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TABLE OF CONTENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on June 6, 2011

Registration No. 333-173381

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Amendment No. 2 to

Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



Wesco Aircraft Holdings, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  5072
(Primary Standard Industrial
Classification Code Number)
  20-5441563
(I.R.S. Employer
Identification No.)



27727 Avenue Scott
Valencia, CA 91355
(661) 775-7200

(Address, including zip code, and telephone number, including area code, of the registrant's principal executive offices)

John G. Holland
General Counsel
27727 Avenue Scott
Valencia, CA 91355
(661) 775-7200
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:

Rachel W. Sheridan
Jason M. Licht

Latham & Watkins LLP
555 11 th  Street, NW
Washington, DC 20004
(202) 637-2200

 

Michael Kaplan
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
(212) 450-4000



Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.

         If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  o

         If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

         If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

         If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  o   Accelerated filer  o   Non-accelerated filer  ý   Smaller reporting company  o

          The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine.


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The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED                  , 2011

PROSPECTUS

            Shares

LOGO

Wesco Aircraft Holdings, Inc.

Common Stock



        This is an initial public offering of the common stock of Wesco Aircraft Holdings, Inc. The selling stockholders are offering             shares of our common stock in this offering. We will not receive any proceeds from the sale of shares held by the selling stockholders. The selling stockholders in this offering include                .

        We expect the public offering price to be between $        and $        per share. Currently, no public market exists for the shares. We will apply to list our common stock on the New York Stock Exchange under the symbol "WAIR."

         Investing in our common stock involves risks. See "Risk Factors" beginning on page 10 of this prospectus.

       
 
 
  Per Share
  Total
 

Public offering price

  $               $            
 

Underwriting discounts and commissions

  $               $            
 

Proceeds, before expenses, to the selling stockholders

  $               $            

 

        The selling stockholders have granted the underwriters a 30-day option to purchase up to an additional        shares from the selling stockholders on the same terms and conditions as set forth above if the underwriters sell more than        shares of common stock in this offering. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

        The underwriters expect to deliver the shares to purchasers on or about        , 2011.



Barclays Capital   Morgan Stanley
BofA Merrill Lynch   J.P. Morgan   William Blair & Company



                , 2011


GRAPHIC


Table of Contents


TABLE OF CONTENTS

 
  Page

Prospectus Summary

  1

Risk Factors

  10

Forward-Looking Statements

  25

Use of Proceeds

  26

Dividend Policy

  27

Capitalization

  28

Dilution

  30

Selected Consolidated Financial Data

  32

Management's Discussion and Analysis of Financial Condition and Results of Operations

  34

Industry Overview

  60

Business

  62

Management

  76

Compensation Discussion and Analysis

  82

Certain Relationships and Related Party Transactions

  100

Principal and Selling Stockholders

  103

Description of Capital Stock

  106

Shares Eligible For Future Sale

  109

Material U.S. Federal Tax Considerations For Non-U.S. Holders of Our Common Stock

  111

Underwriting

  115

Validity of Common Stock

  121

Experts

  121

Where You Can Find More Information

  121

Index to Consolidated Financial Statements

  F-1



         We have not authorized anyone to provide any information other than that contained or incorporated by reference in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. The selling stockholders are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted.



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MARKET AND INDUSTRY DATA

        We obtained the industry, market and competitive position data used throughout this prospectus from our own internal estimates and research as well as from industry publications, research, surveys and studies conducted by third parties, including the May 2010 and January 2011 publications of the Airline Monitor; the January 2011 report entitled "Business Jet Report" by the U.S. Federal Aviation Administration; the March 2011 report entitled "Lockheed Martin F-35 Joint Strike Fighter (JSF)" by Forecast International; the November 2011 report entitled "Boeing Current Market Outlook, 2010-2029" by Boeing; the 2009 and 2010 publications of the "Statistical Databook and Industry Outlook" by the General Aviation Manufacturers Association; the October 2010 report entitled "Business Aviation Outlook" by Honeywell; and an independent research report that was prepared by Stax Inc. for our use in connection with this offering. Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable. We have not independently verified market and industry data from third-party sources. Estimates of historical growth rates in the markets where we operate are not necessarily indicative of future growth rates in such markets.


CERTAIN TRADEMARKS

        This prospectus includes trademarks, such as Wesco Aircraft® and the Wesco logo, which are protected under applicable intellectual property laws and are our property and/or the property of our subsidiaries. This prospectus also contains trademarks, service marks, copyrights and trade names of other companies, which are the property of their respective owners. Solely for convenience, our trademarks and tradenames referred to in this prospectus may appear without the® or™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks and tradenames.

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PROSPECTUS SUMMARY

         This summary highlights information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you. You should read this entire prospectus and should consider, among other things, the matters set forth under "Risk Factors," "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our financial statements and related notes thereto appearing elsewhere in this prospectus before making your investment decision. Unless otherwise noted in this prospectus, the term "Wesco Aircraft" means Wesco Aircraft Holdings, Inc., our top-level holding company, and the terms "Wesco," "the Company," "we," "us," "our" and "our company" mean Wesco Aircraft and its subsidiaries, including Wesco Aircraft Hardware Corp., our primary domestic operating company, and Wesco Aircraft Europe, Ltd., our primary foreign operating company. References to "fiscal year" mean the year ending or ended September 30. For example, "fiscal year 2010" or "fiscal 2010" means the period from October 1, 2009 to September 30, 2010.

Our Company

        We are one of the world's largest distributors and providers of comprehensive supply chain management services to the global aerospace industry on an annual sales basis. Our services range from traditional distribution to the management of supplier relationships, quality assurance, kitting, just-in-time, or JIT, delivery and point-of-use inventory management. We supply approximately 450,000 different stock keeping units, or SKUs, including hardware, bearings, tools and more recently, electronic components and machined parts. In fiscal 2010, sales of hardware represented 80% of our net sales, with highly engineered fasteners constituting 83% of that amount. We serve our customers under three types of arrangements: JIT contracts, which govern comprehensive outsourced supply chain management services; long term agreements, or LTAs, which set prices for specific parts; and ad hoc sales. JIT contracts and LTAs, which together comprised approximately 63% of our fiscal 2010 net sales, are multi-year arrangements that provide us with significant visibility into our future sales.

        Wesco was founded in 1953 by the father of our current chief executive officer and has a long history of consistent growth and profitability. We have grown our net sales at a 16% compound annual growth rate, or CAGR, over the past 10 years to $656.0 million in fiscal 2010. Our growth and profitability have been driven by our focus on customer service and our management's ability to make optimal inventory purchasing decisions through the use of our highly customized information technology, or IT, system. We believe that with more than 1,000 employees across 28 locations in 10 countries, we are well positioned to continue our track record of strong long-term growth and profitability.

        We believe we offer a compelling value proposition to both our customers and suppliers. Customers that utilize our comprehensive JIT supply chain management services are frequently able to realize significant benefits including: reduced inventory levels, fewer disruptions of production schedules, improved quality assurance and reduced administrative and overhead costs. Our more than 1,100 suppliers also derive several benefits from our scale, global reach and unique business model, including: access to over 7,200 customer accounts, improved manufacturing efficiency, reduced inventory levels, improved performance in meeting on-time-delivery targets to end customers and reduced administrative and overhead costs.

Industry Overview

        According to Stax, the global market for C class aerospace parts, which includes hardware, bearings, electronic components and machined parts for both commercial and military customers, was approximately $6.5 billion in 2010. Approximately $4.2 billion of this market flows through distributors.

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        The key trends and drivers of growth in our market include:

        Increased Demand for New Aircraft Production.     The original equipment manufacturer, or OEM, market for C class aerospace parts in 2010 was approximately $4.5 billion according to Stax, with approximately $2.7 billion of this total relating to sales to the commercial end market and $1.8 billion relating to the military end market. Increased passenger traffic volumes and the return to profitability of the global airline industry have renewed demand for commercial aircraft deliveries, which are forecasted by Airline Monitor to grow at a CAGR of approximately 4.5% over the next ten years. We also expect commercial aircraft production to be supplemented by increases in business and regional jet deliveries. Future military aerospace OEM demand is expected to be driven by increases in the production of the Lockheed Martin F-35 Joint Strike Fighter, or JSF. The JSF is a next-generation fighter that is designed for the U.S. Navy, Marines and Air Force, as well as key U.S. allies such as the United Kingdom, Italy and The Netherlands.

