Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
between
PHASE II ACQUISITION CORP.
and
TRANSDIGM HOLDING COMPANY
Dated as of August 3, 1998
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TABLE OF CONTENTS
Page
1. Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.3 Effective Time of the Merger . . . . . . . . . . . . . . . . . . .1
1.4 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . .2
2. The Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . .2
2.1 Certificate of Incorporation . . . . . . . . . . . . . . . . . . .2
2.2 By-laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.3 Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.4 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
3. Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . .2
3.1 Merger Consideration . . . . . . . . . . . . . . . . . . . . . . .2
3.2 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.3 No Further Rights. . . . . . . . . . . . . . . . . . . . . . . . .7
3.4 Closing of the Company's Transfer Books. . . . . . . . . . . . . .7
4. Representations and Warranties of the Company. . . . . . . . . . . . . .7
4.1 Corporate Status and Authority . . . . . . . . . . . . . . . . . .7
4.2 No Conflicts; Consents and Approvals, etc. . . . . . . . . . . . .8
4.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . .8
4.4 Ownership of TransDigm Inc . . . . . . . . . . . . . . . . . . . .9
4.5 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . .9
4.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 10
4.7 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . 10
4.8 Real Property; Assets. . . . . . . . . . . . . . . . . . . . . . 11
4.9 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.10 Employment Agreements and Benefits, etc.. . . . . . . . . . . . 14
4.10.1 Employment Agreements and Plans. . . . . . . . . . . . . 14
4.10.2 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.10.3 Tax Qualification. . . . . . . . . . . . . . . . . . . . 15
4.10.4 Labor Matters. . . . . . . . . . . . . . . . . . . . . . 16
4.11 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 16
4.12 Governmental Authorizations; Compliance with Law. . . . . . . . 17
4.13 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.14 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.15 Absence of Changes. . . . . . . . . . . . . . . . . . . . . . . 20
4.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.17 Environmental Matters. . . . . . . . . . . . . . . . . . . . . 23
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4.18 Banking and Agency Arrangements . . . . . . . . . . . . . . . . 24
4.19 Affiliate Transactions. . . . . . . . . . . . . . . . . . . . . 24
4.20 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.21 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.22 Products Liability. . . . . . . . . . . . . . . . . . . . . . . 25
4.23 Customers and Suppliers . . . . . . . . . . . . . . . . . . . . 26
4.24 Prohibited Payments . . . . . . . . . . . . . . . . . . . . . . 26
4.25 Additional Agreements . . . . . . . . . . . . . . . . . . . . . 26
5. Representations and Warranties of Buyer. . . . . . . . . . . . . . . . 27
5.1 Corporate Status and Authority . . . . . . . . . . . . . . . . . 27
5.2 No Conflicts; Consents and Approvals, etc. . . . . . . . . . . . 27
5.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.4 Financial Ability to Perform . . . . . . . . . . . . . . . . . . 28
5.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.6 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6. Additional Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 28
6.1 Conduct of Business Pending the Merger . . . . . . . . . . . . . 28
6.2 Satisfaction of Closing Conditions . . . . . . . . . . . . . . . 29
6.3 Access and Information . . . . . . . . . . . . . . . . . . . . . 30
6.4 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.5 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.6 Indemnification of Officers and Directors. . . . . . . . . . . . 31
6.7 Contact with Customers and Suppliers . . . . . . . . . . . . . . 31
6.8 Stockholders Approval. . . . . . . . . . . . . . . . . . . . . . 31
6.9 No Solicitation; Notification. . . . . . . . . . . . . . . . . . 31
6.10 Notice of Developments. . . . . . . . . . . . . . . . . . . . . 32
6.11 Novation Agreements . . . . . . . . . . . . . . . . . . . . . . 32
7. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2 Conditions to Obligations of Both Parties. . . . . . . . . . . . 32
7.2.1 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2.2 Consents. . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2.3 No Injunction . . . . . . . . . . . . . . . . . . . . . . 33
7.3 Conditions to Obligations of the Company . . . . . . . . . . . . 33
7.3.1 Representations and Warranties of Buyer . . . . . . . . . 33
7.3.2 Officer's Certificate . . . . . . . . . . . . . . . . . . 33
7.3.3 Outstanding Debt. . . . . . . . . . . . . . . . . . . . . 33
7.3.4 Transaction Costs . . . . . . . . . . . . . . . . . . . . 33
7.3.5 Stockholders' Agreement . . . . . . . . . . . . . . . . . 33
7.4 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . 33
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7.4.1 Representations and Warranties of the Company . . . . . . 34
7.4.2 Officer's Certificate . . . . . . . . . . . . . . . . . . 34
7.4.3 Directors . . . . . . . . . . . . . . . . . . . . . . . . 34
7.4.4 FIRPTA Certificate. . . . . . . . . . . . . . . . . . . . 34
7.4.5 Financial Advisory and Stockholders' Agreement. . . . . . 34
7.4.6 Financing . . . . . . . . . . . . . . . . . . . . . . . . 35
7.4.7 Transaction Costs . . . . . . . . . . . . . . . . . . . . 35
7.4.8 Minimum Net Worth . . . . . . . . . . . . . . . . . . . . 35
7.4.9 Approvals . . . . . . . . . . . . . . . . . . . . . . . . 35
7.4.10 Stockholders' Agreement. . . . . . . . . . . . . . . . . 35
7.4.11 Material Adverse Change. . . . . . . . . . . . . . . . . 35
8. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.1 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 35
8.3 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.5 Further Actions. . . . . . . . . . . . . . . . . . . . . . . . . 37
8.6 Non-Survival of Representations, Warranties and
Agreements; No Recourse. . . . . . . . . . . . . . . . . . . . 37
8.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.8 Assignment and Amendments. . . . . . . . . . . . . . . . . . . . 39
8.9 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . 39
8.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.11 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . 39
8.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.13 Consent to Jurisdiction, etc. . . . . . . . . . . . . . . . . . 40
8.14 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . 41
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AGREEMENT AND PLAN OF MERGER, dated as of August 3, 1998, between
PHASE II ACQUISITION CORP., a Delaware corporation ("BUYER"), and TRANSDIGM
HOLDING COMPANY, a Delaware corporation (the "COMPANY").
WHEREAS, the respective Boards of Directors of Buyer and the Company
have approved the merger of Buyer with and into the Company (the "MERGER"), upon
the terms and subject to the conditions set forth herein.
WHEREAS, Buyer is unwilling to enter into this Agreement unless,
contemporaneously with the execution and delivery of this Agreement, Xxxxx
Investment Associates IV, L.P., Xxxxx Equity Partners II, L.P. and the Buyer
enter into a Voting Agreement and Messrs. Peacock and Xxxxxx enter into an
agreement in the form of Exhibit A hereto and such persons have agreed to enter
into, execute and deliver such agreements;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
1. MERGER.
1.1 THE MERGER . Upon the terms and subject to the conditions
hereof, at the Effective Time (as defined in Section 1.3), Buyer shall be merged
with and into the Company and the separate existence of Buyer shall thereupon
cease, and the Company shall continue as the surviving corporation in the Merger
(the "SURVIVING CORPORATION") under the laws of the State of Delaware.
1.2 CLOSING . Unless this Merger Agreement shall have been
terminated pursuant to Section 8.3, and subject to the satisfaction or waiver of
the conditions set forth in Section 7, the closing of the Merger will take place
as promptly as practicable (and in any event within two business days) after
satisfaction or waiver of the condition set forth in Section 7.2.1, at the New
York offices of Xxxxxx & Xxxxxxx unless another date, time or place is agreed to
in writing by the parties hereto (the "CLOSING DATE").
1.3 EFFECTIVE TIME OF THE MERGER . The Merger shall become effective
upon the filing of a Certificate of Merger with the Secretary of State of
Delaware in accordance with the provisions of the Delaware General Corporation
Law (the "DGCL"), or at such other time as Buyer and the Company shall agree
should be specified in the Certificate of Merger, which filling shall be made as
soon as practicable on the Closing Date. When used in this Merger Agreement,
the term "EFFECTIVE TIME" shall mean the time at which such certificate is
accepted for filing by the Secretary of State of Delaware or such time as
otherwise specified in the Certificate of Merger.
1.4 EFFECT OF MERGER . The Merger shall, from and after the
Effective Time, have all the effects provided by the DGCL. If at any time after
the Effective Time any
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further action is necessary to vest in the Surviving Corporation the title to
any property or rights of Buyer or the Company, the proper officers and
directors of the Surviving Corporation shall be fully authorized in the name of
each of Buyer or the Company, as the case may be, to take any and all such
lawful action.
2. THE SURVIVING CORPORATION.
2.1 CERTIFICATE OF INCORPORATION . The Certificate of Incorporation
of the Company as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation after the Effective
Time.
2.2 BY-LAWS . The By-laws of the Company as in effect immediately
prior to the Effective Time shall be the By-laws of the Surviving Corporation,
until thereafter changed or amended as provided therein or by applicable law.
2.3 DIRECTORS . The directors of Buyer immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
2.4 OFFICERS . The officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
3. CONVERSION OF SHARES.
3.1 MERGER CONSIDERATION . As of the Effective Time, by virtue of
the Merger and without any action on the part of any stockholder of the Company
or Buyer:
(a) The shares of Common Stock, par value $.01 per share, of Buyer
issued and outstanding immediately prior to the Effective Time shall
automatically be converted into and thereafter represent a number of
validly issued, fully paid and non-assessable shares of common stock, par
value $.01 per share, of the Surviving Corporation (the "SURVIVING
CORPORATION COMMON STOCK") equal to the quotient of the Odyssey Equity
Investment divided by the Per Share Merger Consideration.
(b) All shares of Common Stock, $.01 par value, of the Company
("VOTING COMMON STOCK") and all shares of Class A Common Stock, $.01 par
value, of the Company ("NONVOTING COMMON STOCK," and together with Voting
Common Stock, "COMMON STOCK") which are held by the Company shall be
cancelled and retired and shall cease to exist, and no consideration shall
be delivered in exchange therefor.
(c) Each share of Common Stock issued and outstanding immediately
prior to the Effective Time, other than those to which Section 3.1(b) or
Section 3.1(d) applies
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and other than any shares held by stockholders referred to in Section
3.1(g), shall be converted into and represent the right to receive an
amount in cash (such amount in cash being referred to herein as the "PER
SHARE MERGER CONSIDERATION") equal to the quotient of (A) the Merger
Consideration PLUS the Aggregate Exercise Proceeds PLUS the Option Rollover
Amount, PLUS the Xxxxx Rollover Amount, MINUS the Transaction Costs divided
by (B) the total number of Outstanding Shares.
The following terms used in the definition of Per Share Merger
Consideration shall have the following meanings:
"MERGER CONSIDERATION" means $365 million MINUS the Xxxxx Rollover
Amount MINUS the Option Rollover Amount.
"AGGREGATE EXERCISE PROCEEDS" means the aggregate exercise price
payable upon exercise of the Options (as defined below in Section 3.1(e))
which are to be cancelled pursuant to Section 3.1(e) hereof and all of the
Warrants (as defined below in Section 3.1(f)).
"OPTION ROLLOVER AMOUNT" means the gross amount of the Options listed
on Schedule 3.1(e).
"XXXXX ROLLOVER AMOUNT" means (A) the quotient of the Odyssey Equity
Investment Amount divided by .925 MINUS (B) the Odyssey Equity Investment
Amount.
"TRANSACTION COSTS" means the fees and expenses listed on Schedule
3.1(c).
"OUTSTANDING SHARES" means 303,294.4 (the number of shares of common
stock of the Company on a fully-diluted basis).
"ODYSSEY EQUITY INVESTMENT AMOUNT" shall equal $90 million or such
other amount invested by Odyssey in the Buyer immediately prior to the
Effective Time but in no event shall such amount exceed $100 million
without the Company's consent in its sole discretion.
