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Exhibit 4.3
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Execution Copy
INVESTMENT AGREEMENT
BETWEEN
TRANSDIGM HOLDING COMPANY
AND
FIRST UNION INVESTORS, INC.
DATED AS OF
MAY 31, 2001
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TABLE OF CONTENTS
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PAGE
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ARTICLE I
DEFINITIONS
1.1 Definitions..............................................................................................1
1.2 Accounting Terms; Financial Statements...................................................................1
ARTICLE II
ISSUANCE AND SALE OF PREFERRED STOCK AND WARRANTS
2.1 The Issuance of the Preferred Stock and the Warrants.....................................................1
2.2 Terms of the Preferred Stock.............................................................................1
2.3 The Closing..............................................................................................2
2.4 Tax Basis................................................................................................2
ARTICLE III
CONDITIONS OF CLOSING
3.1 Representations, Warranties and Covenants................................................................2
3.2 Ownership Structure......................................................................................2
3.3 Purchase Permitted by Applicable Laws....................................................................2
3.4 Closing of the Asset Purchase............................................................................3
3.5 Adverse Change...........................................................................................3
3.6 No Violation.............................................................................................3
3.7 Litigation...............................................................................................3
3.8 Advances Under the Credit Documents......................................................................3
3.9 Amendment of PIK Notes Indenture.........................................................................3
3.10 Opinions of Counsel......................................................................................3
3.11 Delivery of Closing Documents............................................................................4
3.12 Payment of Fees and Expenses.............................................................................5
3.13 Additional Matters.......................................................................................5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
4.1 Corporate Organization and Power.........................................................................5
4.2 Authorization; Enforceability............................................................................5
4.3 No Violation.............................................................................................6
4.4 Authorized and Issued Capital............................................................................6
4.5 Governmental and Third-Party Authorization; Permits......................................................7
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4.6 Litigation...............................................................................................7
4.7 Taxes....................................................................................................7
4.8 Subsidiaries; Investments................................................................................7
4.9 No Material Adverse Change...............................................................................8
4.10 Financial Matters........................................................................................8
4.11 Ownership of Properties..................................................................................9
4.12 Intellectual Property....................................................................................9
4.13 ERISA....................................................................................................9
4.14 Environmental Matters...................................................................................10
4.15 Securities Matters......................................................................................11
4.16 Compliance with Laws....................................................................................11
4.17 Regulated Matters.......................................................................................11
4.18 Insurance...............................................................................................11
4.19 Material Contracts......................................................................................11
4.20 Labor Relations.........................................................................................12
4.21 Full Disclosure.........................................................................................12
4.22 No Brokers..............................................................................................12
4.23 Transaction Documents...................................................................................12
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
ARTICLE VI
COVENANTS
6.1 Payment of Dividends on Preferred Stock.................................................................14
6.2 Notices.................................................................................................14
6.3 Books, Records and Inspections..........................................................................14
6.4 Payment of Taxes........................................................................................14
6.5 Corporate Franchises....................................................................................14
6.6 Compliance with Statutes, etc...........................................................................14
6.7 Compliance with Environmental Laws......................................................................15
6.8 ERISA...................................................................................................15
6.9 Use of Proceeds.........................................................................................15
6.10 Indemnification.........................................................................................15
6.11 Creditors Entitled to Priority on Payment...............................................................17
ARTICLE VII
GENERAL
7.1 Entire Agreement........................................................................................19
7.2 Reimbursement of Expenses...............................................................................19
7.3 Survival of Agreements and Representations and Warranties...............................................20
7.4 No Waiver...............................................................................................20
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7.5 Binding Effect; Assignment..............................................................................20
7.6 Initial Holder..........................................................................................20
7.7 Cumulative Powers.......................................................................................21
7.8 Loss of Securities; Reissue of Securities in Lesser Denominations.......................................21
7.9 Communications..........................................................................................21
7.10 Legends.................................................................................................21
7.11 Confidentiality; Public Announcements...................................................................22
7.12 Governing Law...........................................................................................22
7.13 Headings................................................................................................23
7.14 Multiple Originals......................................................................................23
7.15 Amendment or Waiver.....................................................................................23
7.16 Waiver of Jury Trial....................................................................................23
7.17 Consent to Jurisdiction and Service of Process..........................................................23
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Exhibits
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Exhibit A Form of Warrant
Exhibit B Form of Certificate of Designations of Preferred Stock
Exhibit C Form of Opinion of Counsel to the Issuer
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INVESTMENT AGREEMENT
This Investment Agreement is made and entered into as of this 31st day
of May, 2001, by and between TRANSDIGM HOLDING COMPANY, a Delaware corporation
(the "ISSUER"), and FIRST UNION INVESTORS, INC., a North Carolina corporation
(the "INVESTOR").
AGREEMENT
NOW, THEREFORE, in consideration of the promises, covenants and
agreements contained herein, the parties hereto hereby mutually covenant,
contract and agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement and unless the context
otherwise requires, the following terms have the meanings indicated in APPENDIX
I hereto.
1.2 ACCOUNTING TERMS; FINANCIAL STATEMENTS. Except as specifically
provided otherwise in this Agreement, all accounting terms used herein that are
not specifically defined herein shall have the meanings customarily given them
in accordance with GAAP. Notwithstanding anything to the contrary in this
Agreement, for purposes of calculation of financial covenants, all accounting
determinations and computations hereunder shall be made in accordance with GAAP
as in effect as of the date of this Agreement applied on a basis consistent with
the basis used in preparing the most recent Financial Statements of the Issuer
referred to in SECTION 4.10.
ARTICLE II
ISSUANCE AND SALE OF PREFERRED STOCK AND WARRANTS
2.1 THE ISSUANCE OF THE PREFERRED STOCK AND THE WARRANTS. Subject to
the terms and conditions herein set forth, and in reliance upon the
representations and warranties of the Issuer contained herein, at the Closing,
the Investor shall purchase from the Issuer, and the Issuer shall sell and issue
to the Investor, (i) 15,000 shares of its 16% Cumulative Redeemable Preferred
Stock having an initial liquidation preference of $1,000 per share (the
"PREFERRED STOCK"), and (ii) warrants for 1,381.87 shares of the Issuer's common
stock (the "Warrants"), which shall be evidenced by a warrant or warrants
substantially in the form of EXHIBIT A to this Agreement, for the aggregate
purchase price of $15,000,000.
2.2 TERMS OF THE PREFERRED STOCK. The terms of, and rights and
privileges associated with, the shares of Preferred Stock purchased by and
issued to the Investor pursuant to this Agreement shall be as set forth in the
Issuer's Certificate of Designations relating to the Preferred Stock, a copy of
which is attached hereto as EXHIBIT B. The Preferred Stock shall rank, as to
preferences on payment of dividends or distributions of assets to stockholders
of the
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Issuer upon liquidation, prior to any and all other shares of preferred stock,
common stock or other equity securities of whatever class or series now or
hereafter issued by the Issuer.
2.3 THE CLOSING. The Closing shall take place simultaneously with the
execution and delivery of this Agreement, or as soon thereafter as possible. At
the Closing, the Issuer shall deliver to the Investor a certificate registered
in the name of the Investor and dated as of the date of the Closing,
representing the shares of Preferred Stock being purchased hereunder. Delivery
of such certificate shall be made against receipt at the Closing by the Issuer
from the Investor of the purchase price described above by wire transfer of
immediately available funds to an account designated by the Issuer.
2.4 TAX BASIS. The Issuer and Investor hereby acknowledge and agree
that the Preferred Stock and the Warrants to be issued are part of an investment
unit within the meaning of the Internal Revenue Code. The Issuer and the
Investor hereby further acknowledge and agree that, for United States federal
income tax purposes, the issue prices of the Preferred Stock and the Warrants
within the meaning of the Internal Revenue Code, which issue price was
determined pursuant to the Treasury Regulations, are equal to the amount set
forth on Section 2.4 of the DISCLOSURE SCHEDULE. The Issuer and the Investor
agree to use the issue price and allocation set forth on such schedule for all
income tax purposes with respect to the issuance of the Preferred Stock and the
Warrants.
ARTICLE III
CONDITIONS OF CLOSING
The Investor's obligations to purchase and pay for the Preferred Stock
and the Warrants at the Closing are subject to the Investor determining, in its
sole discretion, that the following conditions have been satisfied (or the
Investor waiving in writing the conditions that it has determined have not been
satisfied), on or before the Closing Date:
3.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties of the Issuer contained in ARTICLE IV shall be true and correct in
all material respects at and as of the Closing Date with the same force and
effect as if such representations and warranties had been made as of the Closing
Date (except to the extent any such representation or warranty is expressly
stated to have been made as of a specific date, in which case such
representation or warranty shall be true and correct in all material respects as
of such date). In addition, the Issuer shall have performed in all material
respects all agreements, obligations and covenants required herein to be
performed by it on or prior to the Closing.
3.2 OWNERSHIP STRUCTURE. The capital and ownership structure of the
Issuer and its Subsidiaries (after giving effect to the Transaction Documents)
shall be as described in SECTION 4.4.
3.3 PURCHASE PERMITTED BY APPLICABLE LAWS. The issuance and sale of the
Preferred Stock and Warrants pursuant to this Agreement and the consummation of
the transactions contemplated hereby shall not be prohibited by any Requirement
of Law and shall not subject the Investor to any penalty or adverse condition
under or pursuant to any Requirement of Law.
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3.4 CLOSING OF THE ASSET PURCHASE. There shall not have been any
material modification, amendment, supplement or waiver to the Asset Purchase
Documents without the prior written consent of the Investor, including, but not
limited to, any material modification, amendment, supplement or waiver relating
to the amount or type of consideration to be paid in connection with the Asset
Purchase and the contents of all disclosure schedules and exhibits. The Asset
Purchase shall have been consummated substantially in accordance with the terms
of the Asset Purchase Documents (without waiver of any material conditions
precedent to the obligations of the Buyer thereunder) with total cash
consideration to be paid to the seller thereunder on the Closing Date not to
exceed $160,130,000.
3.5 ADVERSE CHANGE. Since September 30, 2000, both immediately before
and after giving effect to the consummation of the Asset Purchase and the other
transactions contemplated by this Agreement and the other Transaction Documents,
there shall not have occurred any Material Adverse Change, except as and to the
extent disclosed in interim financial statements delivered to the Investor since
September 30, 2000 through the Closing Date.
3.6 NO VIOLATION. The transactions related to the Investment and the
Asset Purchase shall not violate, or constitute or trigger the occurrence of an
event of default with respect to, any material Contractual Obligations of the
Issuer or any of its Subsidiaries, and neither the Issuer nor any of its
Subsidiaries is in violation of or default under or with respect to any of its
material Contractual Obligations.