        Increased Demand from the MRO Market.     According to Stax, the combined commercial and military maintenance, repair and overhaul, or MRO, market represented approximately $2.0 billion of the total C class aerospace parts market in 2010. We expect commercial MRO providers to benefit from the same trends as those impacting the commercial OEM market, including increased revenue passenger miles, or RPMs, which will in turn drive growth in the commercial fleet and greater utilization of existing aircraft. We expect demand in the military MRO market to be driven by requirements to maintain aging military fleets, changes in the overall fleet size and the level of U.S. military activity overseas.

        Industry Consolidation.     We are one of the top two aerospace distribution companies by sales and, together with our largest competitor, accounted for approximately $1.4 billion, or 22%, of the approximately $6.5 billion C class aerospace parts market in 2010, of which approximately $656.0 million, or 10%, was attributable to us. The remainder of the market is highly fragmented, which creates significant opportunities for further consolidation. Several benefits typically accrue to distributors through consolidation, including efficiencies in leveraging costs over a larger revenue base, increased customer penetration facilitated by a larger product offering and a reduction in purchasing costs driven by larger volume-based discounts. We expect these benefits to support further consolidation in the industry.

        Globalization.     The manufacture of aircraft and aircraft structures is becoming more globalized, as nations such as China, India and the UAE invest heavily to develop their aerospace industries. In addition, many U.S. and European OEMs continue to expand their operations in international markets in order to benefit from labor cost savings as local businesses seek to partner with established global companies. These OEMs and subcontractors expect to receive the same quality parts and services in new markets that they receive in their home markets. We believe that these quality and service expectations and the overall growth rates in international aerospace markets present significant opportunities for global supply chain managers such as Wesco.

Our Competitive Strengths

        We believe our key competitive strengths include the following:

        Leader in Attractive Global Market.     We are one of the world's largest distributors and providers of comprehensive supply chain management services to the global aerospace industry on an annual sales basis. We believe we offer the world's broadest inventory of aerospace parts comprised of approximately 450,000 SKUs. In addition, we fill approximately 8,000 orders per work day and manage approximately 350,000 stocking bins throughout our customers' facilities. We believe that the scale of our global distribution network, our value-added services and the depth, breadth and dollar investment in our inventory provide us with a significant competitive advantage in an attractive market.

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        Compelling Value Proposition.     We offer a compelling value proposition to our customers by combining access to what we believe to be the world's broadest inventory of aerospace parts with our unique capabilities in comprehensive supply chain management. Our services can significantly improve on-time-delivery performance, enabling our customers to reduce their inventory while at the same time decreasing the frequency of production interruptions caused by part shortages. Aerospace companies that outsource to a supply chain manager like Wesco can reduce overhead and administrative costs relating to internal procurement, quality assurance, inventory stocking and other related personnel.

        Diverse Customer and Program Base.     We maintain strong relationships with over 7,200 active customers including major OEMs such as Airbus, Boeing, Bombardier, Embraer, Cessna, Gulfstream, BAE Systems, Bell Helicopter, Lockheed Martin, Northrop Grumman and Raytheon. We supply products to nearly every major Western aircraft in production, including the B-787, B-737, B-747, A-320, JSF and V-22. During fiscal 2010, no single customer or aircraft program represented more than 15% of our net sales. We have actively worked to transition our largest customers from ad hoc purchases to multi-year LTAs or comprehensive JIT supply chain management agreements, the latter two of which together represented approximately 63% of our fiscal 2010 net sales. By developing strong, long-term relationships with a diverse set of customers, we have significant visibility into our future sales.

        Superior Purchasing Capabilities and Supplier Relationships.     Our management is highly skilled in analyzing supply, demand, cost and pricing factors in order to make optimal inventory investment decisions, and we maintain close relationships with the leading suppliers in the industry. In particular, Precision Castparts Corp., or Precision Castparts, and Alcoa Fastening Systems supplied approximately 22% and 20%, respectively, of the products we purchased during fiscal 2010. As a result of our scale and the strength of our relationships, many of our suppliers offer us attractive volume-based price discounts. Our success in making optimal inventory purchasing decisions is driven by our management's deep understanding of our industry and is further facilitated by our highly customized IT system. Our superior inventory purchasing capabilities and strength of our supplier relationships have contributed substantially to what we believe are our industry-leading operating margins.

        Experienced Management Team with Significant Equity Ownership.     Our management team has extensive industry experience and company tenure. Our Chief Executive Officer and other executive officers have an average of more than 20 years of experience with us and more than 30 years in our industry. In addition, our executive officers will own approximately        % of the common stock of the Company following this offering. We believe that this significant equity ownership aligns the interests of our executive officers with our stockholders.

Our Strategy for Continued Growth

        We intend to pursue the following strategies in order to continue to grow our business:

        Continued Focus on Operational Excellence.     We intend to further our existing customer relationships by continuing to invest in our highly customized IT system and providing best-in-class on-time delivery performance and quality assurance. We believe that by focusing on operational excellence, we will be able to maintain high customer satisfaction and industry-leading operating margins.

        Win New Business from Existing Customers.     We will continue our strategy of expanding our relationships with existing customers by transitioning them to our comprehensive JIT supply chain management services as well as expanding our programs to include additional customer sites and SKUs, and by introducing new supply chain solutions that minimize costs, improve productivity and lower inventory investment.

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        Expand Customer Base.     We plan to expand our customer base and have had significant success in winning business when competing distributors have been unable to meet customer service level requirements and in situations where customers have outsourced work that was previously performed internally. In addition, we will increase our focus on serving airlines and airline maintenance organizations.

        Further Expand into International Markets.     We have recently established a presence in international locations such as China, India and Saudi Arabia, and we intend to expand into other high growth regions such as Mexico to support new and existing customers. Our international expansion efforts will enable us to better reach new customers and more effectively serve our existing customer base as the manufacture of aircraft and aircraft structures continues to become more globalized.

        Selectively Pursue Strategic Acquisitions.     Our industry is highly fragmented and we believe that there are opportunities for continued consolidation. We believe that we are well positioned to expand our product offering and geographical footprint through strategic acquisitions.

Recent Developments

        On April 7, 2011, Wesco Aircraft Hardware Corp., our wholly owned, primary domestic operating subsidiary, entered into a new $765.0 million senior secured credit facility with Barclays Bank PLC, as administrative agent and collateral agent, and Merrill Lynch, Pierce, Fenner & Smith, Incorporated, Key Bank, N.A. and Barclays Capital, as joint lead arrangers, which we refer to as our new senior secured credit facilities.

        The purpose of the refinancing was to extend the maturity dates under the term loans of Wesco Aircraft Hardware Corp.'s existing senior secured credit facilities, which we refer to as our old senior secured credit facilities, increase the borrowing capacity under our revolver and pay related fees and expenses. The new senior secured credit facilities consist of a (i) $150.0 million revolving credit facility, which we refer to as the new revolving facility, (ii) $265.0 million term loan A facility, which we refer to as the new term loan A facility, and (iii) $350.0 million term loan B facility, which we refer to as the new term loan B facility. Wesco Aircraft is a guarantor of the new senior secured credit facilities.

Risks Related to Our Business

        Investing in our common stock involves substantial risk. You should carefully consider all of the information in this prospectus prior to investing in our common stock. There are several risks related to our business that are described under "Risk Factors" elsewhere in this prospectus. Among these important risks are the following:

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Our Sponsor

        The Carlyle Group, or Carlyle, is a global alternative asset management firm with $107.4 billion of assets under management committed to 84 funds as of March 31, 2011. Carlyle invests across three segments—corporate private equity, real assets and global market strategies—in Africa, Asia, Australia, Europe, North America and South America, focusing on aerospace and defense, industrial, transportation, consumer and retail, energy and power, financial services, healthcare, infrastructure, technology and business services, and telecommunications and media. Since 1987, the firm has invested $74.9 billion of equity in 1,052 transactions. Carlyle employs more than 1,000 people in 21 countries. Representative Carlyle transactions include the acquisitions of The Hertz Corporation, the largest worldwide car rental brand, Booz Allen Hamilton, a provider of management and technology consulting services to the U.S. government in the defense, intelligence and civil markets, Kinder Morgan, an energy pipeline and storage company, and The Nielsen Company, an information and data measurement company.