(d) A number of shares of Common Stock held by Xxxxx Investment
Associates IV, L.P. ("KIA IV") and Xxxxx Equity Partners II, L.P. ("KEP
II") equal to the quotient of the Xxxxx Rollover Amount divided by the Per
Share Merger Consideration (each, a "ROLLOVER SHARE") shall be converted
into and become one fully paid and nonassessable share of common stock,
$.01 par value, of the Surviving Corporation. Such conversion shall be
effected such that KIA IV and KEP II will own 94.39% and 5.61% of such
Rollover Shares, rounded to the nearest whole share; provided that in no
event shall the number of Rollover Shares exceed the amount equal to the
quotient of the Xxxxx Rollover Amount divided by the Per Share Merger
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Consideration. All Rollover Shares shall be subject to the stockholders
agreement referred to in Sections 7.3.5 and 7.4.10.
(e) Each outstanding option to purchase shares of Common Stock
granted under the Company's 1994 Stock Incentive Plan (each, an "OPTION")
to any current or former employee of the Company or any subsidiary thereof
(each, an "OPTION HOLDER"), whether or not then exercisable, shall be
cancelled and, in exchange therefor, each Option Holder shall be entitled
to a cash payment (the "OPTION CANCELLATION PAYMENT") in respect of each
such cancelled Option held by each such Option Holder equal to the product
of (I) the number of shares of Common Stock covered by such Option
immediately prior to the Effective Time multiplied by (II) the excess of
(X) the Per Share Merger Consideration over (Y) the per share exercise
price under such Option (the "NET VALUE"); PROVIDED, HOWEVER, that with
respect to the individuals listed on Schedule 3.1(e) the Options held by
each such individual shall be cancelled only to the extent from and after
the Effective Time each such individual shall retain Options with an
aggregate Net Value not less than the amount set forth opposite such
person's name on Schedule 3.1(e). From and after the Effective Time,
pursuant to the terms of such stock option agreements, each such Option not
cancelled shall represent an option to purchase an equal number of shares
of Surviving Corporation Common Stock. Schedule 3.1(e) may be changed from
time to time to add additional optionholders or to increase the net amount
of any Options not being cancelled. The Option Cancellation Payments shall
be subject to all applicable withholding and employment taxes and shall be
paid to the Option Holders as soon as practicable following the Effective
Time. Prior to the Effective Time, the Board of Directors shall adopt such
resolutions or take such actions as are necessary, subject if necessary, to
obtaining the consents of the holders thereof, to carry out the terms of
this Section 3.1(e).
(f) Each warrant to purchase shares of Common Stock granted under the
Company's Warrant Agreement (the "WARRANT AGREEMENT"), dated September 30,
1993 (each, a "WARRANT"), to any person (each, a "WARRANT HOLDER"), shall
be cancelled and, in exchange therefor, each Warrant Holder shall be
entitled to a cash payment (the "WARRANT CANCELLATION PAYMENT") in respect
of each such cancelled Warrant equal to the product of (I) the number of
shares of Common Stock covered by such Warrant immediately prior to the
Effective Time multiplied by (II) the excess of (X) the Per Share Merger
Consideration over (Y) the per share exercise price under such Warrant.
Prior to the Effective Time, the Board of Directors shall adopt such
resolutions or take such actions as are necessary, subject to obtaining the
consents of the holders thereof, to carry out the terms of this Section
3.1(f).
(g) Notwithstanding anything to the contrary herein, shares of Common
Stock held by stockholders who dissent from the Merger pursuant to Section
262 of the DGCL shall not be converted as of the Effective Time into a
right to receive the Per
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Share Merger Consideration, but instead shall have such rights as may be
available under the DGCL.
3.2 PAYMENT . (a) Pursuant to an agreement in form and substance
acceptable to the Company to be entered into prior to the Effective Time between
Buyer and a disbursing agent reasonably satisfactory to Buyer and the Company
(the "DISBURSING AGENT"), at the Effective Time, Buyer shall make available to
the Disbursing Agent the Merger Consideration MINUS the Transaction Costs (the
"PAYMENT FUND"). All payments for shares of Common Stock, Options and Warrants
which are made in accordance with the terms hereof shall be deemed to have been
made in full satisfaction of all rights pertaining to such shares, Options and
Warrants, as the case may be.
(b) Promptly after the Effective Time, Buyer shall cause the
Disbursing Agent to send a notice and a letter of transmittal to each holder of
certificates formerly evidencing (I) shares of Common Stock (other than
certificates representing Rollover Shares, shares of Common Stock to be
cancelled pursuant to Section 3.1(b) and held by stockholders referred to in
Section 3.1(g) (the "DISSENTING SHARES"), (II) Options to be cancelled pursuant
to Section 3.1(e) and (III) Warrants (collectively, the "CERTIFICATES") advising
holders of such Certificates of the effectiveness of the Merger and the
procedure for surrendering to the Disbursing Agent such Certificates for
exchange into the Per Share Merger Consideration, the Option Cancellation
Payment or the Warrant Cancellation Payment, as the case may be, and that
delivery shall be effected, and risk of loss and title shall pass, only upon
proper delivery to the Disbursing Agent of the Certificates and a duly executed
letter of transmittal and any other required documents of transfer. Each holder
of the Certificates, upon surrender thereof to the Disbursing Agent together
with such letter of transmittal (duly executed) and any other required documents
of transfer, shall be entitled to receive in exchange therefor the Per Share
Merger Consideration, the Option Cancellation Payment or the Warrant
Cancellation Payment, as the case may be. Upon such surrender, the Disbursing
Agent shall promptly deliver the merger consideration due hereunder (less any
applicable withholding tax) in accordance with the instructions set forth in the
related letter of transmittal, and the Certificates so surrendered shall
promptly be cancelled. Until surrendered, the Certificates (other than those
evidencing Dissenting Shares) shall be deemed for all purposes to evidence only
the right to receive the merger consideration due hereunder, or, in the case of
Dissenting Shares, the fair value of such Dissenting Shares. No interest shall
accrue or be paid on any cash payable upon the surrender of the Certificates
(other than Dissenting Shares to the extent required by the DGCL).
(c) If the merger consideration due hereunder is to be delivered to a
person other than the person in whose name the Certificates surrendered in
exchange therefor are registered, it shall be a condition to the payment of such
merger consideration that the Certificates so surrendered shall be properly
endorsed or accompanied by appropriate powers and otherwise in proper form for
transfer, that such transfer otherwise be proper and that the person requesting
such transfer pay to the Disbursing Agent any transfer or
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other taxes payable by reason of the foregoing or establish to the satisfaction
of the Disbursing Agent that such taxes have been paid or are not required to be
paid.
(d) Unless required otherwise by applicable law, any portion of the
Payment Fund that remains undistributed to holders of the Certificates 180 days
after the Effective Time shall be delivered to the party who provided such funds
to the Disbursing Agent and any Certificate holder who has not theretofore
complied with the provisions of this Section 3 shall thereafter look only to the
Surviving Corporation for payment of any merger consideration due hereunder, to
which he is entitled pursuant to this Section 3. Neither Buyer nor the
Disbursing Agent shall be liable to any such Certificate holder for any cash
from the Payment Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
3.3 NO FURTHER RIGHTS . From and after the Effective Time, holders
of certificates theretofore evidencing shares of Common Stock, other than
Rollover Shares, shall cease to have any rights as stockholders of the Company,
except as provided herein or by law.
3.4 CLOSING OF THE COMPANY'S TRANSFER BOOKS . At the Effective Time,
the stock transfer books of the Company shall be closed and no transfer of
shares of Common Stock shall be made thereafter. If after the Effective Time
certificates for shares of Common Stock are presented to Buyer or the Surviving
Corporation, they shall be cancelled and exchanged as provided in this Section
3.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Buyer as follows, except as set forth in the
schedules delivered by the Company to Buyer on or prior to the date of execution
of this Merger Agreement:
4.1 CORPORATE STATUS AND AUTHORITY . The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and is duly qualified to do business as a foreign corporation
in the jurisdictions in which the Company conducts its business, except where
the failure to so qualify will not have a Material Adverse Effect (as defined
below) on the Company and has the corporate power and authority to execute and
deliver this Merger Agreement and perform its obligations hereunder and to
conduct its business and to own, use or lease its properties and assets as now
conducted, owned, used or leased. The execution and delivery of this Merger
Agreement and the consummation of the transactions contemplated hereby by the
Company have been duly and validly authorized and approved by the Company's
Board of Directors and by the holders of the required percentage of Common Stock
and no other corporate or stockholder proceedings on the part of the Company are
necessary to authorize or approve this Merger Agreement or to consummate the
transactions contemplated hereby. This Merger Agreement has been duly executed
and delivered by the Company, and assuming the due authorization, execution and
delivery by Buyer, constitutes the valid and binding obligation of the
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Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by general principles of equity or principles
applicable to the enforcement of creditors rights generally. The Company has
delivered to Buyer true, correct and complete copies of its and its
subsidiaries' certificates of incorporation and by-laws (in each case, as
amended to date). The Company and its subsidiaries are not in default or in
violation of any provision of their certificates of incorporation or by-laws.
For the purposes of this Merger Agreement, "MATERIAL ADVERSE EFFECT" or a
similar phrase shall mean, with respect to any person, any material adverse
effect on (I) the business, operations, assets (taken as a whole), liabilities
(taken as a whole), financial condition or results of operations of such person
and its subsidiaries, taken as a whole or, (II) the right or ability of such
person or its subsidiaries to consummate any of the transactions contemplated
hereby. "MATERIAL ADVERSE CHANGE" shall have a corresponding definition.
4.2 NO CONFLICTS; CONSENTS AND APPROVALS, ETC. (a) Except as set
forth in Schedule 4.2(a), the execution and delivery of this Merger Agreement
and the performance of its obligations hereunder will not result in (I) any
conflict with the certificate of incorporation or by-laws of the Company or any
of its subsidiaries, (II) subject to obtaining the consents referred to in
Section 4.2(b), any breach or violation of or default under (A) any law,
statute, regulation, rule, judgment, order, decree, license, permit or other
governmental authorization or (B) any Contract (as defined), mortgage, lease,
agreement, deed of trust, indenture or any other instrument, in each case, to
which the Company or any of its subsidiaries is a party or by which any of them
or their respective properties or assets are bound, or (III) the creation or
imposition of any liens, security interests, adverse claims, charges or
encumbrances ("LIENS") other than Liens created by or resulting from the actions
of Buyer or any of its affiliates, except, in the case of subsections (ii) and
(iii), for such breaches, violations or defaults and such Liens which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
(b) Except as set forth in Schedule 4.2(b), no consent, approval or
authorization of or filing with any third party or any governmental authority is
required on the part of the Company or any of its subsidiaries in connection
with the execution and delivery of this Merger Agreement or the consummation of
the transactions contemplated hereby, except (I) filings required with respect
to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX XXX") and
(II) filings, consents or approvals which, if not made or obtained, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
4.3 CAPITALIZATION . The authorized capital stock of the Company
consists of 900,000 shares of Voting Common Stock, par value $0.01 per share,
236,120 of which shares are issued and outstanding and 100,000 shares of
Nonvoting Common Stock, par value $0.01 per share, 13,750 of which are issued
and outstanding. The shares of the Voting Common Stock and Nonvoting Common
Stock have been duly authorized and
11
validly issued and are fully paid and non-assessable and free of pre-emptive
rights. Except as set forth in this Section 4.3 or on Schedule 4.3 and except
for (I) the Warrants set forth on Schedule 4.3 to purchase 15,957.40 shares of
Nonvoting Common Stock granted under the Warrant Agreement dated September 30,
1993 (subject to adjustment and, under certain circumstances described in the
Warrants, their conversion to the rights to purchase Voting Common Stock), and
(II) the Options set forth on Schedule 4.3 to purchase 37,467 shares of Voting
Common Stock granted under the 1994 Stock Incentive Plan, there are no (I)
outstanding Equity Securities (as defined below) of the Company or (II)
agreements, commitments or obligations of any kind or character for (A) the
issuance of Equity Securities of the Company or (B) the repurchase, redemption
or other acquisition of any Equity Securities of the Company. Other than as set
forth on Schedule 4.3, there are no shareholder agreements, voting trusts,
proxies or other agreements or understandings with respect to the voting of any
Equity Securities in the Company. The only indebtedness for borrowed money is
the Amended and Restated Credit Agreement, dated as of August 8, 1997, among
TransDigm Inc., the Lenders named therein, the Chase Manhattan Bank as
Administrative Agent, Collateral Agent and Issuing Bank, and Chase Securities
Inc. as Arranger (the "CREDIT AGREEMENT"). The Credit Agreement is prepayable
without more than two business days notice and without the payment of any
penalty. For purposes of this Merger Agreement, "EQUITY SECURITIES" shall mean
(I) shares of capital stock or other equity securities, (II) subscriptions,
calls, warrants, options or commitments of any kind or character relating to, or
entitling any person or entity to purchase or otherwise acquire, any capital
stock or other equity securities and (III) securities convertible into or
exercisable or exchangeable for shares of capital stock or other equity
securities.