3.7 LITIGATION. There shall be no material pending or threatened
litigation, proceeding, bankruptcy or insolvency, injunction, order or claim
with respect to the Issuer or any of its Subsidiaries or the Acquired Business.
3.8 ADVANCES UNDER THE CREDIT DOCUMENTS. The Issuer shall have entered
into the Credit Agreement Amendment, and the Credit Documents shall be in full
force and effect. At the Closing, the lenders thereunder shall, concurrently
with the purchase of the Preferred Stock and the Warrants hereunder, make
advances of up to $160,000,000 of additional senior indebtedness in connection
with the Asset Purchase (plus up to an additional $4,000,000 of borrowings under
the revolving credit facility under such Credit Documents) on terms and in form
and substance consistent with the term sheet for such indebtedness previously
delivered to the Investor as to the express terms thereof and otherwise
reasonably acceptable to the Investor for terms not expressly set forth, and
such amounts, together with the proceeds from the sale of the Preferred Stock
and Warrants, shall be sufficient to permit the Issuer to pay the cash purchase
price in connection with the Asset Purchase.
3.9 AMENDMENT OF PIK NOTES INDENTURE. The PIK Notes Indenture shall
have been amended to permit the consummation of the transactions contemplated by
the Transaction Documents (including without limitation the purchase and sale of
the Securities).
3.10 OPINIONS OF COUNSEL. The Investor shall have received (i) from
Xxxxxx & Xxxxxxx, legal counsel for the Issuer, a favorable opinion addressed to
the Investor as of the Closing Date in the form attached hereto as Exhibit C,
(ii) from in-house legal counsel for Federal-Mogul Ignition Company, a letter
entitling the Holders to rely on its opinion rendered in connection with the
Asset Purchase, and (iii) from Xxxxxx & Xxxxxxx, legal counsel for the
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Issuer, a letter entitling the Holders to rely on its opinion rendered in
connection with the Asset Purchase, all which opinions shall be reasonably
satisfactory to the Investor in form and substance.
3.11 DELIVERY OF CLOSING DOCUMENTS. The Investor shall have received
the following closing documents, in form and substance satisfactory to the
Investor, and all of which shall, except as specified below, be fully executed
originals:
(a) this Agreement;
(b) a stock certificate representing the Preferred Stock;
(c) the Warrants to be issued to the Investor;
(d) the Amended and Restated Stockholders Agreement dated as of the
date hereof between the Company and certain of its stockholders, in form and
substance satisfactory to the Investor;
(e) a certificate, issued as of a recent date, of the Secretary of
State of the jurisdiction of incorporation of the Issuer as to its good standing
in such jurisdiction;
(f) certificates of the Secretary of State of each jurisdiction in
which the Issuer is qualified to do business as to its good standing in such
jurisdictions and, where available and to the extent requested by the Investor,
certificates of the relevant state taxing authorities as to the payment by the
Issuer of all taxes in such jurisdictions;
(g) a certificate, dated as of the Closing Date, of the secretary of
the Issuer certifying (i) that the copies of its certificate of incorporation
and bylaws attached thereto, as amended to date, are true, complete and correct,
(ii) that the copies of the resolutions of the directors and stockholders of the
Issuer, authorizing the transactions contemplated by this Agreement and each of
the other Transaction Documents (including the issuance of the Preferred Stock
and the Warrants), attached thereto are true, complete and correct, (iii) as to
the incumbency of each Person executing this Agreement and each of the other
Investment Documents on behalf of the Issuer, (iv) that the copies of the other
Transaction Documents attached thereto are true, complete and correct; and (v)
as to any other matters reasonably requested by the Investor;
(h) a certificate, dated as of the Closing Date, of the president or
chief executive officer of the Issuer certifying to the accuracy of the
representations contained in SECTION 3.1;
(i) copies of all material consents, waivers and amendments required in
connection with the consummation of the transactions related to this Agreement
and the other Transaction Documents and the transactions contemplated hereby;
(j) a consolidated pro forma balance sheet of the Issuer and its
Subsidiaries as of March 31, 2001 in form consistent in all material respects
with the Financial Statements; PROVIDED, HOWEVER, that such pro forma balance
sheet shall be subject to subsequent adjustments necessary to fully reflect the
application of "purchase accounting" to the acquisition of the Acquired
Business; and
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(k) a certificate, dated as of the Closing Date, from a Financial
Officer of the Issuer certifying that the Issuer and its Subsidiaries, taken as
a whole, are Solvent.
3.12 PAYMENT OF FEES AND EXPENSES. The Issuer shall have paid at
Closing via wire transfer of immediately available funds all fees and expenses,
if any, owing to the Investor pursuant to the Fee Letter, the Commitment Letter
referred to therein or any other side letter or other agreement entered into
between the Issuer and the Investor in connection with the Investment.
3.13 ADDITIONAL MATTERS. The Investor shall have received such other
documents, agreements and opinions in connection with the Preferred Stock, all
reasonably satisfactory in form and substance, as the Investor may reasonably
request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
In order to induce the Investor to enter into this Agreement, the
Issuer hereby makes the following representations and warranties to the Investor
and for the benefit of the Holders, as of the Closing Date, after giving effect
to the Asset Purchase and the other transactions contemplated by this Agreement
and the other Transaction Documents. Each representation and warranty shall have
independent significance. Exceptions, if any, to each representation and
warranty shall be set forth on a disclosure schedule (the "DISCLOSURE SCHEDULE")
prepared by the Issuer and shall be identified by reference to the Section of
this Agreement containing the representation and warranty to which such
exception relates. Disclosures in any part of the DISCLOSURE SCHEDULE apply only
to the Section of this Agreement to which they expressly relate and not to any
other representation or warranty. In the event of any inconsistency between the
statements in the body of this Agreement and those in the DISCLOSURE SCHEDULE
(other than an exception expressly set forth as such in the DISCLOSURE SCHEDULE
with respect to a specifically identified representation or warranty), the
statements in the body of this Agreement shall control.
4.1 CORPORATE ORGANIZATION AND POWER. Each of the Issuer and its
Subsidiaries (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) has the
full corporate power and authority to execute, deliver and perform the
Investment Documents to which it is or will be a party, to own and hold its
property and to engage in its business as presently conducted, and (iii) is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the nature of its business or the ownership of its
properties requires it to be so qualified, except where the failure to be so
qualified would not, individually or in the aggregate, be reasonably likely to
have a Material Adverse Effect.
4.2 AUTHORIZATION; ENFORCEABILITY. The Issuer has taken, or on the
Closing Date shall have taken, all necessary corporate action to execute,
deliver and perform each of the Investment Documents to which it is or will be a
party, and has, or on the Closing Date (or any later date of execution and
delivery) shall have, validly executed and delivered each of the Investment
Documents to which it is or will be a party. This Agreement constitutes, and
each of the other Investment Documents to which the Issuer is or shall be a
party upon execution and delivery,
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shall constitute, the legal, valid and binding obligation of the Issuer,
enforceable against it in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally, by general equitable
principles or by principles of good faith and fair dealing.
4.3 NO VIOLATION. The execution, delivery and performance by the Issuer
of this Agreement and each of the other Investment Documents to which it is or
shall be a party, and compliance by it with the terms hereof and thereof, do not
and shall not (i) violate or conflict with any provision of its articles or
certificate of incorporation or bylaws or contravene any other Requirement of
Law applicable to it, (ii) violate, conflict with, result in a breach of, or
constitute (with notice, lapse of time or both) a default under any indenture or
other material agreement or instrument to which it is a party, by which it or
any of its properties is bound or to which it is subject (including without
limitation any provisions of the PIK Notes Indenture), or (iii) result in or
require the creation or imposition of any Lien upon any of its properties or
assets.
4.4 AUTHORIZED AND ISSUED CAPITAL.
(a) The authorized capitalization of the Issuer is set forth on Section
4.4 of the DISCLOSURE SCHEDULE. Except as set forth on Section 4.4 of the
DISCLOSURE SCHEDULE, the Issuer has not issued any other shares of its capital
stock and there are no further subscriptions, contracts or agreements for the
issuance or purchase of any other or additional equity interest in the Issuer,
either in the form of options, agreements, warrants, calls, convertible
securities or other similar rights. All of the outstanding shares of capital
stock of the Issuer are duly and validly authorized and issued and are fully
paid and nonassessable and have been offered, issued, sold and delivered in
compliance with applicable federal and state securities laws.
(b) Set forth on Section 4.4 of the DISCLOSURE SCHEDULE is a listing of
(i) all directors, managers, officers, partners and shareholders of the Issuer
and (ii) the holders of all outstanding options, agreements, warrants, calls,
convertible securities and other rights relating to the issuance of equity
securities of, or interests in, the Issuer (in all cases including the number of
shares of each equity security of the Issuer owned by each such Person).
(c) Section 4.4 of the DISCLOSURE SCHEDULE lists:
(i) all phantom stock, employee stock option and any other
equity-based incentive plans or similar agreements of the Issuer and
its Subsidiaries
(ii) all preemptive or similar rights to purchase or otherwise
acquire equity securities of, or interests in, the Issuer or its
Subsidiaries, whether pursuant to any Requirement of Law or Contractual
Obligation, and
(iii) all registration rights under the Securities Act that
have been granted by the Issuer or any of its Subsidiaries with respect
to their respective equity securities or interests.
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4.5 GOVERNMENTAL AND THIRD-PARTY AUTHORIZATION; PERMITS.
(a) No consent, approval, authorization or other action by, notice to,
or registration or filing with, any Governmental Authority or other Person is or
shall be required as a condition to or otherwise in connection with the due
execution, delivery and performance by each of the Issuer and its Subsidiaries
of this Agreement or any of the other Investment Documents to which it is or
shall be a party or the legality, validity or enforceability hereof or thereof,
other than (i) consents, authorizations and filings that have been (or on or
prior to the Closing Date shall have been) made or obtained and that are (or on
the Closing Date shall be) in full force and effect, and (ii) consents and
filings the failure to obtain or make which would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) Each of the Issuer and its Subsidiaries has, and is in good
standing with respect to, all governmental approvals, licenses, permits and
authorizations necessary to conduct its business as presently conducted and to
own or lease and operate its properties, except for those the failure to obtain
which would not be reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect.
4.6 LITIGATION. There are no actions, investigations, suits or
proceedings pending or, to the knowledge of the Issuer, threatened, at law, in
equity or in arbitration, before any court, other Governmental Authority or
other Person, (i) against or affecting the Issuer, any of its Subsidiaries or
any of their respective properties that would, if adversely determined, be
reasonably likely to have a Material Adverse Effect, or (ii) with respect to
this Agreement or any of the other Investment Documents.
