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PACIFIC AEROSPACE & ELECTRONICS, INC.
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AMENDMENT NO. 1
TO
NOTE PURCHASE AGREEMENT
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Dated as of October 31, 2003
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AMENDMENT NO. 1
This AMENDMENT NO. 1, dated as of October 31, 2003 (this "AMENDMENT"),
to the Note Purchase Agreement, dated as of March 19, 2002 (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
"NOTE PURCHASE AGREEMENT"), is entered into by and between Pacific Aerospace &
Electronics, Inc., a Washington corporation (the "COMPANY"), and existing
Holders of the Company's 5% Senior Secured Notes due May 1, 2007 identified on
the signature pages hereto, and the purchasers of the Additional Notes (as
defined herein) identified on the signature pages hereto (the "PURCHASERS").
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in the Note Purchase Agreement.
WHEREAS, the Company and Holders of the Notes issued pursuant to the
Note Purchase Agreement desire to amend the Note Purchase Agreement in order
provide the Company with additional financing of $3,998,181 through the issuance
of Additional Notes (the "NOTE ISSUANCE");
WHEREAS, the Purchasers have agreed to purchase Additional Notes at a
purchase price equal to an aggregate of $3,998,181 and that such Additional
Notes will be allocated among such Purchasers pro rata based on their relative
holdings of the Company's outstanding 10% Senior Subordinated Pay-In-Kind Notes
due 2007;
WHEREAS, the purchase price for the Additional Notes will be equal to
the accreted value of the Notes as of the date hereof, or 70.14% of the face
Principal Amount of the Notes;
WHEREAS, in order to effect the Note Issuance, the Holders of all of
the outstanding Notes have consented to this Amendment in accordance with
Section 17 of the Note Purchase Agreement; and
WHEREAS, the Company has obtained the approval of a majority of the
members of the Board of Directors that are disinterested in the transaction in
accordance with Section 9.7 of the Note Purchase Agreement and Section 4.11 of
the Indenture governing the terms of the Company's outstanding 10% Senior
Subordinated Pay-In-Kind Notes due 2007.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows:
SECTION ONE - AMENDMENTS
(a) Section 1: Authorization of Notes. Section 1 of the Note Purchase
Agreement is hereby deleted in its entirety and replaced with the
following:
"The Company will authorize the issuance and sale of
$41,700,000 aggregate principal amount at maturity of its 5.0%
Senior Secured Notes due May 1, 2007 (the "Notes," such term
to include any Notes issued in substitution therefor or
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replacement thereof pursuant to Section 13.3 and any
Additional Notes (as defined in Section 2.1)). The Notes shall
be substantially in the form of Exhibit A (for Note issued
prior to October 31, 2003) or Exhibit A-1 as attached to this
Amendment (for Notes issued on or after October 31, 2003),
with such changes therefrom, if any, as may be approved by the
Holders and the Company. Certain capitalized terms used in
this Note Purchase Agreement (as amended, restated or
supplemented from time to time, this "Agreement") are defined
in Section 12."
(b) Section 2.1: Sale and Purchase of Notes; Payments on the Notes. Section
2.1 of the Note Purchase Agreement is hereby amending by adding the
following paragraph at the end of the section:
"Notwithstanding the foregoing, the Company shall be entitled
to issue additional Notes (the "Additional Notes") at the then
accreted value of the Notes, the proceeds of which shall not
exceed $3,998,181 (following the issuance, the principal
amount of such Additional Notes shall be included in the
definition of Principal Amount). Any Additional Notes issued
as set forth herein shall have the same rights and privileges,
and be subject to the same obligations and restrictions, under
each of this Agreement, the Collateral Documents and the
Operative Agreements, as the Notes originally issued to the
Original Purchaser."
(c) Section 2.3: Interest on the Notes. Section 2.3 of the Note Purchase
Agreement is hereby amended by adding the following phrase after the
words "commencing on May 1, 2002":
", or in the event that any Additional Notes are issued after
the date hereof, interest payments shall commence on the next
succeeding May 1 or November 1, as applicable after issuance
thereof; provided that for any Additional Notes issued on
October 31, 2003, interest payments shall commence on May 1,
2004."