4.4 OWNERSHIP OF TRANSDIGM INC . TransDigm Inc. is a direct
wholly-owned subsidiary of the Company.
4.5 SUBSIDIARIES . (a) The authorized capital stock __ each of the
Company's subsidiaries is set forth on Schedule 4.5. Except as set forth in
Schedule 4.5, all such issued and outstanding shares are owned directly or
indirectly by the Company, free and clear of all Liens, and have been duly
authorized and validly issued and are fully paid and non-assessable. Except as
set forth in Schedule 4.5, there are no outstanding Equity Securities or other
rights, obligations, commitments or agreements of any kind for the purchase,
redemption or acquisition from, or the sale or issuance by, the Company or any
of its subsidiaries of any Equity Securities of any of such subsidiaries, and no
authorization therefor has been given. The Company does not have any equity
interest or investment in any corporation, partnership, joint venture,
association or other business organization other than as set forth on Schedule
4.5. There are no shareholder agreements, voting trusts, proxies or other
agreements or understandings with respect to the voting of any Equity Securities
in any subsidiaries of the Company.
(b) Each of the Company's subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation,
12
which is set forth on Schedule 4.5, and has all requisite corporate power and
authority to conduct its business and to own, use or lease its properties and
assets, as now conducted, owned, used or leased, and is duly qualified to do
business in each jurisdiction in which the failure to be so qualified would
reasonably be likely to have a Material Adverse Effect on such subsidiary.
4.6 FINANCIAL STATEMENTS . The Company has delivered to Buyer copies
(which copies are complete and correct) of (I) the audited balance sheets and
related statements of income and cash flows of the Company and its subsidiaries
on a consolidated basis for the fiscal years ending September 30, 1995, 1996 and
1997 (the "AUDITED FINANCIAL STATEMENTS") and (II) the unaudited balance sheet
and related statements of income and cash flows of the Company and its
subsidiaries on a consolidated basis for the nine months ended June 26, 1998
(the "UNAUDITED FINANCIAL STATEMENTS", together with the Audited Financial
Statements, the "FINANCIAL STATEMENTS"). The Financial Statements present
fairly in all material respects the financial condition and results of
operations of the Company and its subsidiaries on a consolidated basis as of the
dates and for the periods indicated. The Audited Financial Statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied throughout the periods covered thereby. The Unaudited
Financial Statements have been prepared in accordance with GAAP and on a
consistent basis with the Audited Financial Statements, except as set forth in
Schedule 4.6.
4.7 ABSENCE OF UNDISCLOSED LIABILITIES . Except for liabilities
reflected or reserved against in the Audited Financial Statements for the fiscal
year ending September 30, 1997 and the Unaudited Financial Statements or
reflected in the schedules hereto, none of the Company or any of its
subsidiaries has any liabilities or obligations (absolute or accrued or
contingent, whether accrued or unaccrued and whether due or to become due) other
than liabilities and obligations incurred in the ordinary course of business
since June 26, 1998 or liabilities or obligations which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company and its subsidiaries taken as a whole.
4.8 REAL PROPERTY; ASSETS . (a) Schedule 4.8(a) lists all real
property owned by the Company or its subsidiaries (the "OWNED REAL PROPERTY") or
leased by the Company or its subsidiaries (the "LEASED REAL PROPERTY," and
together with Owned Real Property, the "REAL PROPERTY"). Except as set forth in
Schedule 4.8(a), the Company and its subsidiaries have good and marketable title
to the Owned Real Property listed on Schedule 4.8(a) and valid and subsisting
leasehold interests in the Leased Real Property listed on Schedule 4.8(a), in
each case, free and clear of all Liens, except for (I) Liens reflected in
Schedule 4.8(a), (II) Liens for taxes and other governmental charges and
assessments which are not yet due and payable or which are being contested in
good faith by appropriate proceedings if a reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made therefor,
(III) Liens of carriers, warehousemen, mechanics and materialmen and other like
Liens arising in the ordinary course of
13
business for sums that are not yet due and payable, (IV) easements, rights of
way, title imperfections and restrictions, zoning ordinances and other similar
encumbrances affecting the Real Property, in each case, which do not interfere
with the ordinary conduct of the business of the Company or its subsidiaries and
do not materially detract from the value of the property to which such
encumbrance relates, (V) statutory Liens in favor of lessors arising in
connection with any property leased to the Company or any of its subsidiaries
which do not interfere with the ordinary conduct of the business of the Company
or its subsidiaries and do not materially detract from the value of the property
to which such encumbrance relates and (VI) Liens reflected on the face of or in
the notes to the Financial Statements ("PERMITTED LIENS"). The Real Property
and Leased Personal Property is used and operated (I) in conformity with all
applicable leases, and (II) in conformity with all applicable contracts,
commitments, licenses and permits, to the extent that the failure so to conform
would not individually or in the aggregate, have a Material Adverse Effect on
the Company.
(b) Except as set forth in Schedule 4.8(b), the Company and its
subsidiaries have legal and beneficial ownership of all of their respective
tangible personal property and assets included in the June 26, 1998 balance
sheet, except for properties and assets disposed of in the ordinary course of
business since the date of such balance sheet and listed on Schedule 4.8, which
Schedule shall not include inventory sold pursuant to contracts with customers,
in each case, free and clear of all Liens, except for Permitted Liens. Except
as set forth on Schedule 4.8(b), the Company and its subsidiaries own or have
the right to use all of the tangible personal properties and assets necessary
for the conduct of their business as currently conducted. Each such property or
asset has been maintained in accordance with normal industry practice, is in
good operating condition and repair (subject to normal wear and tear and any
improvements or replacements included within the Company's Capital Expenditure
Plan (as defined herein)), and is suitable for the purpose for which it is
currently used.
(c) EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE
PARTIES EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY OR REPRESENTATION AS TO
CONDITION, MERCHANTABILITY OR SUITABILITY AS TO ANY OF THE ASSETS OF THE COMPANY
AND ITS SUBSIDIARIES AND, EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS
AGREEMENT, IT IS UNDERSTOOD THAT BUYER TAKES SUCH ASSETS "AS IS" AND "WHERE IS."
4.9 CONTRACTS . Schedule 4.9 lists all Contracts (as defined below)
of the following types to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or any of their
respective properties is bound as of the date hereof (other than real property
leases, employment-related agreements, and intellectual property licenses, which
are provided for in Sections 4.8, 4.10 and 4.11, respectively): (I) joint
venture and limited partnership agreements, (II) mortgages, indentures, loan or
credit agreements, security agreements and other Contracts (A) relat-
14
ing to the borrowing of money or extension of credit, (B) under which the
Company or any of its subsidiaries has created, incurred, assumed or guaranteed
(or may create, incur, assume or guarantee) indebtedness for borrowed money, (C)
constituting a capitalized lease obligation, (D) under which the Company or any
of its subsidiaries has granted (or may grant) a security interest or lien on
any of the assets of the Company or any of its subsidiaries or (E) under which
the Company or any of its subsidiaries has incurred any obligations for any
performance bonds, payment bonds, bid bonds, surety bonds, letters of credit,
guarantees or similar instruments, (III) each distribution, franchise, license,
sales, commission, consulting, agency, advertising or marketing Contract, except
for such Contracts that are cancelable on not more than 30 days' notice by the
Company or its subsidiaries without penalty or increased cost, (IV) each
Contract that involves performance of services or delivery or purchase of goods
or materials by or to the Company or any of its subsidiaries of an amount or
value in excess of $250,000 over the life of such Contract, (V) each Contract
providing for payment in excess of $250,000 over the life of such Contract,
except for such Contracts that are cancelable on not more than 30 days' notice
to the Company or its subsidiaries without penalty, termination payment or
increased cost, (VI) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Contract affecting the
ownership of, leasing of, title to, use of, or any leasehold or other interest
in, any personal property (except leases and installment and conditional sales
agreements having a value per item or aggregate payments of less than $75,000
per year, (VII) each Contract containing covenants that in any way purport to
restrict the business activity of the Company or limit the freedom of the
Company or any of its subsidiaries or any officer, director, stockholder or
affiliate thereof to engage in any line of business or to compete with any
person, (VIII) each Contract for capital expenditures in excess of $250,000,
(IX) each Contract (including, without limitation, a subcontract) with the
United States, state or local government or any agency or department thereof, as
of April 30, 1998 ("GOVERNMENT CONTRACTS"), (X) each guaranty of, or agreement
to become liable for, any obligations of another person and (xi) each amendment,
supplement, and modification (whether oral or written) in respect of any of the
foregoing (the "MATERIAL CONTRACTS") provided, however, that Schedule 4.9 does
not include purchase orders from nongovernmental customers. The Company has
furnished or made available to Buyer copies of all of the Contracts listed on
Schedules 4.8, 4.9, 4.10 and 4.11, respectively. Except as set forth in
Schedule 4.9, each such Contract is a valid and binding agreement of the Company
or one of its subsidiaries and is in full force and effect and, to the knowledge
of the Company, is a valid and binding agreement of each party thereto. Neither
the Company nor any of its subsidiaries, nor to the knowledge of the Company,
any other person, is in default under any of the contracts listed on Schedules
4.8, 4.9, 4.10 and 4.11, respectively, except for such defaults which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
With respect to all Government Contracts, there are no pending, and to
the knowledge of the Company, there are no contemplated or threatened (A) civil
fraud or
15
criminal investigations by any government investigative agency, (B) suspension
or debarment proceedings (or equivalent proceedings) against the Company or any
of its subsidiaries, (C) requests by the government for a contract price
adjustment based on a claim disallowance by the Defense Contract Audit Agency or
similar agency, or claim of defective pricing in excess of $100,000 individually
or $500,000 in the aggregate, (D) disputes between the Company or any of its
subsidiaries and the government which have resulted in a government contracting
officer's final decision where the amount in controversy exceeds or would
reasonably be expected to exceed $100,000 individually or $500,000 in the
aggregate, or (E) claims or equitable adjustments by the Company or any of its
subsidiaries against the government or any third party in excess of $100,000
individually or $500,000 in the aggregate.
With respect to any Government Contract which expired, or was
terminated, or for which final payment was made within three years prior to the
date hereof, and except as set forth on Schedule 4.9 hereof, to the knowledge of
the Company, there are no requests by the U.S. Government for a contract price
adjustment based upon a claim of defective pricing in excess of $100,000.
For the purposes of this Agreement "CONTRACT" shall mean any
agreement, contract, lease, note, loan, evidence of indebtedness, purchase
order, letter of credit, franchise agreement, undertaking, covenant not to
compete, employment agreement, license, instrument, obligation, commitment,
purchase and sales order and other executory commitment, whether oral or
written, express or implied, (A) to which the Company or any of its subsidiaries
is a party or (B) by which the Company, any of its subsidiaries or any of their
respective assets are bound or affected.