4.7 TAXES. Each of the Issuer and its Subsidiaries has filed on a
timely basis all federal, state and material local tax returns and reports
required to be filed by it and has paid all taxes, assessments, fees and other
charges levied upon it or upon its properties that are shown thereon as due and
payable, other than those that are immaterial or being contested in good faith
and by proper proceedings and for which adequate reserves have been established
in accordance with GAAP. Such returns accurately reflect in all material
respects all liability for taxes of the Issuer and its Subsidiaries for the
periods covered thereby. Except as set forth on Section 4.7 of the DISCLOSURE
SCHEDULE, there is no ongoing federal audit or examination or, to the knowledge
of the Issuer, other investigation by any federal Governmental Authority of the
tax liability of the Issuer or any of its Subsidiaries, and there is no
unresolved claim by any federal Governmental Authority concerning the tax
liability of the Issuer or any of its Subsidiaries for any period for which tax
returns have been or were required to have been filed, other than claims for
which adequate reserves have been established in accordance with GAAP. Neither
the Issuer nor any of its Subsidiaries has waived or extended or has been
requested to waive or extend the federal statute of limitations relating to the
payment of any taxes.
4.8 Subsidiaries; Investments. Section 4.8 of the DISCLOSURE SCHEDULE
sets forth a list of all of the Subsidiaries of the Issuer and, as to each such
Subsidiary, the percentage ownership (direct and indirect) of the Issuer in each
class of its capital stock and each direct owner thereof. Except for the shares
of capital stock indicated on Section 4.8 of the DISCLOSURE SCHEDULE, there are
no shares of capital stock, warrants, rights, options or other equity
securities, or other Capital Stock of any Subsidiary of the Issuer outstanding
or reserved for any purpose.
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All outstanding shares of capital stock of each Subsidiary of the Issuer are
duly and validly issued, fully paid and nonassessable. The holders or owners
listed on Schedule 4.8 of the DISCLOSURE SCHEDULE are the sole legal, record and
beneficial owners of, and have good and valid title to, all such capital stock,
free and clear of all Liens other than Permitted Liens.
4.9 NO MATERIAL ADVERSE CHANGE. There has been no Material Adverse
Change since September 30, 2000, and there exists no event, condition or state
of facts since September 30, 2000, that could reasonably be expected to result
in a Material Adverse Change, except as and to the extent disclosed in interim
financial statements delivered to the Investor since September 30, 2000 through
the Closing Date.
4.10 FINANCIAL MATTERS.
(a) The Issuer has delivered to the Investor copies of (i) the audited
consolidated balance sheets of the Issuer and its Subsidiaries as of September
30, 2000, 1999 and 1998, and the related statements of income, cash flows and
stockholders' equity for the fiscal years then ended, together with the opinion
of Deloitte & Touche LLP thereon, (ii) the audited consolidated balance sheets
of the Acquired Business as of December 31, 2000 and 1999, and the related
statements of income, cash flows and net parent investment for the fiscal years
then ended, together with the opinion of Ernst & Young LLP thereon, (iii) the
unaudited consolidated balance sheet of the Issuer and its Subsidiaries as of
March 31, 2001 and the related statements of income and cash flows for the
six-month period then ended, (iv) the unaudited consolidated balance sheet of
the Issuer and its Subsidiaries as of April 30, 2001 and the related statement
of income for the seven-month period then ended, and (v) the unaudited
consolidated balance sheet of the Acquired Business as of March 31, 2001 and the
related statement of income for the three-month period then ended, and (vi) the
unaudited consolidated balance sheet of the Acquired Business as of April 30,
2001and the related statement of income for the four-month period then ended
(collectively, the "FINANCIAL STATEMENTS"). Such financial statements have been
prepared in accordance with GAAP (subject, with respect to the unaudited
financial statements, to the absence of notes required by GAAP and to normal
year-end adjustments) and present fairly in all material respects the financial
condition of the Issuer and its Subsidiaries on a consolidated basis as of the
respective dates thereof and the consolidated results of operations of the
Issuer and its Subsidiaries for the respective periods then ended. Except as
fully reflected in the most recent financial statements referred to above and
the notes thereto and except as contemplated in the Transaction Documents, there
are no material liabilities or obligations with respect to the Issuer or any of
its Subsidiaries of any nature whatsoever that would be required to be reflected
in a balance sheet in accordance with GAAP (whether absolute, contingent or
otherwise and whether or not due).
(b) The unaudited pro forma consolidated balance sheet of the Issuer
and its Subsidiaries as of March 31, 2001, a copy of which has been delivered to
the Investor, gives pro forma effect to the consummation of the Transactions
(other than any changes that may result from any purchase accounting
adjustments), and the payment of transaction fees and expenses related to the
Transactions, all as if such events had occurred on such date (the "PRO FORMA
BALANCE SHEET"). The Pro Forma Balance Sheet has been prepared in good faith on
the basis of reasonable assumptions.
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(c) The Issuer has prepared, and has heretofore furnished to the
Investor a copy of, annual projected balance sheets and statements of income and
cash flows of the Issuer period beginning with the period beginning March 31,
2001 and ending September 30, 2010, giving effect to the Transactions and the
payment of transaction fees and expenses related thereto (the "PROJECTIONS"). In
the opinion of management of the Issuer, the assumptions used in the preparation
of the Projections were fair, complete and reasonable when made and continue to
be fair, complete and reasonable as of the date hereof. The Projections have
been prepared in good faith by the executive and financial personnel of the
Issuer, are complete in all material aspects and represent a reasonable estimate
of the future performance and financial condition of the Issuer, subject to the
uncertainties and approximations inherent in any projections.
(d) The Issuer, after giving effect to the consummation of the
transactions contemplated hereby, (i) has capital sufficient to carry on its
businesses as conducted and as proposed to be conducted, (ii) has assets with a
fair saleable value, determined on a going concern basis, (y) not less than the
amount required to pay the probable liability on its existing debts as they
become absolute and matured and (z) greater than the total amount of its
liabilities (including identified contingent liabilities, valued at the amount
that can reasonably be expected to become absolute and matured), and (iii) does
not intend to, and does not believe that it shall, incur debts or liabilities
beyond its ability to pay such debts and liabilities as they mature.
4.11 OWNERSHIP OF PROPERTIES. Each of the Issuer and its Subsidiaries
(i) has good and marketable title to all real property owned by it, (ii) holds
interests as lessee under valid leases in full force and effect with respect to
all material leased real and personal property used in connection with its
business, and (iii) has good title to all of its other properties and assets
reflected in the most recent financial statements referred to in SECTION 4.10(A)
(except as sold or otherwise disposed of since the date thereof in the ordinary
course of business), in each case under (i), (ii), and (iii) above free and
clear of all Liens other than Permitted Liens.
4.12 INTELLECTUAL PROPERTY. To the knowledge of the Issuer, no
Intellectual Property of the Issuer and its Subsidiaries infringes the rights of
any other Person in respect of any Intellectual Property, and none of such
Intellectual Property is being infringed by any other Person, in each case in a
manner that could reasonably be expected to have a Material Adverse Effect.
Neither the Issuer or any of its Subsidiaries, nor, to the knowledge of the
Issuer, any of their respective employees or consultants has any agreements or
arrangements with former employers of such employees or consultants relating to
any Intellectual Property of such employers that interfere or conflict with the
performance of such employee's or consultant's duties to the Issuer and its
Subsidiaries in a manner that could reasonably be expected to have a Material
Adverse Effect.
4.13 ERISA.
(a) Except to the extent such noncompliance, occurrence, unfunded
pension liability or engagement would not have a Material Adverse Effect: (i)
each of the Issuer and its ERISA Affiliates is in compliance in all material
respects with the applicable provisions of ERISA, and each Plan is and has been
administered in compliance in all material respects with all applicable
Requirements of Law, including, without limitation, the applicable provisions of
ERISA and the Internal Revenue Code; (ii) no ERISA Event (A) has occurred within
the five-year period prior
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to the Closing Date, (B) has occurred and is continuing, or (C) to the knowledge
of the Issuer, is reasonably expected to occur with respect to any Plan; (iii)
no Plan has any Unfunded Pension Liability as of the most recent annual
valuation date applicable thereto, and (iv) neither the Issuer nor any ERISA
Affiliate has engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.
(b) Except to the extent such withdrawal, liability, reorganization or
insolvency would not have a Material Adverse Effect: (i) neither the Issuer nor
any ERISA Affiliate has had a complete or partial withdrawal from any
Multiemployer Plan, and (ii) neither the Issuer nor any ERISA Affiliate would
become subject to any liability under ERISA if the Issuer or any ERISA Affiliate
were to withdraw completely from all Multiemployer Plans as of the most recent
valuation date.
4.14 ENVIRONMENTAL MATTERS.
(a) No portion of any real property, leased or owned, of the Issuer or
any of its Subsidiaries or, to the knowledge of the Issuer, any other real
property at any time leased, owned or operated by the Issuer or any of its
Subsidiaries, has been contaminated by any Hazardous Substance, except where
such contamination could not reasonably be expected to have a Material Adverse
Effect. No portion of any real property, leased or owned, of the Issuer or any
of its Subsidiaries has been or is presently the subject of any remedial action.
(b) No portion of any real property, leased or owned, of the Issuer or
any of its Subsidiaries has been used by the Issuer or any of its Subsidiaries
or, to the knowledge of the Issuer, by any other Person, as or for a mine, a
landfill, a dump, a gasoline service station, or (other than for petroleum
substances stored in the ordinary course of business) a petroleum products
storage facility. No portion of such real property, or to the knowledge of the
Issuer, any other real property at any time leased, owned or operated by the
Issuer or any of its Subsidiaries has, pursuant to any Environmental Law, been
placed on the "National Priorities List" or "CERCLIS List" (or any similar
federal, state or local list) of sites subject to possible environmental
problems.
(c) All activities and operations of the Issuer and its Subsidiaries,
including but not limited to the generation, use, treatment, storage or disposal
of Hazardous Substances are in compliance with the requirements of all
applicable Environmental Laws, except to the extent the failure so to comply,
individually or in the aggregate, would not be reasonably likely to have a
Material Adverse Effect. Each of the Issuer and its Subsidiaries has obtained
all licenses and permits under Environmental Laws necessary to its respective
operations; all such licenses and permits are being maintained in good standing;
and each of the Issuer and its Subsidiaries is in compliance with all terms and
conditions of such licenses and permits, except for such licenses and permits
the failure to obtain, maintain or comply with which would not be reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect.
