting the Dividend to be paid exclusively to the holders of the Class C
Common other than the BRS Investors.
5. Tax Characterization. The Recapitalization is intended to be a
"recapitalization" described in Section 368(a)(1)(E) of the Internal Revenue
Code of 1986, as amended.
5
6. Counterparts. This Second Amendment may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
* * * * * * *
6
IN WITNESS WHEREOF, the Parties hereto have executed this Second Amendment
as of the date first above written.
ANVIL HOLDINGS, INC.
By:
------------------------------------
Name:
Title:
CITICORP VENTURE CAPITAL, LTD.
By:
------------------------------------
Name:
Title:
BRUCKMANN, XXXXXX, XXXXXXXX & CO., L.P.
By: BRS Partners, Limited Partnership,
its General Partner
By:
------------------------------------
Name:
Title:
ANVIL VT, INC.
By:
------------------------------------
Name:
Title:
STOCKHOLDERS:
VESTAR EQUITY PARTNERS, L.P.
By:
------------------------------------
Title: General Partner
By:
---------------------------------
Name:
Title:
---------------------------------------
XXXXXXX XXXXXXXXX
---------------------------------------
XXXXXXX XXXXXX
---------------------------------------
XXXXXXX XXXXXXX
---------------------------------------
XXXXXXX XXXXXX
---------------------------------------
XXXXX XXXXXXXXX
XXXXXX FAMILY LIFETIME TRUST
By:
------------------------------------
Name:
Title:
---------------------------------------
XXXXX X. XXXXXXXXX
---------------------------------------
XXXXX XXXXXX
NATASHA PARTNERSHIP
By:
------------------------------------
Name:
Title:
---------------------------------------
XXXXXXX XXXXXXXX
---------------------------------------
XXXXXX XXXXXXXXX
---------------------------------------
XXXX XXXXX
---------------------------------------
XXXXXX XXXXXXXXX XXXXXX
---------------------------------------
XXXXX XXXX
CCT PARTNERS II, L.P.
By:
------------------------------------
Title: General Partner
By:
---------------------------------
Name:
Title:
399 VENTURE PARTNERS, INC.
By:
------------------------------------
Name:
Title:
---------------------------------------
XXXXX X. XXXXXXXXXX
CULLIGAN INTERNATIONAL COMPANY
By:
------------------------------------
Name:
Title:
SCHEDULE C
PREFERRED STOCK UNITS RECEIVED
----------------------------------------- --------------
Securityholder Total Shares Redeemed Exchanged
-------------- ------------ ------------ -----------
Vestar Equity Partners, L.P. 82,034.0000 82,034.0000 0.0000 0.0000
Culligan International Company 70,416.0000 70,416.0000 0.0000 0.0000
Xxxxxxx Xxxxxxxxx 39.0000 39.0000 0.0000 0.0000
Xxxxxxx Xxxxxx 2,201.0000 2,201.0000 0.0000 0.0000
Xxxxxxx Xxxxxxx 733.0000 733.0000 0.0000 0.0000
Xxxxxxx Xxxxxx 733.0000 733.0000 0.0000 0.0000
Xxxxx Xxxxxxxxx 733.0000 733.0000 0.0000 0.0000
Xxxxxx Family Lifetime Trust 79.0000 79.0000 0.0000 0.0000
Xxxxx Xxxxxxxxx 1,075.8000 1,075.8000 0.0000 0.0000
Xxxxx Xxxxxx 1,075.8000 206.5292 869.2708 86.9271
Natasha Partnership 878.3360 168.6206 709.7155 70.9715
Xxxxxxx Xxxxxxxx 707.3586 707.3586 0.0000 0.0000
Xxxxxx Xxxxxxxxx 235.8016 45.2685 190.5330 19.0533
Xxxx Xxxxx 141.4993 27.1647 114.3347 11.4335
Xxxxxx X. Xxxxxx 94.3022 18.1039 76.1983 7.6198
Xxxxx Xxxx 94.3022 18.1039 76.1983 7.6198
CCT Partners II, L.P. 5,809.3200 1,115.2576 4,694.0624 469.4062
399 Venture Partners, Inc. 32,919.4800 6,319.7930 26,599.6870 2,659.9687
Xxxxx X. Xxxxxxxxxx 0.0000 0.0000 0.0000 0.0000
------------ ------------ ----------- ----------
Total 200,000.0000 166,670.0000 33,330.0000 3,333.0000