4.10 EMPLOYMENT AGREEMENTS AND BENEFITS, ETC.
4.10.1 EMPLOYMENT AGREEMENTS AND PLANS . Schedule 4.10.1 lists (I)
each Contract with any affiliate of the Company (A) to employ or terminate any
officer of the Company and any of its subsidiaries or (B) that will result in
the payment by, or the creation or acceleration of any material commitment or
obligation (absolute or contingent) to pay on behalf of Buyer or the Company or
any of its subsidiaries any material severance, termination, deferred
compensation or "golden parachute," to any present or former officer of the
Company or any of its subsidiaries following termination of employment or
otherwise as a direct result of the consummation of the transactions
contemplated hereby other than those which may be terminated by the Company or
any of its subsidiaries without any liability upon less than 30 days' notice by
the Company or any of its subsidiaries and (II) all profit sharing, pension,
retirement, bonus, incentive compensation, stock option, stock appreciation
right, stock bonus, deferred compensation, health, life insurance, disability
and other written material employee benefit plans, programs, agreements,
contracts or commitments for the benefit of the present or former employees of
the Company or any of its subsidiaries or under which the Company or any of its
subsidiaries may incur any liability (collectively, the "PLANS").
16
4.10.2 ERISA . Each Plan has been maintained in compliance and
presently complies in all material respects with the requirements of all
applicable laws, including ERISA and the Internal Revenue Code of 1986, as
amended (the "CODE"). No Plan that is subject to section 302 of ERISA or
section 412 of the Code has incurred any "accumulated funding deficiency" within
the meaning of section 302 of ERISA or section 412 of the Code, whether or not
waived, and no material liability (other than for annual premiums) to the
Pension Benefit Guaranty Corporation has been incurred by the Company or any of
its subsidiaries with respect to any Plan. Except as set forth on Schedule
4.10, as of the last day of the last plan year of each Plan that is an employee
pension plan as defined in Section 3(3) of ERISA and as of the Effective Time,
the "amount of unfunded benefit liabilities" as defined in Section 4001(a)(18)
of ERISA (but excluding from the definition of "current value" of "assets" of
such Plan, accrued but unpaid contributions) did not and will not exceed zero.
None of the Company or any of its subsidiaries or any Plan has any present or
future obligation to make any payment to, or with respect to any present or
former employee of the Company or any of its subsidiaries pursuant to, any
retiree medical benefit plan. There is no contract, agreement, plan or
arrangement covering any employee or former employee of the Company or any of
its subsidiaries that, individually or collectively, provides for the payment by
the Company of any amount (I) that is not deductible under Section 162(a)(1) of
the Code or (II) that is an "excess parachute payment" pursuant to Section 280G
of the Code. None of the Company or any of its subsidiaries has withdrawn at
any time within the preceding six years from any multi-employer plan, as defined
in section 3(37) or 4001(a)(3) of ERISA (a "MULTI-EMPLOYER PLAN"), and incurred
any material withdrawal liability which remains unsatisfied. If, as of the
Effective Time, the Company and each of its subsidiaries were to withdraw from
all multi-employer plans to which it (or any of them) has contributed or been
obligated to contribute, it (and they) would incur no material liabilities to
such plans under Title IV of ERISA. None of the Company nor any of its
subsidiaries has engaged in a transaction with respect to any Plan that would
reasonably be expected to subject the Company or any of its subsidiaries to a
tax or penalty imposed by either section 4975 of the Code or section 502(i) of
ERISA. Except as set forth on Schedule 4.10.2, there are no material pending
or, to the Company's knowledge, threatened claims by or on behalf of any of the
Plans or by any present and former employee or governmental authority involving
any such Plan (other than routine claims for benefits). All contributions
required to have been made by the Company or any of its subsidiaries to any Plan
under the terms of any such plan or pursuant to any applicable Collective
Bargaining Agreement (as defined in Section 4.10.4 below) or applicable law
(including, without limitation, ERISA and the Code) have been timely made. With
respect to each Plan, the Company has made available to Buyer copies of the plan
documents and summary plan descriptions, the most recent determination letter
received from the Internal Revenue Service, the most recent Form 5500 Annual
Report, and related trust agreements and insurance contracts or other funding
arrangements which implement each such Plan. None of the Company, any of its
subsidiaries or any other trade or business, whether or not incorporated, that
is treated as a single employer together with the Company pursuant
17
to section 414(b), (c) or (m) of the Code has incurred any material liability
pursuant to Title IV of ERISA. Except as set forth in Schedule 4.10.2 and
except as required by any Contract or Plan, neither the Company nor any of its
subsidiaries has any announced Plan or legally binding commitment to create any
additional Plans which are intended to cover employees or former employees of
the Company or to amend or modify any existing Plan.
4.10.3 TAX QUALIFICATION . Except as disclosed on Schedule 4.10.3,
each Plan intended to be qualified under section 401(a) of the Code has received
a favorable determination letter from the IRS as to its qualification under the
Code and nothing has occurred since the date of such determination letter that
will adversely affect such favorable determination or qualification.
4.10.4 LABOR MATTERS . Except as disclosed on Schedule 4.10.4,
neither the Company nor any of its subsidiaries is a party to or bound by any
collective bargaining agreement or other contract with any labor union or other
employee representative of a group of employees (a "COLLECTIVE BARGAINING
AGREEMENT"), and there are no labor unions or other organizations representing
or, to the knowledge of the Company, purporting or attempting to represent any
employees employed by any of the Company and its subsidiaries. Except as
disclosed on Schedule 4.10.4, since January 1, 1996, there has not occurred or,
to the knowledge of the Company, been threatened any strike, organized slowdown,
picketing, organized work stoppage or organized concerted refusal to work
overtime with respect to any employees employed by any of the Company or any of
its subsidiaries. Except as disclosed on Schedule 4.10.4, there are no labor
disputes currently subject to any grievance procedure, arbitration or litigation
and there is no representation petition pending or, to the knowledge of the
Company, threatened with respect to any employees employed by the Company or any
of its subsidiaries.
4.11 INTELLECTUAL PROPERTY . Schedule 4.11 lists all material
trademarks, copyright registrations, trade names, service marks, patents and any
and all registrations thereof and applications therefor, owned by the Company or
any of its subsidiaries (the "INTELLECTUAL PROPERTY"). Except as set forth in
Schedule 4.11, the Company and its subsidiaries own the Intellectual Property
free and clear of all Liens. Except as set forth in Schedule 4.11, neither the
Company nor any of its subsidiaries has any notice or claim that it is
infringing the intellectual property rights of any third party and the Company
has no knowledge of any infringement by any person or entity of the Intellectual
Property. The Intellectual Property and the Licenses (as hereinafter defined)
constitute all the Intellectual Property and the Licenses necessary to conduct
the Company's and its subsidiaries' businesses as is being conducted on the date
hereof. Schedule 4.11 sets forth a complete and correct list, as of the date
hereof, of all material written licenses to which the Company or any of its
subsidiaries is a party, pursuant to which (A) the Company or such subsidiary
permits any person or entity to use any of the Intellectual Property, or (B) any
person or entity permits the Company or such subsidiary to use any trademarks,
service marks, trade names, copyrights or patents not owned by the Company or
any of
18
its subsidiaries (the "LICENSES"). The Company has furnished or made available
to Parent complete and correct copies of the Licenses. Except as set forth on
Schedule 4.11, neither the Company nor any of its subsidiaries, nor, to the
Company's knowledge, any other party thereto, is in default under any License,
and each License is in full force and effect as to the Company or any of its
subsidiaries party thereto, and to the Company's knowledge, as to each other
party thereto, except for such defaults and failures to be so in full force and
effect as would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the Company and its subsidiaries taken as a
whole.
4.12 GOVERNMENTAL AUTHORIZATIONS; COMPLIANCE WITH LAW . Except as
otherwise set forth in Schedule 4.12, the Company and its subsidiaries hold all
licenses, permits, franchises and other governmental authorizations material to
the business of the Company and its subsidiaries as presently conducted
("PERMITS"), including, without limitation, all Permits required by the Federal
Aviation Administration and the Joint Aviation Authorities. Except as set forth
in Schedule 4.12, all such Permits are valid and in full force and effect and
are listed on Schedule 4.12. The Company and its subsidiaries have not violated
any such Permits in any material respect, and each is in compliance with all
such Permits in all material respects. Neither the Company nor its subsidiaries
has received any notice to the effect that, or otherwise has any knowledge that,
(A) the Company and its subsidiaries are not currently in compliance with, or
are in violation of, any such Permits in any material respect or (B) subject to
obtaining the consents set forth in Schedule 4.2(b), any currently existing
circumstances are likely to result in a failure of the Company and its
subsidiaries to comply with, or in a violation by the Company and its
subsidiaries of, any such Permits in any material respect. Except as set forth
on Schedule 4.12, the Company and its subsidiaries have not violated and are in
compliance with (A) all applicable laws, statutes, ordinances, regulations,
rules and orders of every federal, state, local or foreign government and every
federal, state, local or foreign court or other governmental or regulatory
agency, department, authority, body or instrumentality and (B) any judgment,
decision, decree, requirement or order of any court or governmental or
regulatory agency, department, authority, body or instrumentality (collectively,
"LAWS"), relating to the assets, business or operations of the Company or its
subsidiaries, except to the extent that any such violation or failure to comply
is not reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company. Except as set forth on Schedule 4.12, none of
the Company or any of its subsidiaries has received any notice of any failure to
comply or violation of any applicable Law and none of the Company or any of its
subsidiaries has actual knowledge of any currently existing circumstances likely
to result in a failure of the Company to comply with, or a violation by the
Company of, any Laws, except for failures or violations which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. This Section 4.12 does not relate to employee
benefits matters which are instead the subject of Section 4.10, tax matters
19
which are instead the subject of Section 4.14 or environmental matters which are
instead the subject of Section 4.17.
4.13 LITIGATION . Except as otherwise set forth in Schedule 4.13,
there are no judicial, regulatory or administrative actions, suits, proceedings
or investigations pending or, to the knowledge of the Company, threatened, which
(I) individually or in the aggregate, would reasonably be expected to have a
material adverse effect on the Company and its subsidiaries taken as a whole,
(II) assert criminal liability against the Company or any of its subsidiaries or
any officer, director or shareholder of the Company or any of its subsidiaries
as such, or (III) question the validity of this Merger Agreement or any action
taken or to be taken by the Company, or any of its subsidiaries in connection
herewith. Except as set forth in Schedule 4.13, there are no orders, judgments
or decrees of any court or governmental authority, which apply to the Company or
any of its subsidiaries or any of their properties or assets.
4.14 TAX MATTERS . (a) DEFINITIONS. For purposes of this Section
4.14, the following capitalized terms shall have the following meanings.
"CODE": the Internal Revenue Code of 1986, as amended. "EMPLOYMENT AND
WITHHOLDING TAXES": any federal, state, provincial, local, foreign or other
employment, unemployment insurance, social security, disability, workers'
compensation, payroll, health care or other similar tax, duty or other
governmental charge or assessment and all Taxes required to be withheld by or on
behalf of each of the Company and each of its subsidiaries in connection with
amounts paid or owing to any employee, independent contractor, creditor,
shareholder or other party, in each case, on or in respect of the business or
assets thereof. "INCOME TAX": any federal, state, provincial, local or foreign
income, alternative, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits or windfall profits tax or
other similar tax, estimated tax, duty or other governmental charge or
assessment or deficiencies thereof. "INCOME TAX RETURN": any Tax Return
relating to Income Taxes. "IRS": the Internal Revenue Service. "TAX": any
federal, state, provincial, local or foreign income, alternative, minimum,
accumulated earnings, personal holding company, franchise, capital stock,
profits, windfall profits, gross receipts, sales, use, value added, transfer,
registration, stamp, premium, excise, customs duties, severance, real property,
personal property, ad valorem, occupancy, license, occupation, employment,
payroll, social security, disability, unemployment, workers' compensation,
withholding, estimated or other similar tax, assessment or other governmental
charge. "TAX RETURN": any return, report, declaration, form, claim for refund
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof that relates to the
Company or any of its subsidiaries. "TREASURY REGULATIONS": the regulations
promulgated under the Code.