        As of June 6, 2011, Carlyle, through Falcon Aerospace Holdings, LLC, owned approximately 83.8% of our outstanding common stock. Following the completion of this offering and assuming that the underwriters do not exercise their option to purchase additional shares of common stock, Carlyle will continue to own approximately      % of our outstanding common stock.

Company History

        Wesco Aircraft was incorporated in Delaware on July 21, 2006, as a holding company for Wesco Aircraft Hardware Corp., our wholly owned, primary domestic operating subsidiary, Wesco Aircraft Europe, Ltd., our primary foreign operating subsidiary, and certain other foreign operating subsidiaries, in connection with the acquisition of 100% of the outstanding stock of Wesco Aircraft Hardware Corp., Wesco Aircraft Israel and the European entities of Flintbrook Ltd., Wesco Aircraft France and Wesco Aircraft Germany by Wesco Aircraft, which we refer to as the Carlyle Acquisition. Wesco Aircraft Hardware Corp., our primary domestic operating company, was incorporated in California on October 11, 1971 and Wesco Aircraft Europe, Ltd., our primary foreign operating company, was incorporated in the United Kingdom on October 19, 1984.

        Our principal executive offices are located at 27727 Avenue Scott, Valencia, CA 91355 and our telephone number is (661) 775-7200. Our Internet address is www.wescoair.com. The contents of our website are not part of this prospectus.

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The Offering

Common stock offered by the selling stockholders

              shares.

Selling stockholders

 

The selling stockholders in this offering include                . See "Principal and Selling Stockholders."

Common stock outstanding after this offering

 

            shares.

Option to purchase additional shares of common stock

 

The selling stockholders have granted the underwriters a 30-day option to purchase up to an additional        shares of common stock at the initial public offering price to cover overallotments, if any.

Use of proceeds

 

We will not receive any net proceeds from the sale of shares by the selling stockholders, including with respect to the underwriters' overallotment option. See "Use of Proceeds."

Proposed New York Stock Exchange symbol

 

"WAIR."

Risk factors

 

See "Risk Factors" beginning on page 10 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.

        The number of shares of our common stock to be outstanding after completion of this offering is based on            shares outstanding as of March 31, 2011 and excludes:

        Unless we specifically state otherwise, all information in this prospectus assumes:

        Concurrently with the amending and restating of our certificate of incorporation, the number of shares of our authorized common stock will be increased to 950,000,000 shares, and each share of common stock then outstanding, including the shares of our Class B common stock, that will have been converted, on a one-for-one basis, into shares of common stock, will be split into                shares of common stock by way of a stock split. Unless we specifically state otherwise, the share information in this prospectus reflects the increase in the authorized number of our common stock and the stock split.

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Summary Historical Financial Data

        The following tables set forth our summary historical financial data for the years ended September 30, 2008, 2009 and 2010 and for the six month periods ended March 31, 2010 and 2011. Our summary historical income statement data for each of the years in the three-year period ended September 30, 2010 have been derived from our audited financial statements included elsewhere in this prospectus. Our summary historical income statement data for the six months ended March 31, 2010 and 2011 and our summary historical balance sheet data as of March 31, 2011 have been derived from our unaudited financial statements included elsewhere in this prospectus that, in the opinion of management, include all adjustments consisting only of normal, recurring adjustments necessary for a fair presentation of the results for the unaudited interim period. Results for the six months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the year ending September 30, 2011 or for any other period. The selected historical balance sheet data as of March 31, 2011 have been derived from our unaudited financial statements not included in this prospectus. The financial data set forth below are not necessarily indicative of future results of operations. This data should be read in conjunction with, and is qualified in its entirety by reference to, the "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Capitalization" sections and our financial statements and notes thereto included elsewhere in this prospectus.

 
  Year Ended September 30,   Six Months Ended
March 31,
 
(Dollars in thousands, except share and per share amounts)
  2008   2009   2010   2010   2011  
 
   
   
   
  (unaudited)
 

Consolidated statements of income:

                               

Net sales:

                               
 

North America

  $ 551,135   $ 557,874   $ 603,809   $ 283,285   $ 318,808  
 

Rest of the World

    112,623     102,796     95,342     47,259     57,527  
 

Intercompany eliminations

    (59,415 )   (47,983 )   (43,115 )   (19,633 )   (26,792 )
                       
   

Net sales

    604,343     612,687     656,036     310,911     349,543  

Gross profit:

                               
 

North America

    221,898     204,296     226,497     103,788     117,725  
 

Rest of the World

    42,143     39,733     34,167     17,265     19,523  
 

Intercompany eliminations

    (7,433 )   (5,742 )   (6,434 )   (3,214 )   (3,123 )
                       
   

Gross profit

    256,608     238,287     254,230     117,839     134,125  

Selling, general and administrative expenses:

                               
 

North America

    84,807     86,007     81,674     40,140     39,593  
 

Rest of the World

    20,951     17,888     18,241     9,185     10,288  
                       
   

Selling, general and administrative expenses

    105,758     103,895     99,915     49,325     49,881  
                       

Income from operations

    150,850     134,392     154,315     68,514     84,244  

Interest expense, net

    (48,743 )   (37,707 )   (36,270 )   (18,214 )   (12,586 )

Other income (expense), net

    746     (376 )   (458 )   1,056     (177 )
                       

Income before provision for income taxes

    102,853     96,309     117,587     51,356     71,481  
                       

Provision for income taxes

    44,251     37,862     43,913     19,171     27,873  
                       

Net income

  $ 58,602   $ 58,447   $ 73,674   $ 32,185   $ 43,608  
                       

Earnings per share data:

                               

Net income per share:

                               
   

Basic

  $ 6.22   $ 6.19   $ 7.32   $ 3.20   $ 4.33  
   

Diluted

  $ 6.02   $ 5.87   $ 7.28   $ 3.20   $ 4.24  

Weighted average shares outstanding:

                               
   

Basic

    9,420,433     9,440,596     10,063,237     10,063,237     10,065,678  
   

Diluted

    9,740,158     9,964,748     10,118,648     10,063,473     10,292,912  

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  Year Ended September 30,   Six Months Ended
March 31,
 
(Dollars in thousands)
  2008   2009   2010   2010   2011  
 
   
   
   
  (unaudited)
 

Consolidated balance sheet data:

                               
   

Cash and cash equivalents

  $ 15,998   $ 11,406   $ 39,463   $ 24,056   $ 45,670  
   

Working capital(1)

    438,863     526,375     565,126     552,997     600,679  
   

Total assets

    1,173,620     1,254,812     1,279,012     1,266,090     1,300,286  
   

Total liabilities

    763,847     780,872     733,273     763,674     709,696  
   

Total stockholders' equity

    409,773     473,940     545,739     502,416     590,590  

Statements of Cash Flows Data:

                               
   

Net cash provided by operating activities

  $ 24,702   $ 1,266   $ 100,773   $ 31,117   $ 23,657  
   

Net cash used in investing activities

    (115,798 )   (4,135 )   (3,077 )   (1,325 )   (2,761 )
   

Net cash provided by (used in) financing activities

    94,114     (1,720 )   (69,483 )   (16,471 )   (14,875 )

Other Financial and Operating Data:

                               
   

Capital expenditures

  $ (6,769 ) $ (4,135 ) $ (3,077 ) $ (1,325 ) $ (2,761 )
   

Adjusted EBITDA(2)

    184,060     156,985     166,467     75,857     89,047  
   

Adjusted Net Income(2)

    77,435     71,869     81,307     35,673     46,082  

(1)
Working capital is defined as our current assets minus our current liabilities.