Neither the Issuer nor any of its Subsidiaries is involved in any suit, action
or proceeding, or has received any notice, complaint or other request for
information from any Governmental Authority or other Person, with respect to any
actual or alleged Environmental Claims that, if adversely determined, would be
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect; and, to
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the knowledge of the Issuer, there are no threatened actions, suits, proceedings
or investigations with respect to any such Environmental Claims.
4.15 SECURITIES MATTERS. Assuming the accuracy of the representations
and warranties of the Investor contained in ARTICLE V of this Agreement, the
offer and sale of the Securities are not required to be registered pursuant to
the provisions of Section 5 of the Securities Act. Neither the Issuer nor any
agent on their behalf has solicited or shall solicit any offers to sell or has
offered to sell or shall offer to sell all or any part of the Securities to any
Person so as to bring the sale thereof within the registration provisions of the
Securities Act or any state securities laws. All prior offerings and sales of
securities of the Issuer and its Subsidiaries were in compliance with all
applicable federal and state securities laws.
4.16 COMPLIANCE WITH LAWS. Each of the Issuer and its Subsidiaries has
timely filed all material reports, documents and other materials required to be
filed by it under all applicable Requirements of Law with any Governmental
Authority, has retained all material records and documents required to be
retained by it under all applicable Requirements of Law, and is otherwise in
compliance with all applicable Requirements of Law in respect of the conduct of
its business and the ownership and operation of its properties, except for such
Requirements of Law the failure to comply with which, individually or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect.
4.17 REGULATED MATTERS. Neither the Issuer nor any Person controlling,
controlled by or under common control with the Issuer is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended. The Issuer
is not an "affiliated person" of, or "promoter" or "principal underwriter" for,
an "investment company," as such terms are defined under the Investment Company
Act of 1940, as amended. The Issuer is not engaged principally or as one of its
activities in the business of extending credit for the purpose of "purchasing"
or "carrying" any "margin stock" (as each such term is defined or used in
Regulation U of the Board of Governors of the Federal Reserve System). No part
of the proceeds of the Preferred Stock or Warrants shall be used for purchasing
or carrying margin stock or for any purpose which violates, or which would be
inconsistent with, the provisions of Regulations U or X of such Board of
Governors. The Issuer is not a "holding company," a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
4.18 INSURANCE. Section 4.18 of the DISCLOSURE SCHEDULE sets forth a
true and complete summary of all insurance policies or arrangements carried or
maintained by the Issuer and its Subsidiaries, indicating in each case the
insurer, policy number, expiration, amount and type of coverage and deductibles.
The assets, properties and business of the Issuer and its Subsidiaries are
insured against such hazards and liabilities, under such coverages and in such
amounts, as are customarily maintained by comparable companies similarly
situated and under policies issued by insurers of recognized responsibility.
4.19 MATERIAL CONTRACTS. Each "material contract" (within the meaning
of Item 601(b)(10) of Regulation S-K under the Exchange Act) to which the Issuer
or any of its Subsidiaries is a party, by which any of them or their respective
properties is bound or to which
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any of them is subject, is in full force and effect and is enforceable by the
Issuer or the Subsidiary that is a party thereto in accordance with its terms,
and neither the Issuer nor any of its Subsidiaries (nor, to the knowledge of the
Issuer, any other party thereto) is in breach of or default under any such
material contract in any material respect or has given notice of termination or
cancellation of any such material contract.
4.20 LABOR RELATIONS. Neither the Issuer nor any of its Subsidiaries is
engaged in any unfair labor practice within the meaning of the National Labor
Relations Act of 1947, as amended, except where such practice could not
reasonably be expected to have a Material Adverse Effect. There is (i) no unfair
labor practice complaint before the National Labor Relations Board, or grievance
or arbitration proceeding arising out of or under any collective bargaining
agreement, pending or, to the knowledge of the Issuer, threatened, against the
Issuer or any of its Subsidiaries, (ii) no strike, lock-out, slowdown, stoppage,
walkout or other labor dispute pending or, to the knowledge of the Issuer,
threatened, against the Issuer or any of its Subsidiaries, and (iii) to the
knowledge of the Issuer, no petition for certification or union election or
union organizing activities taking place with respect to the Issuer or any of
its Subsidiaries, that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
4.21 FULL DISCLOSURE. All factual information heretofore or
contemporaneously furnished to the Investor in writing by or on behalf of the
Issuer or any of its Subsidiaries for purposes of or in connection with this
Agreement and the transactions contemplated hereby is, and all other such
factual information hereafter furnished to the Investor in writing by or on
behalf of the Issuer or any of its Subsidiaries shall be, when taken together as
a whole, true and accurate in all material respects and not made incomplete by
omitting to state a material fact necessary to make the statements contained
therein, in light of the circumstances under which such information was
provided, not misleading.
4.22 NO BROKERS. The Issuer has not dealt with any broker, finder,
commission agent or other similar Person in connection with the offer and sale
of the Preferred Stock and the Warrants to the Investor or the transactions
contemplated by this Agreement, and the Issuer is not under any obligation to
pay any broker's fee, finder's fee or commission in connection with such
transactions.
4.23 TRANSACTION DOCUMENTS. The documents delivered pursuant to SECTION
3.11 comprise all of the agreements, documents, instruments and certificates
relating to the consummation of the transactions contemplated by the Transaction
Documents.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
The Investor represents and warrants to the Issuer as follows:
5.1 It is a "qualified institutional buyer" as that term is defined in
Rule 144A of the Securities Act and that, in making the purchases contemplated
herein, it is specifically understood and agreed that the Investor is acquiring
the Securities for the purpose of investment
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and not with a view towards the sale or distribution thereof within the meaning
of the Securities Act; PROVIDED, HOWEVER, that the disposition of the Investor's
property shall at all times be and remain within its control.
5.2 The Investor understands that none of the Securities shall be
registered under the Securities Act or any state or other securities law, by
reason of their issuance by the Issuer in a transaction exempt from the
registration requirements of the Securities Act, and that it must hold the
Securities indefinitely unless a subsequent disposition thereof is registered
under the Securities Act and applicable state and other securities laws or is
exempt from registration.
5.3 The Investor understands that the exemption from registration
afforded by Rule 144 (the provisions of which are known to the Investor)
promulgated by the Commission under the Securities Act depends on the
satisfaction of various conditions, including the requirement that the Issuer
has been subject to the reporting requirements of Section 13 or Section 15 of
the Exchange Act for at least 90 days, and that, if applicable, Rule 144 affords
the basis for sales only in limited amounts and that the Issuer may not qualify
under Rule 144.
5.4 The Investor has not employed any broker or finder in connection
with the transactions contemplated by this Agreement.
5.5 The Investor has been furnished with or has had access to the
information it has requested from the Issuer and has had an opportunity to
discuss with the management of the Issuer the business and financial affairs of
the Issuer and its Subsidiaries, and has generally such knowledge and experience
in business and financial matters and with respect to investments in securities
or privately held companies so as to enable it to understand and evaluate the
risks of such investment and form an investment decision with respect thereto;
PROVIDED, HOWEVER, that the foregoing shall in no way affect, diminish or
derogate from the representations and warranties made by the Issuer hereunder or
the right of the Investor to rely thereon and to seek indemnification hereunder.
5.6 The execution, delivery and performance of this Agreement and the
other Investment Documents to which it is a party are within its power and
authority and have been duly authorized by all necessary action of the Investor,
do not conflict with or result in a breach of or violate any of the Investor's
governing documents or any Contractual Obligation or any Requirement of Law and
constitute legal, valid and binding agreements of the Investor enforceable
against it in accordance with their respective terms except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent conveyance or other similar laws of general
applicability relating to or affecting the enforcement of creditors' rights
generally or by general equitable principles.
5.7 Either (i) no part of the funds to be used by the Investor to
acquire or hold the Preferred Stock and the Warrants constitutes assets of any
"employee benefit plan" within the meaning of Section 3(3) of ERISA or any
"plan" within the meaning of Section 4975 of the Internal Revenue Code or (ii)
the Asset Purchase and holding of the Securities by the Investor is exempt from
the restrictions on prohibited transactions of ERISA and the Internal Revenue
Code pursuant to one or more statutory, regulatory or administrative exemptions.
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ARTICLE VI
COVENANTS
Until such time as the Preferred Stock is no longer outstanding, the
Issuer covenants as follows:
6.1 PAYMENT OF DIVIDENDS ON PREFERRED STOCK. The Issuer shall duly and
punctually pay the dividends on and redeem and repurchase the Preferred Stock as
and to the extent required by the Certificate of Incorporation.
6.2 NOTICES. So long as any of the Securities remains outstanding, the
Issuer shall give prior written notice to the Holders of any amendment to or
modification of the Issuer's certificate of incorporation or by-laws, its
issuance of any equity securities, redemption of any equity securities, its
payment of any cash dividends, any transaction involving the sale of all or
substantially all of the Issuer's assets or any combination transaction
involving the Issuer, transactions with affiliates of the Issuer (other than as
permitted in the Certificate of Incorporation), and any bankruptcy proceeding
involving the Issuer or its subsidiaries. Additionally, prior to the occurrence
of any of the foregoing events, the Issuer shall deliver to the Holders a
certificate certifying its compliance with the purchase documentation for the
Preferred Stock on a pro forma basis giving effect to such event.
6.3 BOOKS, RECORDS AND INSPECTIONS. The Issuer shall, and shall cause
each of its Subsidiaries to, keep proper books of record and account in which
full, true and correct entries in conformity with GAAP and all requirements of
law shall be made of all dealings and transactions in relation to its business
and activities.
6.4 PAYMENT OF TAXES. The Issuer shall pay and discharge, and shall
cause each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims for sums that have become due and payable that,
if unpaid, might become a Lien other than a Permitted Lien; PROVIDED, HOWEVER,
that neither the Issuer nor any of its Subsidiaries shall be required to pay any
such tax, assessment, charge, levy or claim that is immaterial or that is being
contested in good faith and by proper proceedings if it has maintained adequate
reserves with respect thereto in accordance with GAAP.
6.5 CORPORATE FRANCHISES. The Issuer shall do, and shall cause each of
its Subsidiaries to do, or cause to be done, all things necessary to preserve
and keep in full force and effect its existence and its material rights,
franchises, authority to do business, licenses, certifications, accreditations
and patents, except where the failure to do so could not reasonably be expected
to have a Material Adverse Effect.