(d) Section 3. Closing. Section 3 of the Note Purchase Agreement is hereby
amended by adding the following paragraph at the end of the section:
"Notwithstanding the foregoing, the sale of any Additional
Notes in accordance with the terms hereof shall take place at
the offices of Milbank, Tweed, Xxxxxx & XxXxxx, 0 Xxxxx
Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 at 11:00 a.m.,
New York City time, at a closing on October 31, 2003 (any such
closing shall be referred to herein as a "Subsequent
Closing"), or such later date as may be agreed upon by the
Company and the Purchasers (any such date shall be referred to
here as the "Subsequent Closing Date"). At the Subsequent
Closing, the Company will deliver to the Purchasers of the
Additional Notes, in the amount so purchased by each such
Purchaser as set forth on Schedule I to this Amendment, in the
form of a single Additional Note (or such greater number of
Additional Notes as the Purchasers may request; provided that
each such Additional Note shall be in a denomination of at
least $1,000,000 or integral multiples of $100,000), each
dated the Subsequent Closing Date and registered in the
Purchaser's name (or in the name of its nominee or another
Holder), against payment of the purchase price therefor on the
Subsequent Closing Date by
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transfer of immediately available funds to the Company, or as
otherwise directed by the Company in writing (at least two (2)
days prior to the Subsequent Closing Date). If at the
Subsequent Closing the Company shall fail to tender such
Additional Notes to the Purchasers as provided above in this
Section 3, the Purchasers shall, at their election, be
relieved of all further obligations under this Agreement,
without thereby waiving any other rights it may have by reason
of such failure or such nonfulfillment."
(e) Section 4: Conditions to Closing. The introductory paragraph of Section
4 of the Note Purchase Agreement is hereby deleted and replaced with
the following:
" The Initial Purchaser's obligation to purchase and pay for
the Notes to be sold to it at the Closing, and any other
purchaser's obligation to purchase and pay for any Additional
Notes at any Subsequent Closing, is subject to the fulfillment
to its satisfaction, prior to or at the Closing, or, in the
case of any issuances of Additional Notes, prior to or at the
Subsequent Closing, of the following conditions:"
(f) Section 4.1: Representations and Warranties. Section 4.1 of the Note
Purchase Agreement is hereby amended by adding the following phrase
after the words "at the time of the Closing":
", or at the time of any Subsequent Closing, as the case may
be,"
(g) Section 4.2: Performance; No Default. Section 4.2 of the Note Purchase
Agreement is hereby deleted in its entirety and replaced with the
following:
"The Company and each of its Subsidiaries shall have performed
and complied with all agreements and conditions contained in
this Agreement and each other Operative Agreement required to
be performed or complied with by it prior to or at the
Closing, or prior to or at the Subsequent Closing, as the case
may be, and at the time of the Closing or Subsequent Closing,
as the case may be, no Default or Event of Default under this
Agreement or default by any party under any Operative
Agreement shall have occurred and be continuing."
(h) Section 4.3: Compliance Certificates. Section 4.3 of the Note Purchase
Agreement is hereby amended by adding the following phrase after the
words "dated the Closing Date":
", or dated the Subsequent Closing Date, as the case may be,"
(i) Section 4.5: Legal Investment. Section 4.5 of the Note Purchase
Agreement is hereby deleted in its entirety and replaced with the
following:
" On the Closing Date or on any Subsequent Closing Date, as
applicable, the purchase of Notes shall be permitted by the
laws and regulations of each jurisdiction to which such
purchaser's investments are subject. If requested by any
Purchaser by prior written request to the Company, such
Purchaser shall have
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received, at least five (5) Business Days prior to the Closing
or the Subsequent Closing, as applicable, an Officers'
Certificate of the Company or any of its Subsidiaries, as the
case may be, certifying as to such matters of fact as the
Purchaser may reasonably specify to enable it to determine
whether such purchase is so permitted."
(j) Section 4.6: Operative Agreements. Section 4.6 of the Note Purchase
Agreement is hereby deleted in its entirety and replaced with the
following:
"Each of the Operative Agreements shall be in full force and
effect, and shall constitute the legal, valid and binding and
enforceable obligations of the respective parties thereto,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and similar
laws of general application relating to or affecting the
rights and remedies of creditors and by general equitable
principles, regardless of whether such enforceability is
considered in a proceeding in equity or law. No default or
accrued right of termination on the part of any of the parties
to the Operative Agreements (other than the Initial Purchaser)
shall exist thereunder as of the Closing Date or any
Subsequent Closing Date, as the case may be and the Holders
shall have received a fully executed original, or a true and
complete copy, of each such document (other than the Notes)."
SECTION TWO - REPRESENTATIONS AND WARRANTIES
(a) The execution and delivery of this Amendment and the performance of the Note
Issuance by the Company have been duly authorized and constitute legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting creditors' rights generally and except as enforceability may be
limited by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(b) Neither the execution or delivery by Company of this Amendment, nor
compliance with the terms and provision hereof will (i) contravene any
applicable provision of any law, statute, rule or regulation, or any order,
writ, injunction or decree of any court or Governmental Authority, (ii) conflict
or be inconsistent with, or result in any breach of, any of the terms,
covenants, conditions or provisions of, or constitute a default under, the terms
of any indenture, mortgage, deed of trust, loan agreement, credit agreement or
any other material agreement, contract or instrument to which it or any of its
respective Subsidiaries may be subject, including without limitation, the Note
Purchase Agreement, or (iii) violate any provision of its certificate of
incorporation or bylaws or the certificate of incorporation or bylaws (or
equivalent organizational or charter documents) of any of its Subsidiaries,
which in the case of (i), (ii) or (iii) above, will be expected to have a
Material Adverse Effect.