(b) FILING OF RETURNS AND PAYMENT OF TAXES. Except as set forth in
Schedule 4.14(b), all material Tax Returns required to be filed on or before the
Closing Date have (or by the Closing Date will have) been duly filed on a timely
basis and such Tax
20
Returns are complete and correct in all material respects. Except for Taxes set
forth in Schedule 4.14(b) or as reflected or reserved against in the Financial
Statements, the following Taxes (collectively, "COMPANY TAXES") have (or by the
Closing Date will have) been duly paid: (I) all Taxes shown to be due on
material Tax Returns required to be filed on or before the Closing Date and (II)
all material Taxes due and payable on or before the Closing Date that are or may
become payable by the Company or any of its subsidiaries or chargeable as a Lien
upon the assets thereof (whether or not shown on any Tax Return). Except as set
forth in Schedule 4.14(b), all material Employment and Withholding Taxes
required to be withheld and paid on or before the Closing Date have (or by the
Closing Date will have) been duly paid to the proper governmental authority or
properly set aside in accounts for such purpose.
(c) EXTENSIONS, ETC. Except as set forth in Schedule 4.14(c), no
written agreement or other document extending, or having the effect of
extending, the period of assessment or collection of any Company Taxes or
Employment and Withholding Taxes, and no power of attorney with respect to any
such Taxes, has been executed or filed with the IRS or any other taxing
authority.
(d) TAX FILING GROUPS; INCOME TAX JURISDICTIONS. Except as set forth
in Schedule 4.14(d), neither the Company nor any of its subsidiaries is or has
been at any time a member of any affiliated, consolidated, combined or unitary
group for purposes of filing Income Tax Returns or paying Income Taxes. Except
as set forth in Schedule 4.14(d), neither the Company nor any of its
subsidiaries has been liable for the taxes of any other person (other than the
Company and its subsidiaries) or entity as a transferee or successor, by
contract, by law or otherwise since 1995. Set forth in Schedule 4.14(d) are all
countries, states, provinces, cities or other jurisdictions in which the Company
and its subsidiaries currently file or have filed within the last year an Income
Tax Return.
(e) COPIES OF RETURNS; AUDITS; ETC. The Company has (or by the
Closing Date will have) made available to Buyer complete and accurate copies of
all Tax Returns with respect to all periods beginning on or after October 1,
1994 that have been filed or will be required to be filed (after giving effect
to all valid extensions of time for filing) on or before the Closing Date.
Except as set forth in Schedule 4.14(e), (I) no material Company Taxes or
material Employment and Withholding Taxes have been asserted in writing by any
governmental authority since October 1, 1994 to be due, (II) no revenue agent's
report or written assessment for Taxes has been issued by any governmental
authority in the course of any audit that has been completed since October 1,
1994 with respect to material Company Taxes or material Employment and
Withholding Taxes, and (III) no material issue has been raised by any
governmental authority in the course of any audit that has not been completed
with respect to material Company Taxes or material Employment and Withholding
Taxes, which issue has been raised in a writing that has been received by the
Company. Except as set forth in Schedule 4.14(e), no Tax Return is currently
under audit by any taxing authority, and no Employment and Withholding Taxes are
currently under audit by any taxing authority. Except as set forth in Sched-
21
ule 4.14(e), neither the IRS nor any other taxing authority is now asserting in
writing against the Company or any of its subsidiaries any material deficiency
or claim for additional Taxes or any material adjustment of Taxes.
(f) SECTION 1445(A) OF THE CODE. The Company is not and has not been
a United States real property holding Company (as defined in Section 897(c)(2)
of the Code) during the applicable period specified in Section 897(e)(i)(iii) of
the Code, and Buyer will not be required to deduct and withhold any amount
pursuant to section 1445(a) of the Code in connection with the Merger.
(g) TAX SHARING AGREEMENTS. Except as set forth in Schedule 4.14(g),
neither the Company nor any of its subsidiaries is a party to or bound by or has
any obligation under any written Tax sharing agreement or arrangement and any
such agreement or arrangement will be terminated prior to the Effective Time.
4.15 ABSENCE OF CHANGES . Since June 26, 1998, other than in
connection with, or as a result of, the transactions contemplated by this Merger
Agreement or reflected in the schedules hereto, including, without limitation,
Schedule 4.15, the Company and its subsidiaries have conducted their business in
the ordinary course, in substantially the same manner in which it has been
previously conducted, there has been no Material Adverse Change in or with
respect to the Company or its subsidiaries, except for any change resulting from
general economic, financial, industry or market conditions and none of the
Company or any of its subsidiaries has:
(i) purchased or redeemed any shares of its Equity Securities;
(ii) incurred any indebtedness for borrowed money or entered into any
guaranty or incurred any material liabilities, or incurred any obligations
for any performance bonds, payment bonds, bid bonds, surety bonds, letters
of credit, guarantees or other similar instruments;
(iii) mortgaged, pledged or subjected to any Lien any of its
properties or assets, except for Liens incurred in the ordinary course of
business or Permitted Liens;
(iv) except as required by GAAP, made any material change in its
accounting principles or the methods by which such principles are applied
for financial reporting purposes;
(v) (A) increased the compensation of any officer or other key
management employee, (B) adopted or amended in any material respect the
terms of any employee benefit plan maintained by the Company or any of its
subsidiaries in a manner that is reasonably expected to increase the costs
of the Company in maintaining such plan by a material amount, (C) granted,
made or accrued any loan, bonus, fees, incentive compensation, service
award or other like benefit, to or for the benefit of any employee except
pursuant to the Plans described on Schedule 4.10 or pursuant to the
22
Company's annual bonus plan in the ordinary course of business, (D) entered
into any new employment, severance, material consulting agreement or other
material compensation agreement or caused or suffered any material written
cancellation or amendment thereof (except with respect to any employee at
will without a written agreement and except for entering into, cancelling
or amending sales representative agreements in the ordinary course of
business), (E) entered into any new bonus or incentive agreement, (F) with
respect to any stockholder or any other affiliates, granted, made or
accorded any payment or distribution or other like benefit, or otherwise
transferred assets, including, but not limited to, any payment of principal
of or interest on any debt owed to any stockholder or affiliate; other than
(A) in the ordinary course of business or (B) to comply with applicable law
or the terms of any Contract or Collective Bargaining Agreement;
(vi) disposed or agreed to lease, assign, transfer or dispose of any
material properties or assets necessary for the conduct of the business of
the Company and its subsidiaries as currently conducted, other than in the
ordinary course of business;
(vii) waived, released, cancelled or forgiven any debts, claims or
rights (or series of rights, debts or claims) involving, individually or in
the aggregate, consideration in excess of $250,000 except in the ordinary
course of business;
(viii) cancelled or terminated, or amended, modified or waived in any
material respect the terms of, any Contract to which it is a party or by
which it or any of their assets are bound, the executor portion of which
provides for aggregate annual revenues to the Company and its subsidiaries
in excess of $250,000;
(ix) (A) acquired (by merger, consolidated, acquisition of stock,
other securities or assets or otherwise), (B) made a material capital
investment in, (C) made a material loan advance or agreement to loan or
advance to, (D) entered into any joint venture, partnership or other
similar arrangement for the conduct of business with, or (E) guaranteed
material indebtedness for borrowed money of, (X) any third party or (Y) any
portion of the assets of any person that constitutes a division or
operating unit of such person;
(x) made any capital expenditures or commitments therefor in excess
of the aggregate amount set forth in the Company's 1998 capital
expenditures plan, a true and complete copy of which has been provided to
Buyer (the "CAPITAL EXPENDITURE PLAN";
(xi) suffered any theft, damage, destruction or casualty loss
affecting its business of any of their assets in excess of $100,000 in any
single instance or $300,000 in the aggregate, whether or not covered by
insurance;
23
(xii) (A) issued or sold, or entered into any agreement obligating it to
issue or sell or (B) declared, set aside for payment or paid dividends or
distributions in respect of or (C) directly or indirectly redeemed, purchased or
otherwise acquired or retired or split, combined or otherwise adjusted, any
Equity Securities;
(xiii) paid, discharged, cancelled, compromised or satisfied any
material liability other than any such payment, discharge or satisfaction
in the ordinary course of business;
(xiv) changed or amended its certificate of incorporation or bylaws;
(xv) committed to or entered into any Contract to do the foregoing;
or
(xvi) entered into any agreement outside the ordinary course of
business.
4.16 INSURANCE . Schedule 4.16 sets forth a complete and correct
list, as of the date hereof, of the policies of insurance currently maintained
by the Company and its subsidiaries. Such policies are in full force and effect
and protect the Company and its subsidiaries against such losses and risks as is
consistent with industry practice and all premiums due with respect to all
periods to and including the Closing Date have either been paid or adequate
provisions for the payment by Company thereof have been made. Neither the
Company nor any of its subsidiaries has received any notice of any material
increase of premiums with respect to, or cancellation or non-renewal of, any of
such insurance policies. There are no material claims by the Company or any of
its subsidiaries under any of such policies relating to the business, assets or
properties of the Company or its subsidiaries as to which any insurance company
is denying liability or defending under a reservation of rights or similar
clause.
4.17 ENVIRONMENTAL MATTERS. (a) DEFINITIONS. For purposes of this
Section 4.17, the following capitalized terms shall have the following meanings.
"ENVIRONMENTAL LAW": any foreign, federal, state, or local law, statute, rule,
regulation, order or other requirement of law relating to (I) the manufacture,
transport, use, emission, treatment, storage, disposal, release or threatened
release of pollutants, contaminants, chemicals, industrial materials or wastes,
or (II) the protection of human health or the environment (including, without
limitation, natural resources, air, and surface or subsurface land or waters).
"HAZARDOUS SUBSTANCE": any pollutant, contaminant, chemical, waste, or any
other carcinogenic, toxic or hazardous substances or materials, including but
not limited to asbestos or asbestos containing material, petroleum, including
crude oil and any fractions thereof, or other wastes, chemicals, substances or
materials subject to regulation or remediation under any Environmental Law.
(b) ENVIRONMENTAL COMPLIANCE AND CONDITIONS. Except as set forth in
Schedule 4.17:
24
(i) the Company and its subsidiaries are in material compliance with
all applicable Environmental Laws;
(ii) the Company and its subsidiaries have obtained, and are in
material compliance with, all permits and authorizations required under
applicable Environmental Laws (all of which permits and authorizations are
set forth on Schedule 4.17);
(iii) there are and have been no material releases or potential
releases of Hazardous Substances at, on, or into any real property
currently owned or leased or to its knowledge, formerly owned or leased, by
the Company or its subsidiaries;
(iv) the Company and its subsidiaries are not a party, whether as a
direct signatory or as successor, assign or third-party beneficiary, or, to
its knowledge, otherwise bound, to any Contract under which the Company or
its subsidiaries are obligated by or entitled to the benefits of, directly
or indirectly, any representation, warranty, indemnification, covenant,
restriction or other undertaking concerning compliance with Environmental
Laws;
(v) neither the Company nor any of its subsidiaries has received from
any governmental authority any written notice of violation, alleged
violation, non-compliance, liability or potential liability regarding
compliance with applicable Environmental Laws concerning any of the Real
Property;
(vi) no material judicial proceeding or governmental or
administrative action is pending or, to its knowledge, threatened, under
any applicable Environmental Law pursuant to which the Company or any of
its subsidiaries is or will be named as a party; and
(vii) neither the Company nor any of its subsidiaries has entered
into any agreement with or is subject to any order or decree from any
governmental authority pursuant to which the Company or any of its
subsidiaries has assumed responsibility for the remediation of any
condition resulting from the release, treatment, storage or disposal of
Hazardous Substances.