(2)
We disclose Adjusted EBITDA and Adjusted Net Income, which are non-GAAP measures our management uses to evaluate our business, because we believe they assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. We believe these metrics are used in the financial community, and we present these metrics to enhance investors, understanding of our operating performance and cash flow. You should not consider Adjusted EBITDA and Adjusted Net Income as an alternative to net income, determined in accordance with GAAP, as an indicator of operating performance, or as an alternative to net cash provided by operating activities, determined in accordance with GAAP, as an indicator of our cash flow.

We use Adjusted EBITDA and Adjusted Net Income to evaluate our performance relative to that of our peers. However, Adjusted EBITDA and Adjusted Net Income are not measurements of financial performance under GAAP, and these metrics may not be comparable to similarly titled measures of other companies. Adjusted EBITDA varies from (i) the measure "EBITDA" discussed in this prospectus under "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Senior Secured Credit Facilities" and in our consolidated financial statements, which are included elsewhere in this prospectus, and (ii) the measure "Bonus EBITDA" discussed in this prospectus under "Compensation Discussion and Analysis" and in our consolidated financial statements, which are included elsewhere in this prospectus.

"Adjusted EBITDA" represents net income before: (i) income tax provision, (ii) net interest expense, (iii) depreciation and amortization, (iv) amortization of inventory step-up, and (v) Carlyle Acquisition related non-cash stock-based compensation expense. The following table reconciles Net income to Adjusted EBITDA:

 
  Year Ended September 30,   Six Months Ended
March 31,
 
(Dollars in thousands)
  2008   2009   2010   2010   2011  
 
   
   
   
  (unaudited)
 

Net income

  $ 58,602   $ 58,447   $ 73,674   $ 32,185   $ 43,608  

Income tax provision

    44,251     37,862     43,913     19,171     27,873  

Interest expense, net

    48,743     37,707     36,270     18,214     12,586  

Depreciation and amortization

    7,846     10,065     8,821     4,461     4,629  

Amortization of inventory step-up(a)

    11,418     3,861     2,200     1,032      

Carlyle Acquisition related non-cash stock-based compensation expense(b)

    13,200     9,043     1,589     794     351  
                       

Adjusted EBITDA

  $ 184,060   $ 156,985   $ 166,467   $ 75,857   $ 89,047  

(a)
Represents the amortization of the fair value step-up of inventory associated with the Carlyle Acquisition and the acquisition of Airtechnics, Inc. included in cost of sales.

(b)
Reflects stock-based compensation expense for restricted stock awards, restricted stock units and stock options granted in connection with the Carlyle Acquisition. This adjustment excludes any remaining stock compensation expense unrelated to the Carlyle Acquisition of $500, $1,346, $921, $487 and $559 for the years ended September 30, 2008, 2009, 2010 and the six months ended March 31, 2010 and 2011, respectively. Stock compensation expense in future periods may vary depending on the number of awards granted.

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    "Adjusted Net Income" represents net income before: (i) amortization of intangible assets, (ii) amortization of inventory step-up, (iii) amortization or write-off of deferred financing costs and original issue discount, or OID, (iv) Carlyle Acquisition related non-cash stock-based compensation expense and (v) the tax effect of items (i) through (iv) above calculated using an assumed effective tax rate. The following table reconciles Net income to Adjusted Net Income:

 
  Year Ended September 30,   Six Months Ended
March 31,
 
(Dollars in thousands)
  2008   2009   2010   2010   2011  
 
   
   
   
  (unaudited)
 

Net income

  $ 58,602   $ 58,447   $ 73,674   $ 32,185   $ 43,608  

Amortization of intangible assets(a)

    3,391     5,763     4,119     2,136     1,848  

Amortization of inventory step-up(b)

    11,418     3,861     2,200     1,032      

Amortization of deferred financing costs(c)

    3,379     3,703     4,814     1,852     1,925  

Carlyle Acquisition related non-cash stock-based compensation expense(d)

    13,200     9,043     1,589     794     351  

Tax effect of above adjustments(e)

    (12,555 )   (8,948 )   (5,089 )   (2,326 )   (1,650 )
                       

Adjusted Net Income

  $ 77,435   $ 71,869   $ 81,307   $ 35,673   $ 46,082  

(a)
We include fixed asset depreciation expense in our presentation of Adjusted Net Income because fixed asset depreciation expense reflects recurring expenses associated with capital expenditures made in our business, whereas we exclude amortization of intangible assets from Adjusted Net Income because amortization of intangible assets is a result of historical, non-recurring transactions, including the Carlyle Acquisition and the acquisition of Airtechnics, Inc.

(b)
Represents the amortization of the fair value step-up of inventory associated with the Carlyle Acquisition and the acquisition of Airtechnics, Inc. included in cost of sales.

(c)
Represents the amortization of deferred financing costs associated with our term loans and revolving line of credit. Amortization of OID associated with our $765.0 million new senior secured credit facilities entered into on April 7, 2011 will be included in this adjustment in future periods.

(d)
Reflects stock-based compensation expense for restricted stock awards, restricted stock units and stock options granted in connection with the Carlyle Acquisition. This adjustment excludes any remaining stock compensation expense unrelated to the Carlyle Acquisition of $500, $1,346, $921, $487 and $559 for the years ended September 30, 2008, 2009, 2010 and the six months ended March 31, 2010 and 2011, respectively. Stock compensation expense in future periods may vary depending on the number of awards granted.

(e)
Reflects taxes on adjustments at an assumed marginal tax rate of 40%.

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RISK FACTORS

         An investment in our common stock involves a high degree of risk. You should consider carefully the following risks and other information contained in this prospectus before you decide whether to buy our common stock. If any of the events contemplated by the following discussion of risks should occur, our business, results of operations and financial condition could suffer significantly. As a result, the market price of our common stock could decline, and you may lose all or part of the money you paid to buy our common stock. The following is a summary of all the material risks known to us.

Risks Related to Our Business and Industry

We are directly dependent upon the condition of the aerospace industry, which is closely tied to global economic conditions, and if the volatility in the global financial markets were to result in a slowdown in the current economic recovery or a return to a recession, our business, financial condition and results of operations could be negatively impacted.

        Demand for the products and services we offer is directly tied to the delivery of new aircraft and aircraft utilization, which, in turn, is impacted by global economic conditions. Although the economy has exhibited signs of recovery, global financial markets have experienced extreme volatility and disruption for more than two years, which, at times, reached unprecedented levels as a result of the financial crisis affecting the banking system and participants in the global financial markets. Concerns over the tightening of the corporate credit markets, inflation, energy costs and the dislocation of the real estate and mortgage markets have contributed to the volatility in the global financial markets and, together with the global financial crisis, have created uncertainties for global economic conditions in the future. The aerospace industry is particularly sensitive to changes in economic conditions. In 2009, RPMs on commercial aircraft declined due to the global recession. During the same period, the industry experienced declines in large commercial, regional jet and business jet deliveries. While demand for commercial and regional jets has recovered somewhat, business jet orders and deliveries have recovered more slowly. A slowdown in the current economic recovery or a return to a recession would negatively impact the aerospace industry, and could negatively impact our business, financial condition and results of operations.

Military spending, including spending on the products we sell, is dependent upon national defense budgets, and a reduction in military spending could have a material adverse effect on our business, financial condition and results of operations.

        During the year ended September 30, 2010, approximately 53% of our net sales were related to military aircraft. The military market is significantly dependent upon government budget trends, particularly the U.S. Department of Defense, or DoD, budget. Future DoD budgets could be negatively impacted by several factors, including, but not limited to, a change in defense spending policy by the current and future presidential administrations and Congress, the U.S. Government's budget deficits, spending priorities, the cost of sustaining the U.S. military presence in overseas operations and possible political pressure to reduce U.S. Government military spending, each of which could cause the DoD budget to decline. A decline in U.S. military expenditures could result in a reduction in military aircraft production, which could have a material adverse effect on our business, financial condition and results of operations.

We are subject to unique business risks as a result of supplying equipment and services to the U.S. Government directly and as a subcontractor, which could lead to a reduction in our net sales from, or the profitability of our supply arrangements with, the U.S. Government.