(c) After giving effect to this Amendment, no Default or Event of Default has
occurred and is continuing.
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SECTION THREE - EFFECTIVENESS
This Amendment shall become effective and the Company shall complete
the Note Issuance as of the date of satisfaction of the following conditions
precedent:
(a) The Company shall have provided the Collateral Agent a duly executed
copy of this Amendment bearing the authorized signatures of the Company, the
existing Holders and the Purchasers on the date hereof;
(b) All corporate and other proceedings taken or to be taken in connection
with this Amendment and all documents incidental thereto, whether or not
referred to herein, shall be satisfactory in form and substance to the Holders;
and
(c) The Company shall have provided such certificates as may have been
requested by the Collateral Agent in connection with this Amendment.
SECTION FOUR - CONSENT
The Holders, by signing this Amendment No. 1, hereby consent to this
amendment to the Note Purchase Agreement in accordance with the amendment
provisions of the Note Purchase Agreement.
SECTION FIVE - MISCELLANEOUS
(a) THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICT OF LAWS.
(b) This Amendment shall not constitute a consent or waiver to or
modification of any other provision, term or condition of the Note Purchase
Agreement or any other Operative Agreement. All terms, provisions, covenants,
representations, warranties, agreements and conditions contained in the Note
Purchase Agreement, as amended hereby, and the Operative Agreement shall remain
in full force and effect.
(c) In case any provision in or obligation hereunder shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
(d) On and after the date first above written, each reference in the Note
Purchase Agreement to "this Agreement," "hereunder," "hereof," "herein" or words
of like import referring to the Note Purchase Agreement, and each reference in
the Operative Agreements to the "Note Purchase Agreement," "thereunder,"
"thereof" or words of like import referring to the Note Purchase Agreement shall
mean and be a reference to the Note Purchase Agreement as amended by this
Amendment.
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(e) Section headings herein are included herein for convenience of
reference only and shall not constitute a part hereof for any other purpose or
be given any substantive effect.
(f) This Amendment may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
THE COMPANY:
PACIFIC AEROSPACE & ELECTRONICS, INC.
By: ________________________________________
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer and President
THE PURCHASERS OF ADDITIONAL NOTES:
GSCP RECOVERY, INC.
By:_________________________________________
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
GSC RECOVERY II, L.P.
By: GSC Recovery II GP, L.P., its general
partner
By: GSC RII, LLC, its general partner
By: GSCP (NJ) Holdings, L.P., its sole member
By: GSCP (NJ), Inc., its general partner
By:_________________________________________
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
[signature pages to Amendment No. 1 to Note Purchase Agreement continued]
The foregoing Agreement is hereby
accepted and agreed to as of
the date first above written.
HOLDERS OF 5% SENIOR SECURED NOTES DUE 2007
GSC RECOVERY II, L.P.
By: GSC Recovery II GP, L.P., its general partner
By: GSC RII, LLC, its general partner
By: GSCP (NJ) Holdings, L.P., its sole member
By: GSCP (NJ), Inc., its general partner
By: ______________________________________
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
GSC RECOVERY IIA, L.P.
By: GSC Recovery IIA GP, L.P., its general partner
By: GSC RIIA, LLC, its general partner
By: GSCP (NJ) Holdings, L.P., its sole member
By: GSCP (NJ), Inc., its general partner
By: ______________________________________
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
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[signature pages to Amendment No. 1 to Note Purchase Agreement continued]
GSC PARTNERS CDO FUND, LIMITED
By: ______________________________________
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
GSC PARTNERS CDO FUND II, LIMITED
By: ______________________________________
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
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SCHEDULE I
SCHEDULE OF PURCHASERS
Allocation between the Purchasers listed below was based on pro-rata
holdings GSC Recovery II, LP of the Company's 10% Senior Subordinated
Pay-in-Kind Notes due 2007:
DATE OF PRINCIPAL AMOUNT AT PERCENT OF TOTAL
ISSUANCE PURCHASER PURCHASE PRICE MATURITY ADDITIONAL NOTES
-------- --------- -------------- ------------------- ----------------
10/31/03 GSCP Recovery, Inc. $ 3,042,616.00 $ 4,337,700.00 76.1%
10/31/03 GSC Recovery II, LP 955,565.00 1,362,300.00 23.9%
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TOTAL: $ 3,998,181.00 $ 5,700,000.00 100%
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EXHIBIT A-1
FORM OF NOTE (ADDITIONAL NOTES)
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