6.6 COMPLIANCE WITH STATUTES, ETC. The Issuer shall, and shall cause
each of its Subsidiaries to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct
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of its business and the ownership of its property except for such noncompliance
as could not, either individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
6.7 COMPLIANCE WITH ENVIRONMENTAL LAWS. The Issuer shall comply, and
shall cause each of its Subsidiaries to comply, with all Environmental Laws
applicable to the ownership or use of its real property now or hereafter owned,
leased or operated by the Issuer or any of its Subsidiaries, shall promptly pay
or cause to be paid all costs and expenses incurred in connection with such
compliance, and shall keep or cause to be kept all such real property free and
clear of any Liens imposed pursuant to such Environmental Laws, except where
such failure to comply could not reasonably be expected to have a Material
Adverse Effect. Neither the Issuer nor any of its Subsidiaries shall generate,
use, treat, store, release or dispose of, or permit the generation, use,
treatment, storage, release or disposal of, Hazardous Materials on any real
property owned, leased or operated by the Issuer or any of its Subsidiaries, or
transport or permit the transportation of Hazardous Materials to or from any
such real property, unless the failure to comply with the requirements specified
in clause (i) or (ii) above, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. If the Issuer or any
of its Subsidiaries, or any tenant or occupant of any real property owned,
leased or operated by the Issuer or any of its Subsidiaries, cause or permit any
intentional or unintentional act or omission resulting in the presence or
release or disposition of any Hazardous Material (except in compliance with
applicable Environmental Laws), the Issuer agrees to undertake, and/or to cause
any of its Subsidiaries, tenants or occupants to undertake, at their sole
expense, any clean-up, removal, remedial or other action required pursuant to
Environmental Laws to remove and clean up any Hazardous Materials from any real
property except where the failure to do so, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect;
PROVIDED, HOWEVER, that neither the Issuer nor any of its Subsidiaries shall be
required to comply with any such order or directive which is being contested in
good faith and by proper proceedings so long as it has maintained adequate
reserves with respect to such compliance to the extent required in accordance
with GAAP. The Issuer shall give prompt written notice to the Holders of any
actions, suits, claims, findings, hearings, investigations or other proceedings
(i) alleging a violation of, noncompliance with, or liability under any
Environmental Laws, that could be reasonably expected to result in a Material
Adverse Effect, or (ii) related to asbestos claims.
6.8 ERISA. The Issuer shall, and shall cause each of its Subsidiaries
to comply with the applicable provisions of ERISA, except to the extent the
failure so to comply would not reasonably be expected to have a Material Adverse
Effect.
6.9 USE OF PROCEEDS. The Issuer shall use the proceeds of the sale of
the Preferred Stock and the Warrants only in connection with the acquisition of
the Acquired Business, for the payment of fees and expenses in connection with
the transactions contemplated by the Transaction Documents, and for other
general business purposes, including working capital and capital expenditures.
6.10 INDEMNIFICATION.
(a) Subject to SECTION 6.11, the Issuer shall defend and indemnify the
Holders and their officers, directors, managers, employees, partners, members,
accountants, attorneys,
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consulting persons and agents (each, an "INDEMNIFIED PARTY") against, and hold
each Indemnified Party harmless from, any and all claims, actual losses, liens,
damages, obligations, liabilities, penalties, costs and expenses (including
without limitation reasonable attorneys' fees and expenses) of any kind or
nature whatsoever), other than securities trading losses (involving any
transaction other than with Issuer and its Subsidiaries) or income taxes of the
Holders relating to income associated with the Securities or resulting from the
sale or disposition of the Securities, whether direct or indirect, in any
litigation or other proceeding, claim or assertion initiated by an unaffiliated
third party (collectively, the "LOSSES") that may at any time be asserted
against any such Indemnified Person (including without limitation through
derivative actions brought by any Person claiming through or in the name of the
Issuer or any of its Subsidiaries) as a result of, arising from or in any way
relating to the preparation, execution, performance or enforcement of this
Agreement or any of the other Investment Documents, any of the transactions
contemplated herein or therein or any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds of the Investment
(including without limitation in connection (i) with the actual or alleged
generation, presence, storage, treatment, disposal, transport, discharge or
release of any Hazardous Substances by the Issuer or its Subsidiaries on, in, to
or from any real property at any time owned, operated or leased by the Issuer or
its Subsidiaries, (ii) any other Environmental Claims and (iii) any violation of
or liability under any Environmental Law), or any action, suit or proceeding
(including any inquiry or investigation) by any Person, whether threatened or
initiated, related to any of the foregoing, and in any case whether or not such
Indemnified Person is a party to any such action, proceeding or suit or a
subject of any such inquiry or investigation; PROVIDED, HOWEVER, that no
Indemnified Person shall have the right to be indemnified hereunder for any
Losses to the extent determined by a final and nonappealable judgment of a court
of competent jurisdiction or pursuant to arbitration as set forth herein to have
resulted from the gross negligence, bad faith or willful misconduct of such
Indemnified Person or its Affiliates or a material breach of such Indemnified
Person's or its Affiliates' obligations or duties hereunder. Subject to SECTION
6.11, all of the foregoing Losses of any Indemnified Person shall be paid or
reimbursed by the Holders, as and when incurred and upon demand. Each Holder
agrees to reimburse the Issuer for any payments made by the Issuer to such
Holder pursuant to this paragraph for Losses that are finally determined in such
proceeding to primarily and directly result from the bad faith, gross negligence
or willful misconduct of such Holder or a material breach of such Holder's
obligations or duties hereunder. The obligations of the Issuer under this
paragraph shall survive any transfer of the Securities and the termination of
this Agreement. In the event that the foregoing indemnity is unavailable or
insufficient to hold an Indemnified Party harmless, subject to SECTION 6.11, the
Issuer shall contribute to amounts paid or payable by such Indemnified Party in
respect of such Indemnified Party's Losses in such proportions as appropriately
reflect the relative benefits received by and fault of the Issuer, on the one
hand, and such Indemnified Party, on the other, in connection with the matters
as to which such Losses relate and other equitable considerations but in no
event less than the maximum contribution amount permitted by law.
(b) If any action, proceeding or investigation is commenced, as to which
any Indemnified Party proposes to demand such indemnification, it shall notify
the Issuer with reasonable promptness; PROVIDED, HOWEVER, that any failure by
such Indemnified Party to notify the Issuer shall not relieve the Issuer from
its obligations hereunder except to the extent such omission results in the
forfeiture by the Issuer of substantive rights or defenses. The Issuer shall be
entitled to assume the defense of any such action, proceeding or investigation,
including the
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employment of counsel and the Issuer shall be responsible for the payment of all
fees and expenses of such counsel. The Indemnified Party shall have the right to
employ separate counsel in connection with any such action, proceeding or
investigation and to participate in the defense thereof, but the fees and
expenses of such counsel shall be paid by the Indemnified Party, unless (i) the
Issuer has failed to assume the defense and employ counsel as provided herein,
(ii) the Issuer has agreed in writing to pay such fees and expenses of separate
counsel or (iii) an action, proceeding, or investigation has been commenced
against both the Indemnified Party and/or the Issuer and representation of the
Issuer, on the one hand, and the Indemnified Party, on the other, by the same
counsel would be inappropriate because of actual or potential conflicts of
interest between the parties. In the case of any circumstance described in
clauses (i), (ii) or (iii) of the immediately preceding sentence, subject to
SECTION 6.11, the Issuer shall be responsible for the reasonable fees and
expenses of such separate counsel; PROVIDED, HOWEVER, that the Issuer shall not
in any event be required to pay the fees and expenses of more than one separate
counsel (and, if deemed reasonably necessary by such separate counsel,
appropriate local counsel who shall report to such separate counsel) for all
Indemnified Parties. The Issuer shall be liable only for settlement of any claim
against an Indemnified Party made with the Issuer's written consent.
6.11 CREDITORS ENTITLED TO PRIORITY ON PAYMENT.
(a) Notwithstanding anything to the contrary contained in this
Agreement or in the Certificate of Incorporation, the Issuer and the Holders
hereby expressly acknowledge, understand and agree:
(i) that all shares of Preferred Stock are issued subject to
the provisions of this SECTION 6.11;
(ii) that each Holder, whether such Holder becomes a holder of
the Preferred Stock upon original issue or upon transfer, assignment or
exchange thereof, accepts and agrees that, except as otherwise
expressly provided for in this SECTION 6.11, the Issuer shall not make
(nor shall it be required to make), and the Holders may not receive or
retain, any payment of any kind or character (whether in cash, property
or securities) under this Agreement or on account of the Preferred
Stock (whether in respect of a redemption payment, dividend payment,
indemnification payment, damages payment or otherwise) until all Senior
Obligations (including any interest accruing subsequent to the filing
of a petition of bankruptcy at the rate provided for in the
documentation with respect to such Senior Obligations, whether or not
such interest is an allowed claim under applicable law), whether
outstanding on the date hereof or hereafter incurred, issued or
created, have been paid in full in cash;
(iii) that the relationship between the Issuer and the Holders
is one of issuer and stockholder as opposed to a debtor-creditor
relationship; and
(iv) that the provisions of this SECTION 6.11 are for the
benefit of, and shall be enforceable directly by, the holders of the
Senior Obligations, and that each such holder shall be deemed to have
acquired such Senior Obligations, whether now outstanding or hereafter
created, incurred, assumed or guaranteed, in reliance upon the
covenants and provisions contained in this SECTION 6.11, and such
covenants and provisions may not be
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amended, modified or waived without the prior written consent of the
holders of the Senior Obligations.
(b) Upon any payment or distribution of assets of the Issuer of any
kind or character, whether in cash, property or securities, upon any total or
partial liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors or marshaling of assets of the Issuer, or in a bankruptcy,
reorganization, insolvency, receivership or other similar proceeding, relating
to the Issuer or its property, whether voluntary or involuntary, all Senior
Obligations (including any interest accruing subsequent to the filing of any
such proceeding at the rate provided for in the documentation with respect to
such Senior Obligations, whether or not such interest is an allowed claim under
applicable law) shall first be paid in full in cash to the holders thereof
before any payment or distribution of any kind or character (whether in cash,
property or securities) is made under this Agreement or on account of the
Preferred Stock (whether in respect of a redemption payment, dividend payment,
indemnification payment, damages payment or otherwise). Upon any such
dissolution, winding-up, liquidation, reorganization, receivership or similar
proceeding, any payment or distribution of assets of the Issuer of any kind or
character, whether in cash, property or securities, to which the Holders would
be entitled, except for the provisions hereof, shall be paid by the Issuer, or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
person or entity making such payment or distribution, or by the Holders if
received by them, directly to the holders of the Senior Obligations (PRO RATA to
such holders on the basis of the respective amounts of Senior Obligations held
by such holders, taking into account the relative priorities of such Senior
Obligations as their interests may appear), until all such Senior Obligations
have been paid in full in cash, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Obligations.