4.18 BANKING AND AGENCY ARRANGEMENTS . Schedule 4.18 sets forth a
list of:
(i) each bank, savings and loan or similar financial institution in
which either the Company or any of its subsidiaries has an account or safe
deposit box or other custodial arrangement and the numbers of such accounts
or safe deposit boxes maintained by the Company and its subsidiaries; and
(ii) the names of all persons authorized to draw on each such account
or to have access to any such safe deposit box facility.
25
4.19 AFFILIATE TRANSACTIONS . Except as set forth in Schedule 4.19
or Schedule 4.10.1, neither the Company nor any of its subsidiaries is a party
to any Contract with any of their respective directors or officers in their
capacity as directors or officers of the Company.
4.20 BROKERS . All negotiations relating to this Merger Agreement
and the transactions contemplated hereby have been carried out without the
intervention of any person acting on behalf of the Company in such manner as to
give rise to any valid claim against Buyer or the Company for any brokerage or
finder's commission, fee or similar compensation, except for Xxxxxxx, Xxxxx &
Co. and Xxxxx & Company, whose fees in respect hereof shall be paid by the
Company.
4.21 QUALIFICATION . (a) All products sold by the Company and its
subsidiaries pursuant to qualification requirements established by the Company's
and its subsidiaries' customers were produced in a manner consistent with the
requirements of such qualification except for individual defective products
produced in the ordinary course of business, or where the failure to do so,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. The Company held all necessary qualifications for its products
from its customers pursuant to which sales were made to such customers. Except
as set forth in Schedule 4.21, the Company has not received notification that
any qualifications for the Company's products as established by the Company's
customers have been revoked or terminated as a result of the failure of products
manufactured by the Company to meet the specifications required by such
qualifications, and to the knowledge of the Company, no such revocation or
termination is threatened or contemplated.
(b) The Company and its subsidiaries hold such security clearances as
are required to perform their respective obligations under any Government
Contract. There are no facts or circumstances known to the Company that could
result in the suspension or termination of such clearances, or that could render
the Company or its subsidiaries ineligible for such security clearances in the
future. All security measures required by the Department of Defense Industrial
Security Manual have been implemented in all material respects.
4.22 PRODUCTS LIABILITY . Except as set forth on Schedule 4.22,
there are not presently pending or, to the knowledge of the Company, threatened
any civil, criminal or administrative actions, suits, demands, claims, hearings,
notices of violation, investigations, proceedings or demand letters relating to
any alleged hazard or alleged defect in design, manufacture, materials or
workmanship including, without limitation, any failure to warn or alleged breach
of express or implied warranty or representation, relating to any product
manufactured, distributed or sold by or on behalf of the Company that would
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. Schedule 4.22 sets forth a true and complete
list of (I) all matters referred to in the preceding sentence and (II) all
material product recalls or material written post-sales warnings involving a
product line of the Company as opposed
26
to warranty claims in the ordinary course of business ("RECALLS") and any
pending investigations being conducted by the Company or by any other person
concerning a Recall relating to any product manufactured, distributed or sold by
or on behalf of the Company. The Financial Statements contain as of their
respective dates, adequate and sufficient reserves for product warranty related
expenses and product returns.
4.23 CUSTOMERS AND SUPPLIERS . Schedule 4.23 sets forth a true and
correct list of (A) the 10 largest customers of the Company by division, on a
consolidated basis, in terms of sales during the fiscal year ended September 30,
1997 PLUS one other customer and (B) the 10 largest suppliers of the Company by
division, on a consolidated basis, in terms of purchases during the fiscal year
ended September 30, 1997. Except as set forth on Schedule 4.23, there are no
ongoing discussions with any of the customers or suppliers involving or in
respect of any price increases in the Company's inputs or price decreases in the
Company's outputs, the net effect of which could reasonably be expected to have
a material negative impact on the Company's gross profit. Since June 26, 1998,
there has not been any adverse change in the business relationship of the
Company or its subsidiaries with any customer or supplier named in Schedule 4.23
which is material to the Company or any such subsidiary's relationship with such
customer or supplier.
4.24 PROHIBITED PAYMENTS . The Company and its subsidiaries have
not, directly or indirectly, (A) made or agreed to make any contribution,
payment or gift to any government official, employee or agent where either the
contribution, payment or gift or the purpose thereof was illegal under the laws
of any federal, state, local or foreign jurisdiction, (B) established or
maintained any unrecorded fund or asset for any purpose or made any false
entries on the books and records of the Company and its subsidiaries for any
reason, (C) made or agreed to make any contribution, or reimbursed any political
gift or contribution made by any other persons, to any candidate for federal,
state, local or foreign public office or (D) paid or delivered any fee,
commission or any other sum of money or item of property, however characterized,
to any finder, agent, government official or other party, in the United States
or any other country, which in any manner relates to the assets, business or
operations of the Company or its subsidiaries, which the Company or its
subsidiaries knows or has reason to believe to have been illegal under any
federal, state or local laws (or any rules or regulations thereunder) of the
United States or any other country having jurisdiction.
4.25 ADDITIONAL AGREEMENTS . The (I) Stock Purchase Agreement among
TransDigm, Inc. and the shareholders of Marathon Power Technologies Company
listed therein, dated as of August 8, 1997, (II) Asset Purchase Agreement among
American Premier Underwriters, Inc., Marathon Power Technologies Company and the
other parties named therein, dated as of April 20, 1994, and (III) Stock Sale
and Asset Transfer Agreement by and between IMO Industries Inc. and Novadigm
Acquisition Inc., dated as of July 14, 1993, are, in each case, in full force
and effect, subject to the terms thereof, and to the knowledge of the Company
are enforceable by the Company and its subsidiaries, as applicable, in
accordance with their terms.
27
5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to the Company as follows:
5.1 CORPORATE STATUS AND AUTHORITY . Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the power and authority to execute and deliver this Merger
Agreement and perform its obligations hereunder. Buyer has the requisite
corporate power and authority to carry on its business as it is now being
conducted and is duly qualified and licensed to do business, and is in good
standing, in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not, individually
or in the aggregate, impair the ability of Buyer to fulfill its obligations
hereunder. The execution and delivery of this Merger Agreement and the
consummation of the transactions contemplated hereby by Buyer have been duly and
validly authorized and approved by the board of directors of Buyer, and no other
corporate or stockholder proceedings on the part of Buyer are necessary to
consummate the transactions contemplated hereby. This Merger Agreement has been
duly executed and delivered by Buyer and constitutes the valid and binding
obligation of Buyer, enforceable against it in accordance with its terms, except
as such enforceability may be limited by general principles of equity or
principles applicable to the enforcement of creditors' rights generally.
5.2 NO CONFLICTS; CONSENTS AND APPROVALS, ETC. (a) Except as set
forth in Schedule 5.2(a), the execution, delivery and performance of this Merger
Agreement by Buyer will not result in (I) any conflict with the certificate of
incorporation or by-laws of Buyer, (II) any breach or violation of or default
under any law, statute, regulation, judgment, order, decree, license, permit or
other governmental authorization or any mortgage, lease, agreement, deed of
trust, indenture or any other instrument to which Buyer or any of its
subsidiaries is a party or by which Buyer or any of its subsidiaries or any of
their respective properties or assets are bound, or (III) the creation or
imposition of any Lien, except, in the case of clauses (ii) and (iii) of this
Section 5.2, for such breaches, violations or defaults and such Liens which
would not, individually or in the aggregate, impair the ability of Buyer to
fulfill its obligations hereunder.
(b) Except as set forth in Schedule 5.2(b), no consent, approval or
authorization of or filing with any third party or governmental authority is
required on the part of Buyer in connection with the execution and delivery of
this Merger Agreement or the consummation of the transactions contemplated
hereby, except (I) filings required with respect to the HSR Act, (II) those
which may be required by the governmental contracts to which the Company is a
party or the governmental permits and authorizations held by the Company, and
(III) the filing of a certificate of merger pursuant to the DGCL.
5.3 CAPITALIZATION . Immediately prior to the Effective Time, Buyer
shall not have outstanding any Equity Securities other than shares of common
stock.
28
5.4 FINANCIAL ABILITY TO PERFORM . Buyer has delivered to the
Company complete and correct executed copies of letters from Bankers Trust
Corporation and Odyssey Investment Partners Fund L.P. (the "FINANCING LETTERS")
issued in connection with the financing of the transactions contemplated hereby
(the "FINANCING"). Assuming satisfaction of all applicable conditions set forth
in the Financing Letters and full funding thereunder, Buyer at the Closing Date
shall be capitalized with an equity contribution in an amount up to $90 million
(or such other amount as is equal to $116 million MINUS the Option Rollover
Amount MINUS the Xxxxx Rollover Amount; provided that in no event shall Buyer be
required to be capitalized with an equity contribution in an amount in excess of
$94.5 million) and such funds, together with the proceeds from the debt
Financing, will provide sufficient funds to consummate the transactions
contemplated hereby.
5.5 LITIGATION . There are no judicial or administrative actions,
proceedings or investigations pending or, to the knowledge of Buyer, threatened,
which question the validity of this Merger Agreement or any action taken or to
be taken by Buyer in connection herewith.
5.6 BROKERS . All negotiations relating to this Merger Agreement and
the transactions contemplated hereby have been carried out without the
intervention of any person acting on behalf of Buyer in such manner as to give
rise to any valid claim against Buyer or the Company for any brokerage or
finder's commission, fee or similar compensation.
6. ADDITIONAL AGREEMENTS.
6.1 CONDUCT OF BUSINESS PENDING THE MERGER . From the date hereof
until the Closing Date, other than (I) in connection with, or as a result of,
the transactions contemplated by this Merger Agreement or reflected in the
schedules hereto, or (II) as otherwise consented to by Buyer in writing, such
consent not to be unreasonably withheld, the Company and its subsidiaries shall
conduct their business in the ordinary course in substantially the same manner
in which it previously has been conducted and not take any action that would
cause a breach of paragraphs (i)-(xvii) of Section 4.15.
6.2 SATISFACTION OF CLOSING CONDITIONS . (a) The parties shall use
their commercially reasonable best efforts to take all action necessary or
appropriate to bring about the satisfaction as soon as possible of all the
conditions contained in Section 7. Without limiting the generality of the
foregoing, the parties shall apply for and diligently prosecute all applications
for, and shall use their commercially reasonable best efforts promptly to
obtain, such consents, authorizations and approvals from such third parties and
governmental authorities as shall be necessary to permit the consummation of the
transactions contemplated by this Merger Agreement, including, without
limitation, making the requisite filings with the Federal Trade Commission and
the Antitrust Division of the Department of Justice pursuant to the HSR Act and
each party will refrain
29
from taking any action which would cause, and shall use its commercially
reasonable best efforts to take any action necessary to prevent, any of the
representations and warranties made by it in this Merger Agreement not to be
true and correct in all material respects at and as of the Closing Date with the
same force and effect as then made (except with respect to representation and
warranties which are made as of a specific date), subject only to exceptions
permitted or expressly contemplated by this Merger Agreement. The Company
further covenants and agrees, with respect to any threatened or pending
judgment, order, injunction, decree or decision of any governmental authority
that will adversely affect the ability of the parties hereto to consummate the
transactions contemplated hereby, to use all commercially reasonable efforts to
prevent the entry or promulgation thereof and to defend and cooperate with each
other in the defending of any legal proceedings, whether judicial or
administrative and whether brought derivatively or on behalf of third parties
challenging the transaction contemplated hereby as the case may be, it being
understood that such efforts shall not include any requirement of the Company to
expend material sums of money or grant any material financial or other
accommodation.