        Companies engaged in supplying defense-related equipment and services to U.S. Government agencies are subject to business risks specific to the defense industry. We contract directly with the U.S. Government and as a subcontractor to customers contracting with the U.S. Government. These risks include the ability of the U.S. Government to unilaterally suspend us from receiving new contracts

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pending resolution of alleged violations of procurement laws or regulations, reduce the value of existing contracts and audit our contract-related costs and fees. In addition, most of our U.S. Government contracts and subcontracts can be terminated by the U.S. Government or the contracting party, as applicable, at its convenience. Termination for convenience provisions provide only for our recovery of costs incurred or committed, settlement expenses and profit on the work completed prior to termination.

        In addition, the U.S. Government may seek to review our costs to determine whether our pricing is "fair and reasonable." Such a review could be costly and time consuming for our management and could distract from our ability to effectively manage the business. As a result of such a review, we could be required to provide a refund to the U.S. Government or we could be asked to enter into an arrangement whereby our prices would be based on cost or the DoD could seek to pursue alternative sources of supply for our parts. Any of those occurrences could lead to a reduction in our net sales from, or the profitability of certain of our supply arrangements with, certain agencies and buying organizations of the U.S. Government.

        We are also subject to the federal False Claims Act, which provides for substantial civil penalties and treble damages where a contractor presents a false or fraudulent claim to the government for payment. Actions under the False Claims Act may be brought by the government or by other persons on behalf of the government (who may then share in any recovery).

We do not have guaranteed future sales of the products we sell and when we enter into JIT contracts and LTAs with our customers we generally take the risk of cost overruns, and our business, financial condition, results of operations and operating margins may be negatively affected if we purchase more products than our customers require, product costs increase unexpectedly or our contracts are terminated.

        Our JIT contracts and LTAs are long-term, fixed-price agreements with no guarantee of future sales volumes, and they may be terminated for convenience on short notice by our customers, often without meaningful penalties, provided that we are reimbursed for the cost of any inventory specifically procured for the customer. In addition, we purchase inventory based on our forecasts of anticipated future customer demand. As a result, we may take the risk of having excess inventory in the event that our customers do not place orders consistent with our forecasts. We also run the risk of not being able to pass along or otherwise recover unexpected increases in our product costs, including as a result of commodity price increases, which may increase above our established prices at the time we entered into the customer contract and established prices for parts we provide. In the event that we purchase more products than our customers require, product costs increase unexpectedly or our contracts are terminated, our business, financial condition, results of operations and operating margins could be negatively affected.

If we lose significant customers, significant customers materially reduce their purchase orders or significant programs on which we rely are delayed, scaled back or eliminated, our business, financial condition and results of operations may be adversely affected.

        Our top ten customers for the year ended September 30, 2010 accounted for approximately 48% of our net sales. Boeing was our largest customer during fiscal 2010, accounting for approximately 15% of our net sales through purchases by its various divisions and subsidiaries. A reduction in purchasing by or loss of one of our larger customers for any reason, such as changes in manufacturing practices, loss of a customer as a result of the acquisition of such customer by a purchaser who does not fully utilize a distribution model or uses a competitor, in-sourcing by customers, a transfer of business to a competitor, an economic downturn, failure to adequately service our clients, decreased production or a strike, could have a material adverse effect on our business, financial condition and results of operations.

        As an example of changes in manufacturing practices that could impact us, OEMs such as Boeing and Airbus are currently incorporating an increasing amount of composite materials in the aircraft they

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manufacture. Aircraft utilizing composite materials generally require the use of significantly fewer C class aerospace parts than new aircraft made of more traditional non-composite materials, although the parts used are generally higher priced than C class aerospace parts used in non-composite aircraft structures. As Boeing, Airbus and other customers increase their reliance on composite materials, they may materially reduce their purchase orders from us.

        As an example of the loss of a customer resulting from the acquisition of such customer by a purchaser that does not intend to fully utilize our distribution model, we were notified by Boeing of its intent to perform certain supply chain management functions in-house that we were providing at two facilities under JIT contracts that were awarded to us prior to these particular facilities being acquired by Boeing. In fiscal 2010, sales at these facilities accounted for approximately 5.8% of net sales.

        As an example of the potential loss of business due to customer in-sourcing, it is our understanding that Boeing is undertaking an initiative to cause its first and second tier suppliers to source certain Boeing-specific materials, including fasteners, directly from manufacturers, rather than through distributors such as us. If Boeing's initiative is broadly implemented, a portion of our sales to these Boeing suppliers, and consequently our business, financial condition and results of operations, could be adversely affected.

        While we believe that we have a diversified customer and aircraft program base, we expect to derive a significant portion of our net sales from certain aerospace programs in their early production stages. In particular, our future growth will be dependent, in part, upon our sales to various OEMs and subcontractors related to the Boeing 787 and the Lockheed Martin JSF. For example, we estimate that 10% of our net sales during fiscal 2010, which includes the 5.8% of net sales generated at the facilities acquired by Boeing that are referenced above, were derived from sales to a number of customers related to the Boeing 787 and that approximately 20% of the parts we held in inventory primarily pertained to the Boeing 787. If production of any of the programs we support is terminated or delayed, or if our sales to customers affiliated with these programs are reduced or eliminated, our business, financial condition and results of operations could be adversely affected.

We operate in a highly competitive market and our failure to compete effectively may negatively impact our results of operations.

        We operate in a highly competitive global industry and compete against a number of companies, including divisions of larger companies, some of which may have significantly greater financial resources than we do, and therefore may be able to adapt more quickly to changes in customer requirements than we can. Our competitors consist of both U.S. and foreign companies and range in size from divisions of large public corporations to small privately held entities. We believe that our ability to compete depends on superior customer service and support, on-time delivery, sufficient inventory availability, competitive pricing and effective quality assurance programs. In order to remain competitive, we may have to adjust the prices of some of the products and services we sell and continue investing in our procurement, supply-chain management and sales and marketing functions, the costs of which could negatively impact our results of operations.

        In addition, we face competition for our JIT and LTA customers from both competitors in our industry and the in-sourcing of supply-chain management by our customers themselves. If any of our JIT or LTA customers decides to in-source the services we provide or switch to one of our competitors, we would be adversely affected.

We may be unable to effectively manage our inventory as we grow, which could have a material adverse effect on our business, financial condition and results of operations.

        We have experienced rapid growth in recent periods and intend to continue to grow our business by increasing our product offerings and expanding our customer base. Due to the lead times required by our suppliers, we order products in advance of expected sales, the volume of which orders may be significant as a result of our growth strategy. Lead times generally range from several weeks up to two

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years, depending on industry conditions, which make it difficult to successfully manage our inventory as we plan for expected growth. For example, in 2009, our cash flows were negatively impacted as our suppliers continued filling orders that we had placed in anticipation of future sales, while orders from our customers slowed because the aerospace industry had entered a significant downturn. In the future, if we are unable to effectively manage our inventory as we attempt to grow our business, our cash flows may be negatively affected, which could have a material adverse effect on our business, financial condition and results of operations.

If suppliers are unable to supply us with the products we sell in a timely manner, in adequate quantities and/or at a reasonable cost, we may be unable to meet the demands of our customers, which could have a material adverse effect on our business, financial condition and results of operations.

        Our inventory is primarily sourced directly from manufacturing firms, and we depend on the availability of large supplies of the products we sell. Our largest supplier for the year ended September 30, 2010 was Precision Castparts. During fiscal 2010, approximately 22% of the products we purchased were from Precision Castparts and 20% were purchased from Alcoa Fastening Systems. In addition, our ten largest suppliers during fiscal 2010 accounted for approximately 58% of our purchases. These manufacturers may experience capacity constraints that result in their being unable to supply us with products in a timely manner, in adequate quantities and/or at a reasonable cost. Contributing factors to manufacturer capacity constraints include, among other things, industry or customer demands in excess of machine capacity, labor shortages and changes in raw material flows. Any significant interruption in the supply of these products or termination of our relationship with any of our suppliers could result in us being unable to meet the demands of our customers, which would have a material adverse effect on our business, financial condition and results of operations.

Our business is highly dependent on complex information technology.

        The provision and application of IT is an increasingly critical aspect of our business. Among other things, our IT system must frequently interact with those of our customers, suppliers and logistics providers. Our future success will depend on our continued ability to employ an IT system that meets our customers' demands. The failure of the hardware or software that supports our IT system, including redundancy systems, could significantly disrupt our ability to service our customers and cause economic losses for which we could be held liable and which could damage our reputation.