(c) In the event that, notwithstanding the foregoing, any payment or
distribution by, or of assets of, the Issuer, of any kind or character (whether
in cash, property, securities or other assets) shall be received by any Holder
when such payment or distribution is prohibited by the provisions of this
SECTION 6.11 (whether or not any Holder had knowledge thereof), such payment or
distribution shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of the Issuer's Senior Obligations (PRO RATA to
such holders on the basis of the respective amounts of Senior Obligations held
by such holders, taking into account the relative priorities of such Senior
Obligations as their interests may appear).
(d) No right of any present or future holders of any Senior Obligations
to enforce the provisions of this SECTION 6.11 shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Issuer or
any of its Subsidiaries, or by any act or failure to act by any such holder, or
by any noncompliance by the Issuer with any of the terms and provisions of this
Agreement or the Preferred Stock, regardless of any knowledge thereof that any
such holder may have or be otherwise charged with. The holders of the Senior
Obligations may, without in any way affecting the obligations of the Holders
with respect hereto, at any time or from time to time and in their absolute
discretion, change the manner, place or terms of payment of, change or extend
the time of payment of, or renew, increase or otherwise alter, any Senior
Obligations of the Issuer, or amend, modify or supplement any agreement or
instrument governing or evidencing such Senior Obligations or any other document
referred to therein, or
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exercise or refrain from exercising any other of their rights under such Senior
Obligations, all without notice to or assent from any Holder.
(e) To the extent any payment of Senior Obligations (whether by or on
behalf of the Issuer, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar person or entity under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then, if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar person or entity, the Senior Obligations or part
thereof originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment has not occurred.
(f) Notwithstanding the foregoing provisions of this SECTION 6.11,
except under the circumstances described in (or during any proceeding described
in) SECTION 6.11(B), the Issuer may make, and the Holders shall be entitled to
receive and retain, (i) those fees and expenses required or permitted to be paid
by the Issuer pursuant to the first sentence of SECTION 7.2 hereof, (ii) any
redemption or dividend payment on the Preferred Stock expressly permitted at
such time by the terms of the documentation governing the Senior Obligations,
and (iii) so long as no default or event of default then exists and is
continuing under the Credit Documents, up to $100,000 in the aggregate for all
of the Holders' out-of-pocket costs and expenses incurred to enforce the
Issuer's obligations under this Agreement and the Certificate of Designations
for the Preferred Stock.
(g) Notwithstanding the foregoing provisions of this SECTION 6.11
(other than SECTION 6.11(B)), the Issuer shall be permitted to pay, and the
Holders shall be permitted to accept and retain, payments of dividends on the
Preferred Stock made solely by the issuance of additional shares of Preferred
Stock as provided for in the Certificate of Incorporation (including without
limitation the right to an increased dividend rate upon the occurrence, and
during the continuance, of an Event of Noncompliance as set forth therein).
ARTICLE VII
GENERAL
As further and special provisions forth under this Agreement, the
parties hereto further warrant, covenant, contract and agree each with the other
as follows:
7.1 ENTIRE AGREEMENT. This Agreement together with the other Investment
Documents constitute the entire understanding among the parties as to the
subject matter specifically referred to herein or therein.
7.2 REIMBURSEMENT OF EXPENSES. The Issuer agrees to pay upon demand all
reasonable out-of-pocket costs and expenses of the Holders (including without
limitation the reasonable fees and expenses for one counsel to the Holders) in
connection with the preparation, negotiation, execution, delivery of any
amendment, modification or waiver of this Agreement or the other Investment
Documents. Subject to SECTION 6.11, the Issuer shall pay upon demand all
reasonable out-of-pocket costs and expenses of the Holders (including without
limitation
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reasonable attorneys' fees and expenses) in connection with (x) any refinancing
or restructuring of the Preferred Stock, whether in the nature of a "work-out,"
in any insolvency or bankruptcy proceeding or otherwise and whether or not
consummated, and (y) the enforcement, attempted enforcement or preservation of
any rights or remedies under this Agreement or any of the other Investment
Documents, whether in any action, suit or proceeding (including any bankruptcy
or insolvency proceeding) or otherwise unless it shall be finally judicially
determined in a court of competent jurisdiction that the Issuer did not breach
its covenants under any Transaction Document. Additionally, the Issuer shall pay
and hold the Holders harmless from and against all liability for any
intangibles, documentary, stamp or other similar taxes, fees and excises, if any
(other than transfer taxes, if any), including any interest and penalties, and
any finder's or brokerage fees, commissions and expenses (other than any fees,
commissions or expenses of finders or brokers engaged by any of the Holders),
that may be payable in connection with the transactions contemplated by this
Agreement and the other Investment Documents.
7.3 SURVIVAL OF AGREEMENTS AND REPRESENTATIONS AND WARRANTIES. All
agreements and covenants made by the Issuer in this Agreement shall survive the
execution and delivery of this Agreement and the other Investment Documents for
so long as any of the Securities are outstanding and all repurchase or
redemption obligations associated therewith have been indefeasibly paid in full.
All representations and warranties made by the Issuer in this Agreement or
otherwise made in writing by the Issuer in connection herewith shall survive the
execution and delivery of this Agreement and the other Investment Documents for
a period of one year following the Closing Date.
7.4 NO WAIVER. No delay by or on behalf of the Investor in exercising
any rights conferred hereunder, and no course of dealing between the Investor
and the Issuer shall operate as a waiver of any right granted hereunder, unless
expressly waived in writing by the party whose waiver is alleged.
7.5 BINDING EFFECT; ASSIGNMENT. All covenants, representations,
warranties and other stipulations in this Agreement and other documents referred
to herein, given by or on behalf of any of the parties hereto, shall bind and
inure to the benefit of the respective successors, heirs, personal
representatives and assigns of the parties hereto, except that the Issuer shall
not assign or transfer any of its rights or obligations under this Agreement or
any of the other Investment Documents without the prior written consent of the
Investor. This Agreement and Securities may be endorsed, assigned and
transferred in whole or part by the Investor (i) to any of its Affiliates
without the consent of the Issuer or any other Person or (ii) to any other
Person with the consent of the Issuer (which consent shall not be unreasonably
withheld). The Investor may grant participations in the Securities and this
Agreement (or any portion thereof) on the same terms as provided with respect to
assignments above. The Investor shall notify the Issuer in writing of any such
endorsement, assignment or transfer by the Investor. Each transferee of the
Securities shall make the representations in ARTICLE V as of the date of such
transfer.
7.6 INITIAL HOLDER. The Issuer shall be entitled to treat and deal with
the Investor, and shall not be required to recognize any other Person as the
holder of any of the Securities, except after production of such securities duly
endorsed for transfer together with such documentation as the Issuer may
reasonably require concerning compliance with federal or state securities laws.
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7.7 CUMULATIVE POWERS. No remedy herein conferred upon the Issuer or
any holder of the Securities is intended to be exclusive of any other remedy,
and each such remedy shall be cumulative and in addition to every other remedy
given hereunder or now or hereafter existing at law, or in equity or by statute
or otherwise.
7.8 LOSS OF SECURITIES; REISSUE OF SECURITIES IN LESSER DENOMINATIONS.
Upon:
(a) receipt of evidence satisfactory to the Issuer of loss, theft,
mutilation or destruction of any Security, and
(b) in the case of any such loss, theft or destruction, upon delivery
of indemnity in such form and amount as shall be reasonably satisfactory to the
Issuer, or in the event of such mutilation, upon surrender and cancellation of
such Security,
the Issuer shall make and deliver a new Security of like tenor, in lieu of such
lost, stolen, mutilated or destroyed Security. In addition, upon request of any
holder of a Security or any other securities of the Issuer now or hereafter
issued by the Issuer to the Investor, and upon surrender of such Security or
other securities to the Issuer and compliance with any restrictive legends, the
Issuer shall reissue, in lesser denominations to parties designated by such
holder, new certificates, warrants or other securities in the equivalent amounts
of such other securities surrendered.
7.9 COMMUNICATIONS. All communications and notices provided for
hereunder shall be sent by personal delivery, nationally recognized overnight
courier, facsimile or registered or certified mail, to the Investor and the
Issuer at their respective addresses set forth on Section 7.9 of the DISCLOSURE
SCHEDULE, or to such other address with respect to any party as such party shall
notify the other parties hereto in writing. Any notice required to be given
hereunder by one party to another shall be deemed to have been received (i) when
delivered, if personally delivered or sent via facsimile, or (ii) one day
following delivery to a nationally recognized overnight courier or (iii) on the
third Business Day following the date on which the piece of mail containing such
communication is posted, if sent by certified or registered mail. Except as
otherwise provided for herein, all requests for disclosure or other provision of
information to be made or otherwise given by the Issuer shall be completed no
later than 10 days following the receipt by the Issuer of a written request
therefor in the manner described in this Section.
7.10 LEGENDS.
(a) Each certificate, if any, representing the Securities shall bear
legends in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED UNLESS THE COMPANY
HAS RECEIVED A WRITTEN OPINION FROM COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE COMPANY STATING THAT SUCH TRANSFER IS BEING MADE IN
COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY NOT BE
TRANSFERRED TO ANY PERSON UNLESS SUCH PERSON PROVIDES DOCUMENTATION
REASONABLY SATISFACTORY TO THE COMPANY THAT WILL ENABLE THE COMPANY TO
ASCERTAIN THAT SUCH TRANSFER WILL NOT RESULT IN THE COMPANY BEING
REQUIRED TO WITHHOLD OR DEDUCT ANY TAXES, LEVIES, IMPOSTS, OR OTHER
GOVERNMENTAL CHARGES WITH RESPECT TO DIVIDENDS OR DISTRIBUTIONS WITH
RESPECT TO SUCH SECURITIES. ANY TRANSFER IN VIOLATION OF THIS LEGEND
SHALL BE VOID AB INITIO.
7.11 CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS. The Investor shall not make
public disclosure of any nonpublic information, including financial terms and
financial and organizational information contained in any documents, statements,
certificates, materials or information furnished, or to be furnished, by or on
behalf of the Issuer in connection with the transactions contemplated by this
Agreement or any other Transaction Document; PROVIDED, HOWEVER, that the
foregoing shall not be construed, now or in the future, to apply to any
information reflected in any recorded document, information which is
independently developed by the Investor, information obtained from sources other
than the Issuer or information that is or becomes in the public domain (other
than as a result of a breach of this Agreement), nor shall it be construed to
prevent the Investor from (i) making any disclosure of any information (PROVIDED
that the Investor shall, if practicable, provide the Issuer with prior notice of
such disclosure) (A) if required to do so by any Requirement of Law, (B) to any
Governmental Authority having or claiming authority to regulate or oversee any
aspect of the Investor's business or that of the corporate parent or affiliates
of the Investor in connection with the exercise of such authority or claimed
authority, or (C) pursuant to subpoena; or (ii) to the extent the Investor or
its counsel deems necessary or appropriate to do so to enforce its rights
hereunder or under any other Investment Document or any remedy provided herein
or therein or otherwise available by law; or (iii) making, on a confidential
basis, such disclosures as the Investor deems necessary or appropriate to the
Investor's legal counsel, accountants or other advisors so long as such parties
are notified of the confidential nature of such information; or (iv) making such
disclosures as the Investor reasonably deems necessary or appropriate to any
bank or financial institution or other entity, and/or counsel to or other
representatives of such bank or financial institution or other entity, to which
the Investor in good faith desires to sell an interest in any applicable
investment or financing (the Investor shall be permitted to disclose under this
clause (iv) only such information as it is entitled to receive pursuant to this
Agreement or the Certificate of Incorporation); PROVIDED, HOWEVER, that such
bank, financial institution or other entity or counsel to or representative
thereof, agrees to take reasonable steps to maintain the confidentiality of such
disclosures.