(b) The Buyer agrees to use commercially reasonable best efforts to
obtain the financing necessary to consummate the transactions contemplated
hereby as soon as possible. The Buyer agrees that any 144A offerings
contemplated by the Financing Letters must be consummated prior to October 31,
1998 and that if any such offering is not consummated prior to such date, then
the Buyer will be obligated on October 31, 1998 to obtain the bridge loan
financing contemplated by the Financing Letter in substitution therefor pursuant
to the terms thereof, subject to the conditions for such bridge loan financing
set forth in the Financing Letters. The Company agrees to provide, and will
cause its subsidiaries and their respective personnel and advisers to provide,
all cooperation reasonably requested in connection with the arrangement of such
financing, including without limitation, participation in meetings, due
diligence sessions, road shows, the preparation of offering memoranda, private
placement memoranda, prospectuses and similar documents, the execution and
delivery of any commitment letters, underwriting or placement agreements, pledge
and security documents, other definitive financing documents, or other requested
certificates or documents, including a certificate of the chief financial
officer of the Company with respect to solvency matters, comfort letters of
accountants as may be reasonably requested by Buyer. Notwithstanding the
foregoing, Buyer agrees that the payment of any expenses relating to providing
such cooperation, including fees by the Company in connection with any
commitment letters, shall be subject to the occurrence of the Closing.
6.3 ACCESS AND INFORMATION . Prior to the Closing Date, the Company
shall give to Buyer and its representatives (including any financial institution
providing or proposed to provide financing in connection with the transactions
contemplated hereby) reasonable access at all reasonable times to the
properties, books and records, assets, data, documents, personnel, tax returns
and other information of the Company and its subsidiaries and to furnish such
information and documents in its possession relating to
30
the Company and its subsidiaries as Buyer may reasonably request, PROVIDED that
Buyer shall not be entitled to any such access, information or documents for the
purposes of conducting any environmental audit or assessment without the prior
written consent of the Company. The Company further agrees to furnish Buyer
with such financial and operating data and other information which the Company
has reasonably available with respect to the Company's business, properties,
assets and financial and legal condition as Buyer or its representatives,
accountants and attorneys may from time to time reasonably request. All such
information and documents obtained by Buyer shall be subject to the terms of the
Confidentiality Agreement, dated May, 1998 (the "CONFIDENTIALITY AGREEMENT"),
between Buyer and the Company. Buyer hereby agrees that the provisions of the
Confidentiality Agreement will apply to any properties, books, records, data,
documents and other information relating to the Company provided to Buyer or its
affiliates or any of their respective advisors or employees pursuant to this
Merger Agreement.
6.4 TRANSFER TAXES . Buyer shall be liable for all transfer Taxes
(including, without limitation, any transfer gains Taxes) arising from the
transactions contemplated by this Merger Agreement.
6.5 PUBLICITY . No press release or public announcement related to
this Merger Agreement or the transactions contemplated hereby shall be issued or
made without the joint approval of the Company and Buyer, unless required by
law, in which case the Company and Buyer shall have the right to review such
press release or announcement prior to its publication.
6.6 INDEMNIFICATION OF OFFICERS AND DIRECTORS . For a period of
seven years after the Closing Date, Buyer shall not, and shall not permit the
Surviving Corporation to, amend, repeal or modify any provision in the
Certificate of Incorporation or By-laws relating to the exculpation or
indemnification of former officers and directors (unless required by law) in a
manner that would be adverse to such persons, it being the intent of the parties
that the officers and directors of the Surviving Corporation prior to the
Closing Date shall continue to be entitled to such exculpation and
indemnification to the fullest extent permitted under applicable law.
6.7 CONTACT WITH CUSTOMERS AND SUPPLIERS . Buyer and its
representatives shall contact and communicate with the employees, customers,
suppliers and licensors of the Company in connection with the transactions
contemplated hereby only with the prior written consent of the Company, which
consent shall not be unreasonably withheld, which consent may be conditioned
upon an officer of the Company being present at any such meeting or conference.
6.8 STOCKHOLDERS APPROVAL . The Company shall take all appropriate
action in accordance with the DGCL, the Company's Certificate of Incorporation
and By-laws (A) to obtain consent of all of its stockholders acting without a
meeting with respect to the Merger and this Merger Agreement and (B) prior to
the Effective Time to obtain consent
31
of the requisite number of stockholders to amend the Company's Certificate of
Incorporation as reasonably requested by the Buyer and to file such amended
Certificate of Incorporation with the Delaware Secretary of State.
6.9 NO SOLICITATION; NOTIFICATION . (i) The Company and its
subsidiaries shall not, and shall cause their respective representatives
(including, without limitation, investment bankers, attorneys and accountants)
not to enter into, solicit, initiate or continue any discussions or negotiations
with, or encourage or respond to any inquiries or proposal by or participate in
any discussions or negotiations with, or provide any information to, or
otherwise cooperate in any other way with, any person other than Buyer and its
representatives concerning any sale of all or any material portion of the
Company's or any subsidiary's assets (other than sales of inventory, product or
obsolete or non-productive assets in the ordinary course of business) or the
business of, or of any Equity Securities of, the Company or any subsidiary, or
any business combination or any recapitalization, dissolution or similar
transaction involving the Company (each such transaction being referred to
herein as "PROPOSED ACQUISITION TRANSACTION").
(ii) The Company will immediately notify Buyer if any written offer
is made, discussions or negotiations are sought to be initiated with respect to
any Proposed Acquisition Transaction and keep Buyer informed of the status of
any developments regarding such offer.
6.10 NOTICE OF DEVELOPMENTS . Each party hereto shall give prompt
written notice to the other party of (I) the occurrence, or failure to occur, of
any event, which occurrence or failure to occur would be reasonably likely to
cause any representation or warranty made by such party in this Merger Agreement
or in any Schedule to be untrue or inaccurate and (II) any failure by such other
party to comply with, perform or satisfy any covenant, condition or agreement to
be complied with, performed by or satisfied by it under this Merger Agreement.
No disclosure by any party pursuant to this Section 6.10, however, shall be
deemed to amend or supplement the Schedules or to prevent or cure any
misrepresentation or breach or failure to satisfy any representations, warrant,
covenant, condition or agreement hereunder.
6.11 NOVATION AGREEMENTS . The Company shall use its reasonable best
efforts to satisfy all conditions to obtaining any novation agreements which may
be required with respect to any of the Government Contracts and to pass to the
Surviving Corporation any security clearances relating to such Contracts.
7. CONDITIONS PRECEDENT.
7.1 GENERAL . The respective obligations set forth herein of each
party to effect the Merger shall be subject to the fulfillment, on or before the
Effective Time, in the case of the Company, of the conditions set forth in
Sections 7.2 and 7.3, and in the case of Buyer, of the conditions set forth in
Sections 7.2 and 7.4.
32
7.2 CONDITIONS TO OBLIGATIONS OF BOTH PARTIES .
7.2.1 HSR ACT . The waiting period under the HSR Act shall have been
terminated or expired.
7.2.2 CONSENTS . All consents, authorizations, permits or approvals
listed on Schedule 7.2.2 shall have been made or obtained. Buyer shall have 30
days after the date hereof to amend Schedule 7.2.2 with the consent of the
Company, such consent not to be unreasonably withheld, to include any consents,
authorizations, permits or approvals relating to government contracts required
to be made or obtained prior to the Closing Date in connection with the
execution and delivery of this Merger Agreement and the transactions
contemplated hereby, the failure of which to obtain could reasonably be expected
to have a Material Adverse Effect.
7.2.3 NO INJUNCTION OR LITIGATION . There shall not be in effect any
injunction or other order issued or instituted or overtly threatened by a court
of competent jurisdiction or governmental authority restraining or prohibiting
or seeking to restrain or prohibit the consummation of the transactions
contemplated by this Merger Agreement and there shall not have been promulgated,
entered, issued or determined by any court or other governmental authority to be
applicable to this Merger Agreement any applicable law making illegal the
consummation of the transactions contemplated hereby and no proceeding brought
by any governmental authority with respect to the application of any such
applicable law shall be pending. No suit, proceeding or similar action by any
person shall have been instituted which questions the validity or legality of
the transactions contemplated hereby and which is reasonably likely to
materially adversely affect the value of the Buyer's equity interest in the
Surviving Corporation.
7.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY .
7.3.1 REPRESENTATIONS AND WARRANTIES OF BUYER . Each of the
representations and warranties in Section 5 shall be true and correct in all
material respects when made and at and as of the Effective Time with the same
effect as though made at and as of such time. Buyer shall have duly performed
and complied in all material respects with all agreements contained herein
required to be performed or complied with by it at or before the Effective Time.
7.3.2 OFFICER'S CERTIFICATE . Buyer shall have delivered to the
Company a certificate, dated the Effective Time and signed by its President or a
Vice President, as to the fulfillment of the conditions set forth in Section
7.3.1.
7.3.3 OUTSTANDING DEBT . Buyer shall have paid or provided
sufficient funds to the Company to pay all amounts owing with respect to the
Credit Agreement.
7.3.4 TRANSACTION COSTS . Buyer shall have provided sufficient funds
to the Company to pay the Transaction Costs.
33
7.3.5 STOCKHOLDERS' AGREEMENT . Odyssey shall have entered into a
stockholders' agreement with Xxxxx Investment Associates IV, L.P. and Xxxxx
Equity Partners II, L.P. ("XXXXX") in form and substance reasonably satisfactory
to Xxxxx.
7.4 CONDITIONS TO OBLIGATIONS OF BUYER .
7.4.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY . Each of the
representations and warranties in Section 4 shall be true and correct when made
and at and as of the Effective Time with the same effect as though made at and
as of such time, except (A) that those representations and warranties which are
made of a specific date shall be true and correct in all material respects only
as of such date and (B) where the truth or incorrectness of such representations
and warranties would not, singly or in the aggregate, have a Material Adverse
Effect. For purposes of this Section 7.4.1, the representations and warranties
of the Company contained in this Merger Agreement shall be deemed to have been
made without any qualification as to knowledge or materiality and, accordingly,
all references in such representations and warranties to "material," "Material
Adverse Effect," "in all material respects," "Material Adverse Change,"
"knowledge," "best knowledge" and similar terms and phrases (including, without
limitation, references to the dollar thresholds therein) shall be deemed to be
deleted therefrom. The Company shall have duly performed and complied in all
material respects with all agreements and covenants contained herein required to
be performed or complied with by it at or before the Effective Time.
7.4.2 OFFICER'S CERTIFICATE . The Company shall have delivered to
Buyer a certificate, dated the Effective Time and signed by its President or a
Vice President, as to the fulfillment of the conditions set forth in Sections
7.4.1, 7.4.8 and 7.4.11.
7.4.3 DIRECTORS . All directors of the Company shall have tendered
their resignations.
7.4.4 FIRPTA CERTIFICATE . Buyer shall have received (I) a
certification from the Company, dated no more than 30 days prior to the Closing
Date and signed by a President or a Vice President of the Company, that the
Company is not, and has not been at any time during the five years preceding the
date of such certification, a United States real property holding company, as
defined in section 897(c)(2) of the Code, and (II) proof reasonably satisfactory
to Buyer that the Company has provided notice of such certification to the
Internal Revenue Service in accordance with the provisions of Treasury
Regulations section 1.897-2(h)(2).
7.4.5 FINANCIAL ADVISORY AND STOCKHOLDERS' AGREEMENT . The Financial
Advisory Agreement referred to in Schedule 4.19 shall have been terminated in
consideration of the fee referred to in Section 4.20 and each of the
Stockholders' Agreement and Investor Stockholders' Agreement referred to in
Schedule 4.9 shall have been terminated.
34
7.4.6 FINANCING . The debt funding contemplated by the Financing
Letters shall have been obtained; it being understood that as of October 31,
1998 this condition shall only apply to the credit agreement and bridge loan
financing in the Financing Letters.