        Our competitors may have or may develop IT systems that permit them to be more cost effective and otherwise better situated to meet customer demands than we are able to acquire or develop. Larger competitors may be able to develop or license IT systems more cost effectively than we can by spreading the cost across a larger revenue base, and competitors with greater financial resources may be able to acquire or develop IT systems that we cannot afford. If we fail to meet the demands of our customers or protect against disruptions of our IT system, we may lose customers, which could seriously harm our business and adversely affect our operating results and operating cash flow.

We may be unable to retain personnel who are key to our operations.

        Our success, among other things, is dependent on our ability to attract, develop and retain highly qualified senior management and other key personnel. Competition for key personnel is intense, and our ability to attract and retain key personnel is dependent on a number of factors, including prevailing market conditions and compensation packages offered by companies competing for the same talent. The inability to hire, develop and retain these key employees may adversely affect our operations.

There are risks inherent in international operations that could have a material adverse effect on our business, financial condition and results of operations.

        While the majority of our operations are based in the United States, we have significant international operations, with facilities in Canada, China, France, Germany, Israel, Italy, Saudi Arabia,

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South Korea and the United Kingdom, and customers throughout North America, Latin America, Europe, Asia and the Middle East. For the years ended September 30, 2009 and 2010, 32% and 26%, respectively, of our net sales were derived from customers located outside the United States.

        Our international operations are subject to, without limitation, the following risks:

        In addition, fluctuations in the value of foreign currencies affect the dollar value of our net investment in foreign subsidiaries, with these fluctuations being included in a separate component of stockholders' equity. At September 30, 2010, we reported a cumulative foreign currency translation adjustment of approximately $4.4 million in stockholders' equity as a result of foreign currency adjustments, and we may incur additional adjustments in future periods. In addition, operating results of foreign subsidiaries are translated into U.S. dollars for purposes of our statement of operations at average monthly exchange rates. Moreover, to the extent that our net sales are not denominated in the same currency as our expenses, our net earnings could be materially adversely affected. For example, a portion of labor, material and overhead costs for our facilities in the United Kingdom, Germany, France and Italy are incurred in British Pounds or Euros, but the related net sales are generally denominated in U.S. dollars. Changes in the value of the U.S. dollar or other currencies could result in material fluctuations in foreign currency translation amounts or the U.S. dollar value of transactions and, as a result, our net earnings could be materially adversely affected. For example, in fiscal 2009, the strengthening of the U.S. dollar relative to the British pound resulted in a negative impact of approximately $22.1 million. Although we at times engage in hedging transactions to manage or reduce our foreign exchange risk, our attempts to manage our foreign currency exchange risk may not be successful and, as a result, our business, financial condition and results of operations could be materially adversely affected.

        Our international operations also cause our business to be subject to the U.S. Export Control regime and similar regulations in other countries, in particular in the United Kingdom. In the United States, items of a commercial nature are generally subject to regulatory control by the U.S. Department of Commerce's Bureau of Industry and Security and to Export Administration Regulations, and other international trade regulations may apply as well. Additionally, we are not permitted to export some of the products we sell. In the future, regulatory authorities may require us to obtain export licenses or other export authorizations to export the products we sell abroad, depending upon the nature of items being exported, as well as the country to which the export is to be made. We cannot assure you that any of our applications for export licenses or other authorizations will be granted or approved. Furthermore, the export license and export authorization process is often time-consuming. Violation of export control regulations could subject us to fines and other penalties, such as losing the ability to

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export for a period of years, which would limit our sales and significantly hinder our attempts to expand our business internationally.

Our international operations require us to comply with anti-corruption laws and regulations of the U.S. government and various international jurisdictions, and our failure to comply with these laws and regulations could adversely affect our reputation, business, financial condition and results of operations.

        Doing business on a worldwide basis requires us and our subsidiaries to comply with the laws and regulations of the U.S. government and various international jurisdictions, and our failure to successfully comply with these rules and regulations may expose us to liabilities. These laws and regulations apply to companies, individual directors, officers, employees and agents, and may restrict our operations, trade practices, investment decisions and partnering activities. In particular, our international operations are subject to U.S. and foreign anti-corruption laws and regulations, such as the U.S. Foreign Corrupt Practices Act, or FCPA. The FCPA prohibits us from providing anything of value to foreign officials for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment, and requires companies to maintain adequate record-keeping and internal accounting practices to accurately reflect the transactions of the company. As part of our business, we deal with state-owned business enterprises, the employees and representatives of which may be considered foreign officials for purposes of the FCPA. In addition, some of the international locations in which we operate lack a developed legal system and have elevated levels of corruption. As a result of the above activities, we are exposed to the risk of violating anti-corruption laws.

        We are also subject to International Traffic in Arms Regulation, or ITAR. ITAR requires export licenses from the U.S. Department of State for products shipped outside the U.S. that have military or strategic applications. Violations of these legal requirements are punishable by criminal fines and imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts as well as other remedial measures. We have established policies and procedures designed to assist us and our personnel to comply with applicable U.S. and international laws and regulations. However, there can be no assurance that our policies and procedures will effectively prevent us from violating these regulations in every transaction in which we may engage, and such a violation could adversely affect our reputation, business, financial condition and results of operations.

If any of our customers were to become insolvent or experience substantial financial difficulties, our business, financial condition and results of operations may be adversely affected.

        If any of the customers with whom we do business becomes insolvent or experiences substantial financial difficulties we may be unable to timely collect amounts owed to us by such customers and may not be able to sell the inventory we have purchased for such customers, which could have a material adverse effect on our business, financial condition and results of operations. For example, during the year ended September 30, 2009, we wrote off a receivable of $2.4 million and inventory of approximately $1.8 million after one of our customers filed for bankruptcy protection. The majority of these write-offs were recorded as a reduction to receivable and inventory reserves taken during prior fiscal years.

We, our suppliers or our customers may experience damage to or disruptions at our or their facilities caused by natural disasters and other factors, which may result in our business, financial condition and results of operations being adversely affected.

        Several of our facilities or those of our suppliers and customers could be subject to a catastrophic loss caused by earthquakes, tornadoes, floods, hurricanes, fire, power loss, telecommunication and information systems failure or other similar events. Should insurance be insufficient to recover all such losses or should we be unable to reestablish our operations, or if our customers or suppliers were to experience material disruptions in their operations as a result of such events, our business, financial condition and results of operations could be adversely affected.

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We are dependent on access to and the performance of third-party package delivery companies.

        Our ability to provide efficient distribution of the products we sell to our customers is an integral component of our overall business strategy. We do not maintain our own delivery networks, and instead rely on third-party package delivery companies. We cannot assure you that we will always be able to ensure access to preferred delivery companies or that these companies will continue to meet our needs or provide reasonable pricing terms. In addition, if the package delivery companies on which we rely experience delays resulting from inclement weather or other disruptions, we may be unable to maintain products in inventory and deliver products to our customers on a timely basis, which may adversely affect our business, financial condition and results of operations.

A significant labor dispute involving us or one or more of our customers or suppliers, or a labor dispute that otherwise affects our operations, could reduce our net sales and harm our profitability.

        Labor disputes involving us or one or more of our customers or suppliers could affect our operations. For example, a labor dispute affecting Boeing has contributed to delays in the Boeing 787 program and impacted the production of other aircraft platforms. If our customers or suppliers are unable to negotiate new labor agreements and our customers' or suppliers' plants experience slowdowns or closures as a result, our net sales and profitability could be negatively impacted.

        While our employees are not currently unionized, they may attempt to form unions in the future, and the employees of our customers, suppliers and other service providers may be, or may in the future be, unionized. We cannot assure you that there will not be any strike, lock out or material labor dispute with respect to our business or those of our customers or suppliers in the future that materially affects our business, financial condition and results of operations.

We may be materially adversely affected by high fuel prices.