7.12 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of North Carolina, except for corporate matters, which
shall be governed by the laws of the State of Delaware, and except for the
provisions of SECTION 6.11, which shall be governed by the laws of the State of
New York, in all cases without regard to such states' conflicts of laws
principles.
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7.13 HEADINGS. The descriptive section headings herein have been
inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provisions hereof.
7.14 MULTIPLE ORIGINALS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
7.15 AMENDMENT OR WAIVER. This Agreement may be amended, and the Issuer
may take any action herein prohibited (including any actions to which consent of
the Holders is required hereunder), or omit to perform any act herein required
to be performed by it, if the Issuer shall obtain the prior written consent of
the Majority Holders to such amendment, action or omission to act; PROVIDED,
HOWEVER, that, without the prior written consent of the Holders affected
thereby, no such agreement shall amend the provisions of this Section. Each
holder of a Security at the time or times thereafter outstanding shall be bound
by any consent authorized by this Section, whether or not such Security shall
have been marked to indicate such consent.
7.16 WAIVER OF JURY TRIAL. THE INVESTOR AND THE ISSUER EACH HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE (TO THE EXTENT PERMITTED BY
APPLICABLE LAW) ANY RIGHT TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER,
RELATING TO, OR CONNECTED WITH THIS AGREEMENT OR ANY OTHER AGREEMENT, INSTRUMENT
OR DOCUMENT CONTEMPLATED HEREBY OR DELIVER IN CONNECTION HEREWITH AND AGREE THAT
ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT.
7.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All judicial
proceedings brought against the Issuer with respect to this Agreement, the
Securities or any of the other Investment Documents may be brought in any state
or federal court of competent jurisdiction in the State of North Carolina, and,
by execution and delivery of this Agreement, each of the Issuer accepts, for
itself and in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts and irrevocably agrees to be
bound by any final judgment rendered thereby in connection with this Agreement
from which no appeal has been taken or is available. The Issuer irrevocably
agrees that all service of process in any such proceedings in any such court may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to it at its address set
forth in SECTION 7.9 or at such other address of which the Investor shall have
been notified pursuant thereto, such service being hereby acknowledged by the
Issuer to be effective and binding service in every respect. Each of the parties
hereto irrevocably waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non conveniens
which it may now or hereafter have to the bringing of any such action or
proceeding in any such jurisdiction. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
the Investor to bring proceedings against the Issuer in the court of any other
jurisdiction.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
day and year first above written.
ISSUER:
TransDigm Holding Company
By: /s/ Xxxxxxx Xxxxx
------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
INVESTOR:
First Union Investors, Inc.
By: /s/ Xxxxxx X. Xxxx
------------------------------------
Name: Xxxxxx X. Xxxx
Title: Senior Vice President
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APPENDIX I
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DEFINITIONS
-----------
"ACQUIRED BUSINESS" means the assets and liabilities acquired by the
Issuer (or a Subsidiary thereof) pursuant to the Asset Purchase Agreement.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person (including without limitation such Person's investment
decisions), whether through the ownership of voting securities, by agreement or
otherwise; PROVIDED that beneficial ownership of 10% or more of the Voting Stock
of a Person shall be deemed to be control. For purposes of this definition, the
terms "controlling," "controlled by" and "under common control with" shall have
correlative meanings. Notwithstanding the foregoing, each Odyssey Party and each
officer and key employee thereof shall be deemed to be an Affiliate of each of
the Issuer and its Subsidiaries.
"AGREEMENT" means this Investment Agreement, as amended, modified or
supplemented from time to time in accordance with its terms.
"ASSET PURCHASE" means the acquisition of the Acquired Business and the
other transactions contemplated by the Asset Purchase Agreement effected
pursuant to the terms, conditions and provisions of such agreement.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement dated as
of April 29, 2000, between Federal-Mogul Ignition Company, a Delaware
corporation, and Aviation Acquisition Corporation, a Delaware corporation, as
amended, modified or supplemented from time to time.
"ASSET PURCHASE DOCUMENTS" means the Asset Purchase Agreement, together
with exhibits, schedules and other documents contemplated thereby or related
thereto, as amended, modified, replaced, refinanced or restated from time to
time.
"BUSINESS DAY" means any day other than a Saturday or Sunday, a legal
holiday or a day on which commercial banks in North Carolina or New York are
required by law to be closed.
"CAPITAL STOCK" means (i) with respect to any Person that is a
corporation, any and all shares, interests or equivalents in capital stock
(whether voting or nonvoting, and whether common or preferred) of such
corporation, and (ii) with respect to any Person that is not a corporation, any
and all partnership, membership, limited liability company or other equity
interests of such Person.
"CERTIFICATE OF INCORPORATION" means, with respect to the Issuer, its
certificate of incorporation, together with any certificates of designations
filed in connection therewith (including without limitation the certificate of
designations of the Preferred Stock), as may be amended, modified or changed
from time to time.
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"CLOSING" means the closing of the purchase of the Preferred Stock and
the Warrants.
"CLOSING DATE" means the date on which the Closing occurs.
"COMMISSION" means the Securities and Exchange Commission and any
successor Person thereof.
"CONTRACTUAL OBLIGATION" means, with respect to a Person, any
provision of (i) any security issued by such Person, including provisions
contained in the Certificate of Incorporation or bylaws or other organizational
or governing documents of such Person, or (ii) any agreement, franchise,
license, lease, permit, undertaking, contract, indenture, mortgage, deed of
trust or other instrument or understanding to which such Person is a party or by
which it or any of its assets or property is bound.
"CREDIT AGREEMENT AMENDMENT" means that certain amendment to the Credit
Documents entered into in connection with and to consummate the Asset Purchase
and the transactions contemplated by the other Transaction Documents.
"CREDIT DOCUMENTS" means the Credit Agreement dated as of December 3,
1998 and amended and restated as of May 31, 2001 among the Issuer, TransDigm
Inc., the lenders party thereto in their capacities as lenders thereunder, and
Bankers Trust Company, as administrative agent, together with the related
documents thereto (including without limitation any guarantee agreements,
security documents, notes and letters of credit), in each case as such
agreements may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring
(including increasing the amount of available borrowings thereunder or adding
Subsidiaries of the Issuer as additional borrowers or guarantors thereunder) all
or any portion of the indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders.
"DOLLARS" or "$" means dollars of the United States of America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
"ERISA AFFILIATE" means any Person (including any trade or business,
whether or not incorporated) that would be deemed to be under "common control"
with, or a member of the same "controlled group" as, the Issuer or any of its
Subsidiaries, within the meaning of Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code or Section 4001 of ERISA.
"ERISA EVENT" means any of the following with respect to a Plan or
Multiemployer Plan, as applicable: (i) a Reportable Event, (ii) a complete or
partial withdrawal by the Issuer or any ERISA Affiliate from a Multiemployer
Plan that results in liability under Section 4201 or 4204 of ERISA, or the
receipt by the Issuer or any ERISA Affiliate of notice from a Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of
ERISA or that it intends to terminate or has terminated under Section 4041A of
ERISA, (iii) the distribution by the Issuer or any ERISA Affiliate under Section
4041 of ERISA of a notice of
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intent to terminate any Plan or the taking of any action to terminate any Plan,
(iv) the commencement of proceedings by the PBGC under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Plan, or
the receipt by the Issuer or any ERISA Affiliate of a notice from any
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan, (v) the institution of a proceeding by any fiduciary of
any Multiemployer Plan against the Issuer or any ERISA Affiliate to enforce
Section 515 of ERISA, which is not dismissed within thirty (30) days, (vi) the
imposition or threatened imposition of any Lien upon any assets of the Issuer or
any ERISA Affiliate as a result of any alleged failure to comply with the
Internal Revenue Code or ERISA in respect of any Plan, (vii) the engaging in or
otherwise becoming liable for a nonexempt Prohibited Transaction by the Issuer
or any ERISA Affiliate, or (viii) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Internal Revenue Code or Section 307 of
ERISA, would result in the loss of tax-exempt status of the trust of which such
Plan is a part if the Issuer or an ERISA Affiliate fails to timely provide
security to such Plan in accordance with the provisions of such sections.
"ENVIRONMENTAL CLAIMS" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
written allegations, notices of noncompliance or violation, investigations
(other than internal reports prepared by any Person in the ordinary course of
its business and not in response to any third party action or request of any
kind) or proceedings relating in any way to any actual or alleged violation of
or liability under any Environmental Law or relating to any permit issued, or
any approval given, under any such Environmental Law (collectively, "Claims"),
including, without limitation, (i) any and all Claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (ii) any and
all Claims by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Hazardous
Substances or arising from alleged injury or threat of injury to human health or
the environment.
"ENVIRONMENTAL LAWS" shall mean any and all federal, state and local
laws, statutes, ordinances, rules, regulations, permits, licenses, approvals,
rules of common law and orders of courts or Governmental Authorities, relating
to the protection of human health or occupational safety or the environment, now
or hereafter in effect and in each case as amended from time to time, including,
without limitation, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of Hazardous
Substances.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"FEE LETTER" means the letter agreement dated April 27, 2001 addressed
to the Issuer from the Investor, as amended, modified or otherwise supplemented.
"FINANCIAL OFFICER" means, with respect to the Issuer, the chief
financial officer, vice president - finance, principal accounting officer or
treasurer of the Issuer.
"FINANCIAL STATEMENTS" has the meaning set forth in SECTION 4.10.
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"GAAP" means generally accepted accounting principles, as set forth in
the statements, opinions and pronouncements of the Accounting Principles Board,
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, consistently applied and maintained as in effect
from time to time (subject to the provisions of Section 1(b)).