7.4.7 TRANSACTION COSTS . The Company shall have paid the
Transaction Costs with funds provided by Buyer.
7.4.8 MINIMUM NET WORTH . As of the close of business on the day
prior to the Effective Time, the Company and its subsidiaries on a consolidated
basis shall have a minimum net worth (as determined in accordance with GAAP
applied on a basis consistent with the Audited Financial Statements) of not less
than $52 million, it being understood that net worth will be calculated without
reflecting the transactions contemplated by the Merger Agreement or any of the
costs and expenses incurred or to be incurred by the Company in connection
therewith.
7.4.9 APPROVALS . All payments to be made to employees or former
employees pursuant to the Executive Retention Bonuses shall have been approved
by stockholders holding more than 75% of the voting power of all outstanding
stock of the Company in accordance with the provisions of Code Section
280G(a)(5)(B) so as to be excluded from the definition of "parachute payment"
under Code Section 280G.
7.4.10 STOCKHOLDERS' AGREEMENT . Xxxxx shall have entered into a
stockholders' agreement with Odyssey in form and substance reasonably
satisfactory to Odyssey.
7.4.11 MATERIAL ADVERSE CHANGE . Since June 26, 1998, there shall
not have been any Material Adverse Change with respect to the Company and to the
knowledge of the Company there shall not have occurred any event which could
reasonably be expected to result in a Material Adverse Change.
8. GENERAL PROVISIONS.
8.1 WAIVER . Any of the terms and conditions of this Merger
Agreement may be waived in writing at any time on or prior to the Effective Time
by the party entitled to the benefits thereof.
8.2 ENTIRE AGREEMENT . This Merger Agreement, including the exhibits
and schedules hereto (which are hereby incorporated by reference and made a part
hereof) is the entire agreement of the parties with respect to the subject
matter hereof and supersedes all other prior agreements, understandings,
documents, projections, studies, statements, environmental site assessments or
investigations, financial data, representations and warranties, oral or written,
express or implied, between the parties hereto and their respective affiliates,
representatives and agents in respect of the subject matter hereof (including,
without limitation, the Confidential Memorandum, dated May 1998, prepared by
Xxxxxxx Sachs & Co., with respect to the Company and any supplements thereto),
except that this Merger Agreement does not supersede the Confidentiality
35
Agreement, the terms and conditions of which the parties hereto expressly
reaffirm. Without limiting the generality of the foregoing, the parties hereto
acknowledge and agree that neither party nor any of its affiliates,
representatives or agents is making any representation or warranty whatsoever,
oral or written, express or implied, other than those set forth in Section 4 and
5 and neither party is relying on any statement, representation or warranty,
oral or written, express or implied, made by the other party or such other
party's affiliates, representatives or agents, except for the representations
and warranties set forth in such sections.
8.3 TERMINATION . (a) This Merger Agreement may be terminated: (I)
at any time prior to the Effective Time by mutual consent of Buyer and the
Company, (II) by either Buyer or the Company, if the Merger shall not have been
consummated on or before December 15, 1998 (and such party is not then in
material breach hereunder) or such later date as the parties may have agreed to
in writing, (III) by either Buyer or the Company if Buyer, in the case of the
Company, or the Company in the case of Buyer, shall (and the terminating party
shall not) have failed to perform and comply with all agreements and covenants
required to have been performed or complied with by such party prior to the time
of such termination, with such exceptions as are not in the aggregate material,
and such failure shall not have been cured within 30 days following notice of
such failure, or (IV) by Buyer, if within two weeks of the date hereof, the
Company shall not have delivered letters reasonably satisfactory to Buyer
executed by the employees listed on Schedule 8.3 hereto reflecting the matters
set forth on Schedule 8.3 hereof.
(b) In the event of termination by the Company or Buyer pursuant to
this Section 8.3, written notice thereof shall forthwith be given to the other
party and the transactions contemplated by this Merger Agreement shall be
terminated without further action by either party. If the transactions
contemplated by this Merger Agreement are terminated as provided herein:
(i) Buyer shall return to the Company all documents and other
materials received from the Company, its affiliates or its agents
(including all copies of or materials developed from any such documents or
other materials) relating to the transactions contemplated hereby, whether
obtained before or after the execution hereof; and
(ii) all confidential information received by Buyer with respect to
the Company and its affiliates shall be treated in accordance with the
Confidentiality Agreement which shall remain in full force and effect
notwithstanding the termination of this Merger Agreement.
(c) If this Merger Agreement is terminated as provided in this
Section 8.3, this Merger Agreement shall become null and void and of no further
force or effect, except for the Confidentiality Agreement, Section 6.5
(Publicity) and Section 8.4 (Expenses).
36
Nothing in this Section 8.3 shall be deemed to release any party hereto from any
liability for any willful breach by such party of the terms and provisions of
this Merger Agreement or to impair the right of any party hereto to compel
specific performance under this Merger Agreement.
8.4 EXPENSES . Except as expressly provided herein, whether or not
the transactions contemplated herein shall be consummated, each party shall pay
its own expenses incident to the preparation and performance of this Merger
Agreement; PROVIDED that Buyer shall be responsible for all filing fees in
connection with the filings required by the HSR Act; PROVIDED, FURTHER, that the
Transaction Costs shall be paid by the Company from funds deducted from the
Merger Consideration.
8.5 FURTHER ACTIONS . Each party shall execute and deliver such
certificates and other documents and take such other actions as may reasonably
be requested by any other party in order to consummate or implement the
transactions contemplated hereby.
8.6 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; NO
RECOURSE . Notwithstanding anything herein or in the Confidentiality Agreement
to the contrary, no representations, warranties or agreements in this Merger
Agreement or in any certificate delivered in connection herewith shall survive
the Merger, except that the agreements contained in Section 3 and the agreements
of Buyer referred to in Sections 6.6 (Indemnification of Officers and
Directors), 8.12 (Governing Law) and this Section 8.6 shall survive the Merger
indefinitely (except to the extent a shorter period of time is explicitly
specified therein). In no event shall Buyer or the Surviving Corporation, or
the Company or any of their respective affiliates, agents, representatives,
successors or assigns, have any recourse against the present or former
directors, officers, stockholders, Option Holders or Warrant Holders of the
Company or Buyer, as the case may be, or any affiliates or agents thereof with
respect to any representation, warranty or agreement made by the Company or
Buyer in this Merger Agreement or in any certificate delivered in connection
herewith.
8.7 NOTICES . All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given or made as follows: (I) if sent by registered or certified mail in
the United States return receipt requested, upon receipt; (II) if sent by
reputable overnight air courier (such as DHL or Federal Express), two business
days after mailing; (III) if sent by facsimile transmission, with a copy mailed
on the same day in the manner provided in (i) or (ii) above, when transmitted
and receipt is confirmed by telephone; or (IV) if otherwise actually personally
delivered, when delivered, and shall be delivered as follows:
37
if to the Company (prior to the Effective Time):
TransDigm Holding Company
c/o Marathon Power Technologies
0000 Xxxxxxxx Xxxxx
Xxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Fax: 000-000-0000
with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax Number: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxxx
Fax: 000-000-0000
and to:
Xxxxx & Company
000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx XX
Fax: 000-000-0000
if to Buyer or to the
Surviving Company (after the Effective Time):
Odyssey Investment Partners, LLC
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx Xxxxx
Fax: (000) 000-0000
38
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Fax: (000) 000-0000
or to such other address or to such other person as either party hereto shall
have last designated by notice to the other party.
8.8 ASSIGNMENT AND AMENDMENTS . This Merger Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of Buyer, the
Company and each of their respective successors and assigns, except that neither
this Merger Agreement nor any of the rights, interests or obligations hereunder
may be assigned by Buyer, or the Surviving Corporation without the prior written
consent of the Company. This Merger Agreement and the Schedules hereto cannot
be altered or otherwise amended except prior to the Effective Time pursuant to
an instrument in writing signed by Buyer and the Company.
8.9 NO THIRD PARTY BENEFICIARIES . Nothing in this Merger Agreement
shall confer any rights upon any person or entity which is not a party or a
successor or permitted assignee of a party to this Merger Agreement.
8.10 COUNTERPARTS . This Merger Agreement may be executed in two or
more counterparts, each such counterpart being deemed to constitute one and the
same instrument.
8.11 INTERPRETATION . The section headings in this Merger Agreement
are for convenience of reference only and shall not be deemed to alter or affect
the meaning or interpretation of any provision hereof. Any references to
Company's knowledge or the knowledge of the Company shall mean the actual
knowledge of Xxxxxxx X. Xxxxxxx, Xxxxxxxx Xxxxxx, Xxxx X. Xxxxxxxx, Xxxxxx X.
Xxxxxxxxx and Xxxxx X. Xxxxxxxxxx obtained in the normal course of their
respective duties as officers of the Company. Such individuals will be also
deemed to have knowledge of a particular fact or other matter if a prudent
person could be expected to discover or otherwise become aware of such fact or
other matter in the course of conducting a reasonably comprehensive
investigation concerning the existence of such fact or other matter. The
disclosure of any matter in the schedules hereto shall not be deemed to be a
disclosure under any other schedule hereto unless expressly made therein or
unless, and only to the extent that, it is apparent on the face of such
disclosure that such disclosure contains information which also modifies another
representation and warranty. For the purpose of this Merger Agreement, the
following terms shall have the following meanings: "AFFILIATE" shall mean, with
respect
39
to any person or entity (the "REFERENT PERSON"), any person or entity which
controls the referent person, any person or entity which the referent person
controls, or any person or entity which is under common control with the
referent person. For purposes of the preceding sentence, the term "CONTROL"
shall mean the power, direct or indirect, to direct or cause the direction of
the management and policies of a person or entity through voting securities, by
contract or otherwise; "PERSON" shall mean and include an individual,
partnership, a joint venture, a corporation, a trust, an unincorporated
organization or a government or any department or agency thereof; and
"SUBSIDIARY" shall mean any corporation or other business entity, whether or not
incorporated, of which at least 50% of the securities or interests having, by
their terms, ordinary voting power to elect members of the board of directors,
or other persons performing similar functions with respect to such entity, are
held, directly or indirectly by such party.
8.12 GOVERNING LAW . This Merger Agreement shall be construed,
performed and enforced in accordance with the laws of the State of New York,
without regard to the conflicts of law principles of such state.
8.13 CONSENT TO JURISDICTION, ETC. (a) Each of the parties hereto
hereby irrevocably and unconditionally submits, for itself and its property, to
the exclusive jurisdiction of any New York State court sitting in the County of
New York or Federal court of the United States of America sitting in New York
City, in any action or proceeding arising out of or relating to this Merger
Agreement or the transactions contemplated hereby or for recognition or
enforcement of any judgment relating thereto, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State
court or, to the extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(b) Each of the parties hereto hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Merger Agreement or the
transactions contemplated hereby in any such New York State or Federal court.
Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
(c) Each party to this Merger Agreement irrevocably consents to
service of process in the manner provided for notices in Section 8.7. Nothing
in this Merger Agreement will affect the right of any party to this Merger
Agreement to serve process in any other manner permitted by law.
40
8.14 WAIVER OF JURY TRIAL . (a) EACH PARTY ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS MERGER AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(b) EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
SUCH WAIVER, (III) IT MAKES SUCH WAIVER VOLUNTARILY, AND (IV) IT HAS BEEN
INDUCED TO ENTER INTO THIS MERGER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.14.
41
IN WITNESS WHEREOF, the parties hereto have caused this Merger
Agreement to be executed as of the date first above written.
PHASE II ACQUISITION CORP.
By /s/ Xxxxx Xxxxx
----------------------------------
Name: Xxxxx Xxxxx
Title: Chairman of the Board, President &
Treasurer
TRANSDIGM HOLDING COMPANY
By /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman & Chief Executive Officer
42