        Fluctuations in the global supply of crude oil and the possibility of changes in government policies on the production, transportation and marketing of jet fuel make it impossible to predict the future availability and price of jet fuel. In the event there is an outbreak or escalation of hostilities or other conflicts or significant disruptions in oil production or delivery in oil-producing areas or elsewhere, there could be reductions in the production or importation of crude oil and significant increases in the cost of jet fuel. If there were major reductions in the availability of jet fuel or significant increases in its cost, commercial airlines would face increased operating costs. Due to the competitive nature of the airline industry, airlines are often unable to pass on increases in fuel prices to customers by increasing fares. As a result, an increase in jet fuel could result in a decrease in net income from either lower margins or, if airlines increase ticket fares, less net sales from reduced airline travel. Decreases in airline profitability could decrease the demand for new commercial aircraft, resulting in delays of or reductions in deliveries of commercial aircraft that utilize the products we sell, and, as a result, our business, financial condition and results of operations could be materially adversely affected.

Our financial results may fluctuate from period-to-period, making quarter-to-quarter comparisons of our business, financial condition and results of operations less reliable indicators of our future performance.

        There are many factors, such as the cyclical nature of the aerospace industry, fluctuations in our ad hoc sales, delays in major aircraft programs, downward pressure on sales prices and changes in the volume of our customers' orders, that could cause our financial results to fluctuate from period-to-period. For example, during the year ended September 30, 2010, approximately 37% of our net sales were derived from ad hoc sales. The prices we charge for ad hoc sales are typically higher than the prices under our JIT contracts or LTAs. However, ad hoc customers may not continue to purchase the same amount of products from us as they have in the past, so we cannot assure you that in any given year we will be able to generate similar net sales from our ad hoc customers as we did in the past. We are also actively working to transition customers from ad hoc purchases to multi-year LTAs or comprehensive JIT supply chain management agreements, which may also result in a reduction

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in ad hoc purchases. A significant diminution in our ad hoc sales in any given period could result in fluctuations in our financial results and operating margins. As a result of these factors, we believe that quarter-to-quarter comparisons of our financial results are not necessarily meaningful and that these comparisons cannot be relied upon as indicators of future performance.

Upon completion of this offering, we will continue to be controlled by Carlyle and its affiliates, whose interests in our business may be different than yours.

        The interests of Carlyle and its affiliates could conflict with yours. Upon completion of this offering, certain funds affiliated with Carlyle will own approximately          % and        % of our common stock, respectively, or approximately        % and      %, respectively, if the underwriters' overallotment option is exercised in full. As a result of this ownership, Carlyle will continue to have substantial influence over the outcome of votes on all matters requiring approval by our stockholders, including the election of directors, the adoption of amendments to our certificate of incorporation and bylaws and approval of significant corporate transactions. Carlyle will also be able to take actions that have the effect of delaying or preventing a change in control of the Company or discouraging others from making tender offers for our shares, which could prevent stockholders from receiving a premium for their shares. These actions may be taken even if other stockholders oppose them. Moreover, this concentration of stock ownership may make it difficult for stockholders to replace management and may also adversely affect the trading price for our common stock because investors often perceive disadvantages in owning stock in companies with controlling stockholders. In addition, pursuant to the Amended and Restated Stockholders Agreement, Carlyle will continue to have certain rights to appoint directors to our board of directors following the consummation of this offering, and Randy Snyder, Susan Snyder, certain affiliates of Mr. Snyder and certain of our employees, which we collectively refer to as the Wesco Stockholders, are required to vote their shares in favor of such directors. See "Certain Relationships and Related Party Transactions." In addition, Carlyle and its affiliates may also in the future own businesses that directly compete with ours.

We are a "controlled company" within the meaning of the rules of the New York Stock Exchange and, as a result, expect to qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.

        Following the consummation of this offering, we expect that Carlyle will continue to control a majority of the voting power of our outstanding common stock. As a result, we expect to be a "controlled company" within the meaning of the corporate governance standards of the New York Stock Exchange. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a "controlled company" and may elect not to comply with certain corporate governance requirements, including:

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        Following this offering, we intend to utilize these exemptions if we continue to qualify as a "controlled company." For these purposes, as a result of the provisions of the Amended and Restated Stockholders Agreement, the Wesco Stockholders and the affiliates of Carlyle that own shares will be treated as a "group," and therefore the Wesco Stockholders' shares will be included in determining whether we are a controlled company. If we utilize these exemptions we will not have a majority of independent directors and our nominating and corporate governance and compensation committees will not consist entirely of independent directors and such committees will not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the New York Stock Exchange.

We will incur significant increased costs as a result of operating as a publicly traded company, and our management will be required to devote substantial time to new compliance requirements and investor needs.

        As a publicly traded company, we will incur significant legal, accounting and other expenses that we did not previously incur. Although we are currently unable to estimate these costs with any degree of certainty, they are likely to be material in amount. In addition, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and the rules of the Securities and Exchange Commission, or the SEC, and the New York Stock Exchange have imposed various requirements on public companies. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to incur substantial costs to maintain appropriate levels of coverage.

If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired and investors' views of us could be harmed.

        The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management and, to the extent required, our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, with auditor attestation of the effectiveness of our internal controls, beginning with our annual report on Form 10-K for the fiscal year ending September 30, 2012. If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of shares of our common stock could decline and we could be subject to sanctions or investigations by the New York Stock Exchange, the SEC or other regulatory authorities, which would require additional financial and management resources.

        Our ability to successfully implement our business plan and comply with Section 404 requires us to be able to prepare timely and accurate financial statements. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures or controls, may cause our operations to suffer and we may be unable to conclude that our internal control over financial

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reporting is effective and to obtain an unqualified report on internal controls from our auditors if required under Section 404 of the Sarbanes-Oxley Act. Moreover, we cannot be certain that these measures would ensure that we implement and maintain adequate controls over our financial processes and reporting in the future. Even if we were to conclude, and our auditors were to concur, that our internal control over financial reporting provided reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the U.S., or GAAP, because of its inherent limitations, internal control over financial reporting may not prevent or detect fraud or misstatements. This, in turn, could have an adverse impact on the trading price of our shares of common stock, and could adversely affect our ability to access the capital markets.

We are subject to health, safety and environmental laws and regulations, any violation of which could subject us to significant liabilities and penalties.

        We are subject to extensive and changing federal, state, local and foreign laws and regulations establishing health, safety and environmental quality standards and may be subject to liability or penalties for violations of those standards. We are also subject to laws and regulations governing remediation of contamination at facilities currently or formerly owned or operated by us or to which we have sent hazardous substances or wastes for treatment, recycling or disposal. We may be subject to future liabilities or obligations as a result of new or more stringent interpretations of existing laws and regulations. In addition, we may have liabilities or obligations in the future if we discover any environmental contamination or liability at any of our facilities, or at facilities we may acquire.

Our reputation and/or our business, financial condition and results of operations could be adversely affected if one of the products we sell causes an aircraft to crash.

        We may be exposed to liabilities for personal injury, death or property damage as a result of the failure of a product we have sold. We typically agree to indemnify our customers against certain liabilities resulting from the products we sell. Although we may seek third party indemnification from our suppliers in the event of a product failure, we cannot guarantee that we will be successful in doing so and may ultimately be held liable. While we maintain liability insurance to protect us in these situations, our insurers may attempt to deny coverage or any coverage we have may not be adequate. We also may not be able to maintain insurance coverage in the future at an acceptable cost. Any liability for which third party indemnification is not available that is not covered by insurance could have a material adverse effect on our business, financial condition and results of operations.

        In addition, a crash caused by one of the products we have sold could damage our reputation for selling quality products. We believe our customers consider safety and reliability as key criteria in selecting a provider of aircraft products and believe our reputation for quality assurance is a significant competitive strength. If a crash were to be caused by one of the products we sold, or if we were to otherwise fail to maintain a satisfactory record of safety and reliability, our ability to retain and attract customers may be materially adversely affected.

We sell products to a highly regulated industry and our business may be adversely affected if our suppliers or customers lose government approvals, if more stringent government regulations are enacted or if industry oversight is increased.