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof and any central bank thereof, any municipal
local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"HAZARDOUS SUBSTANCES" shall mean any substances or materials (i) that
are or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (ii) that are
defined by any Environmental Law as toxic, explosive, corrosive, ignitable,
infectious, radioactive, mutagenic or otherwise hazardous, (iii) the presence of
which require investigation or response under any Environmental Law, (iv) that
constitute a nuisance, trespass or health or safety hazard to Persons or
neighboring properties, (v) that contain asbestos, polychlorinated biphenyls,
urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
wastes, crude oil, nuclear fuel, natural gas or synthetic gas.
"HOLDER" or "HOLDERS" means the Investor (so long as the Investor
continues to own Preferred Stock) and/or any transferee of any of the Preferred
Stock whose name has been recorded by the Issuer in its ownership register of
the Preferred Stock.
"INDEBTEDNESS" has the meaning set forth in the Certificate of
Designations of the Preferred Stock.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 6.10.
"INTELLECTUAL PROPERTY" means (i) all inventions (whether or not
patentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissues, continuations, continuations-in-part, divisions, revisions,
extensions, and reexaminations thereof; (ii) all trademarks, service marks,
trade dress, logos, trade names, and corporate names, together with all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith; (iii) all copyrightable works and all copyrights
(registered and unregistered); (iv) all trade secrets and confidential
information (including without limitation financial, business and marketing
plans and customer and supplier lists and related information); (v) all computer
software and software systems (including without limitation data, databases and
related documentation); (vi) all Internet web sites and domain names; (vii) all
other proprietary rights; and (viii) all licenses or other agreements to or from
third parties regarding the foregoing.
"INTEREST RATE PROTECTION AGREEMENT" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate hedging agreement or other similar agreement or arrangement.
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"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"INVESTMENT" means the purchase and issuance of the Securities upon the
terms set forth in this Agreement.
"INVESTMENT DOCUMENTS" means this Agreement, the Warrants and the
Securities, together with exhibits, schedules and other documents contemplated
thereby or related thereto (including without limitation the letter agreement
entered into between the Issuer and the Investor in connection with the
Closing), as amended, modified, replaced, refinanced or restated from time to
time.
"INVESTOR" has the meaning set forth in the introductory paragraph
hereof (together with its successors and assigns).
"ISSUER" has the meaning set forth in the introductory paragraph hereof
(together with is successors and assigns).
"LIEN" means any mortgage, pledge, hypothecation, assignment, security
interest, lien (statutory or otherwise), preference, priority, charge or other
encumbrance of any nature, whether voluntary or involuntary, including, without
limitation, the interest of any vendor or lessor under any conditional sale
agreement, title retention agreement, capital lease or any other lease or
arrangement having substantially the same effect as any of the foregoing, or set
off rights of depository institutions against deposit accounts with such
depository institutions for customary fees and expenses.
"LOSSES" has the meaning set forth in SECTION 6.10.
"MAJORITY HOLDERS" means, at any time, the Holders having an aggregate
unpaid principal amount of more than 50% of the total unpaid principal amount of
all the outstanding Preferred Stock outstanding at such time.
"MATERIAL ADVERSE CHANGE" means a material adverse change in the
business, properties, operations or condition (financial or otherwise) of the
Issuer and its Subsidiaries, taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (i) the
business, properties, operations or condition (financial or otherwise) of the
Issuer and its Subsidiaries, taken as a whole, (ii) the ability of the Issuer or
any of its Subsidiaries to perform its material obligations under this Agreement
or any of the other Investment Documents to which it is a party or (iii) the
legality, validity or enforceability of this Agreement or any of the other
Investment Documents or the rights and remedies of the Investor hereunder and
thereunder.
"MULTIEMPLOYER PLAN" means any "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA to which the Issuer or any ERISA Affiliate makes,
is making or is obligated to make contributions or has within the past five
years made or been obligated to make contributions.
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"OBLIGATIONS" means all obligations (including guarantees) for
principal, premium, interest, penalties, fees, indemnifications, reimbursements,
damages and other liabilities and amounts payable under the documentation
governing any Indebtedness.
"ODYSSEY PARTIES" means Odyssey Investment Partners Fund, LP, Odyssey
Coinvestors, LLC, and all Permitted Odyssey Transferees.
"OTHER HEDGING AGREEMENTS" means any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency or
commodity values.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
thereto.
"PERMITTED ODYSSEY TRANSFEREE" means, with respect to each of Odyssey
Investment Partners Fund, LP and Odyssey Coinvestors, LLC (each, an "ODYSSEY
STOCKHOLDER"), (i) any general or limited partner or manager of such Odyssey
Stockholder (each, an "ODYSSEY PARTNER"), (ii) any corporation, partnership,
limited liability company or other entity that is an Affiliate of such Odyssey
Stockholder or of any Odyssey Partner (collectively, "ODYSSEY AFFILIATES"),
(iii) any managing director, member, general partner, director, limited partner,
officer or employee of (a) such Odyssey Stockholder, (b) such Odyssey Partner,
or (c) any Odyssey Affiliate of such Odyssey Stockholder or Odyssey Partner or
of an Odyssey Affiliate, or the heirs, executors, administrators, testamentary
trustees, legatees or beneficiaries of any of the foregoing Persons referred to
in this clause (iii) (collectively, "ODYSSEY ASSOCIATES"), (iv) any trust, the
beneficiaries of which, or a corporation, limited liability company or
partnership, the stockholders, members or general or limited partners of which,
include only such Odyssey Stockholder, Odyssey Affiliates, Odyssey Associates,
or their spouses, parents or lineal descendants, and (v) a voting trustee for
one or more of such Odyssey Stockholder, Odyssey Affiliates or Odyssey
Associates; PROVIDED, HOWEVER, that in no event shall the Issuer or any of its
Subsidiaries be deemed a Permitted Odyssey Transferee.
"PIK NOTES INDENTURE" means that certain Indenture dated as of
December 3, 1998 between the Issuer and State Street Bank and Trust Company, as
Trustee, relating to $20,000,000 of 12% Pay-in-Kind Notes due 2009, as in effect
on the date of this Agreement (including as amended in connection with the sale
and purchase of the Preferred Stock).
"PERSON" means any corporation, association, joint venture,
partnership, limited liability company, organization, business, individual,
trust, government or agency or political subdivision thereof or any other legal
entity.
"PLAN" means any "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA that is subject to the provisions of Title IV of ERISA
(other than a Multiemployer Plan) and to which the Issuer or any ERISA Affiliate
is reasonably expected to have any liability.
"PREFERRED STOCK" has the meaning set forth in SECTION 2.1.
"PRO FORMA BALANCE SHEET" has the meaning set forth in SECTION 4.10.
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"PROHIBITED TRANSACTION" means any transaction described in (i) Section
406 of ERISA that is not exempt by reason of Section 408 of ERISA or by reason
of a Department of Labor prohibited transaction individual or class exemption or
(ii) Section 4975(c) of the Internal Revenue Code that is not exempt by reason
of Section 4975(c)(2) or 4975(d) of the Internal Revenue Code.
"PROJECTIONS" has the meaning set forth in SECTION 4.10.
"REPORTABLE EVENT" means (i) any "reportable event" within the meaning
of Section 4043(c) of ERISA for which the 30-day notice under Section 4043(a) of
ERISA has not been waived by the PBGC (including any failure to meet the minimum
funding standard of, or timely make any required installment under, Section 412
of the Internal Revenue Code or Section 302 of ERISA, regardless of the issuance
of any waivers in accordance with Section 412(d) of the Internal Revenue Code),
(ii) any "reportable event" subject to advance notice to the PBGC under Section
4043(b)(3) of ERISA, (iii) any application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the Internal Revenue Code,
and (iv) a cessation of operations in the circumstances described in Section
4062(e) of ERISA.
"REQUIREMENT OF LAW" means, with respect to any Person, the charter,
articles or certificate of incorporation (including any certificate of
designations filed in connection therewith), formation or organization,
partnership or operating agreements and bylaws or other organizational or
governing documents of such Person, and any statute, law, treaty, rule,
regulation, order, decree, writ, injunction or determination of any arbitrator
or court or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject, and, with respect to the Issuer and its Subsidiaries,
otherwise pertaining to any or all of the transactions contemplated by this
Agreement, the other Investment Documents and the Asset Purchase Documents.
"SECURITIES" means the Preferred Stock, the Warrants and the Warrant
Shares.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"SENIOR OBLIGATIONS" means all Obligations outstanding under: (i) the
Credit Documents (other than to any Odyssey Party), (ii) each Interest Rate
Protection Agreement and Other Hedging Agreement entered into with a lender
under the Credit Documents (even if any such lender subsequently ceases to be a
lender under the Credit Documents for any reason), or any affiliate of such
lender, and (iii) the PIK Notes Indenture.
"SOLVENT" means as to any Person on any particular date, that such
Person (i) does not have unreasonably small capital to carry on its business as
now conducted and as presently proposed to be conducted, (ii) is able to pay its
debts as they become due in the ordinary course of business, (iii) has assets
with a present fair saleable value taken on a going concern basis greater than
its total stated liabilities and identified contingent liabilities, including
any amounts necessary to satisfy preferential rights of shareholders and (iv)
does not intend to, and does not believe that it shall, incur debts and
liabilities beyond its ability to pay such debts and liabilities as they mature.
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"SUBSIDIARY" means, with respect to any Person, any corporation or
other Person of which more than 50% of the outstanding Capital Stock having
ordinary voting power to elect a majority of the board of directors, board of
managers or other governing body of such Person, is at the time, directly or
indirectly, owned or controlled by such Person and one or more of its other
Subsidiaries or a combination thereof (irrespective of whether, at the time,
securities of any other class or classes of any such corporation or other Person
shall or might have voting power by reason of the happening of any contingency).
When used without reference to a parent entity, the term "Subsidiary" shall be
deemed to refer to a Subsidiary of the Issuer.
"TRANSACTION DOCUMENTS" means (i) this Agreement and the other
Investment Documents, (ii) the Credit Documents, (iii) the Asset Purchase
Documents, (iv) the First Supplemental Indenture dated as of the date hereof
between the Issuer and State Street Bank and Trust Company, as trustee, entered
into in connection with the notes issued under the PIK Notes Indenture, and (v)
all other agreements, exhibits, documents and schedules related thereto.
"UNFUNDED PENSION LIABILITY" shall mean, with respect to any Plan or
Multiemployer Plan, the excess of its benefit liabilities under Section
4001(a)(16) of ERISA over the current value of its assets, determined in
accordance with the applicable assumptions used for funding under Section 412 of
the Internal Revenue Code for the applicable plan year.
"WARRANTS" has the meaning given to it in SECTION 2.1.
"WARRANT SHARES" means the shares of the Issuer's common stock into
which the Warrants are exercisable.
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