        The aerospace industry is highly regulated in the United States and in other countries. The U.S. Federal Aviation Administration, or the FAA, prescribes standards and other requirements for aircraft components in the U.S. and comparable agencies, such as the European Aviation Safety Agency, the Civil Aviation Administration of China and the Japanese Civil Aviation Bureau, regulate these matters in other countries. Our suppliers and customers must generally be certified by the FAA, the DoD and similar agencies in foreign countries. If any of our suppliers' government certifications are

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revoked, we would be less likely to buy such supplier's products, and, as a result, would need to locate a suitable alternate supply of such products, which we may be unable to accomplish on commercially reasonable terms or at all. If any of our customers' government certifications are revoked, their demand for the products we sell would decline. In each case, our business, financial condition and results of operations may be adversely affected.

        In addition, if new and more stringent government regulations are adopted or if industry oversight increases, our suppliers and customers may incur significant expenses to comply with such new regulations or heightened industry oversight. In the case of our suppliers, these expenses may be passed on to us in the form of price increases, which we may be unable to pass along to our customers. In the case of our customers, these expenses may limit their ability to purchase products from us. In each case, our business, financial condition and results of operations may be adversely affected.

We may be unable to successfully consummate or integrate future acquisitions, which could negatively impact our business, financial condition and results of operations.

        We may consider future acquisitions, some of which could be material to us. Depending upon the acquisition opportunities available, we may need to raise additional funds through the capital markets or arrange for additional debt financing in order to consummate such acquisitions. We may be unable to raise the capital required for future acquisitions on satisfactory terms or at all, which could adversely affect our business, financial condition and results of operations. In addition, we may not be able to successfully integrate acquired businesses into our operations and may be unable to realize any anticipated benefits from future acquisitions, which failure to do so could negatively impact our business, financial condition and results of operations.

Our total assets include substantial intangible assets, and the write-off of a significant portion of our intangible assets would negatively affect our financial results.

        Our total assets reflect substantial intangible assets. At September 30, 2010, goodwill and intangible assets, net represented approximately 47% of our total assets. Goodwill represents the excess of the purchase price of acquired businesses over the fair value of the assets acquired and liabilities assumed resulting from acquisitions, including the Carlyle Acquisition. Intangible assets, net represents tradenames, customer backlogs, non-compete agreements and customer relationships. On at least an annual basis, we assess whether there has been an impairment in the value of goodwill and indefinite lived intangible assets. If our testing identifies an impairment under generally accepted accounting principles in the United States, the impairment charge we calculate would result in a charge to operating earnings. Any determination requiring the write-off of a significant portion of goodwill and unamortized identified intangible assets would negatively affect our results of operations and total capitalization, which could be material.

Our substantial indebtedness could adversely affect our financial health and could harm our ability to react to changes to our business.

        We have a significant amount of indebtedness. As of March 31, 2011, our total long-term indebtedness outstanding under our old senior secured credit facilities was approximately $606.2 million, which was approximately 50.6% of our total capitalization.

        In addition, we may be able to incur substantial additional indebtedness in the future. Although the new senior secured credit facilities contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and the indebtedness incurred in compliance with these qualifications and exceptions could be substantial. If we incur additional debt, the risks associated with our substantial leverage would increase.

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        Our substantial indebtedness could have important consequences to investors. For example, it could:

        In addition, all of our debt under the new senior secured credit facilities bears interest at floating rates. Accordingly, in the event that interest rates increase, our debt service expense will also increase.

        Our substantial level of indebtedness increases the possibility that we may be unable to generate cash sufficient to pay, when due, the principal of, interest on or other amounts due in respect of our indebtedness. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under the new senior secured credit facilities or otherwise in amounts sufficient to enable us to service our indebtedness. If we cannot service our debt, we will have to take actions such as reducing or delaying capital investments, selling assets, restructuring or refinancing our debt or seeking additional equity capital and cannot assure you that we will be successful in implementing any such actions or that any actions we take will allow us to stay in compliance with the terms of our indebtedness.

The terms of the new senior secured credit facilities and other debt instruments may restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

        The new senior secured credit facilities contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests. The new senior secured credit facilities include covenants restricting, among other things, our ability to:

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        In addition, the new senior secured credit facilities contain financial maintenance covenants, including a maximum leverage ratio covenant and a minimum interest coverage ratio covenant. A breach of any of these covenants could result in a default under the new senior secured credit facilities. If any such default occurs, the lenders under the new senior secured credit facilities may elect to declare all outstanding borrowings, together with accrued interest and other amounts payable thereunder, to be immediately due and payable. The lenders under the new first lien credit facility also have the right in these circumstances to terminate any commitments they have to provide further borrowings. In addition, following an event of default under the new senior secured credit facilities, the lenders under those facilities will have the right to proceed against the collateral granted to them to secure the debt, which includes our available cash. If the debt under the new senior secured credit facilities was to be accelerated, we cannot assure you that our assets would be sufficient to repay in full our debt.

Risks Related to our Common Stock

There is no existing market for our common stock, and we do not know if one will develop to provide you with adequate liquidity to sell our common stock at prices equal to or greater than the price you paid in this offering.

        Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of an active trading market on the New York Stock Exchange or otherwise or how liquid that market might become. If an active trading market does not develop, you may have difficulty selling any of our common stock that you buy. The initial public offering price for the common stock will be determined by negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell our common stock at prices equal to or greater than the price you paid in this offering, or at all.

The price of our common stock may fluctuate significantly, and you could lose all or part of your investment.

        Volatility in the market price of our common stock may prevent you from being able to sell your common stock at or above the price you paid for your common stock. The market price of our common stock could fluctuate significantly for various reasons, including:

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        In addition, in the past two and a half years, the U.S. stock market has experienced significant price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in our industry. The changes frequently appear to occur without regard to the operating performance of the affected companies. Hence, the price of our common stock could fluctuate based upon factors that have little or nothing to do with our company, and these fluctuations could materially reduce our share price and cause you to lose all or part of your investment. Further, in the past, market fluctuations and price declines in a company's stock have led to securities class action litigations. If such a suit were to arise, it could have a substantial cost and divert our resources regardless of the outcome.

If securities analysts do not publish research or reports about our business or if they downgrade our stock, the price of our stock could decline.

        The research and reports that industry or financial analysts publish about us or our business may vary widely and may not predict accurate results, but will likely have an effect on the trading price of our common stock. If an industry analyst decides not to cover our company, or if an industry analyst decides to cease covering our company at some point in the future, we could lose visibility in the market, which in turn could cause our stock price to decline. We may be subject to greater risk of losing analyst coverage as a result of the size of this offering and the relative number of shares that will be available for trading in the public market. If an industry analyst downgrades our stock, our stock price would likely decline rapidly in response.

We have no plans to pay regular dividends on our common stock, so you may not receive funds without selling your common stock.

        We have no plans to pay regular dividends on our common stock. We generally intend to invest our future earnings, if any, to fund our growth. Any payment of future dividends will be at the discretion of our board of directors and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that our board of directors deems relevant. The new senior secured credit facilities also effectively limit our ability to pay dividends. Accordingly, you may have to sell some or all of your common stock in order to generate cash flow from your investment. You may not receive a gain on your investment when you sell your common stock and you may lose the entire amount of the investment.

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Provisions of our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, as a result, depress the trading price of our common stock.

        Following this offering, we expect that our amended and restated certificate of incorporation and amended and restated bylaws will contain provisions that could discourage, delay or prevent a change in control of our company or changes in our management that the stockholders of our company may deem advantageous. These provisions will:

        These anti-takeover defenses could discourage, delay or prevent a transaction involving a change in control of our company. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and cause us to take corporate actions other than those you desire.

Future sales of our common stock in the public market could lower our share price, and any additional capital raised by us through the sale of equity or convertible debt securities may dilute your ownership in us and may adversely affect the market price of our common stock.

        We and our existing stockholders may sell additional shares of common stock in subsequent public offerings. We may also issue additional shares of common stock or convertible debt securities to finance future acquisitions. After the consummation of this offering, we will have 950,000,000 shares of common stock authorized and         shares of common stock outstanding. This number includes        shares that the selling stockholders are selling in this offering, which may be resold immediately in the public market. Of the remaining shares,          , or        % of our total outstanding shares, are restricted from immediate resale under the lock-up agreements between us, all of our directors, executive officers and stockholders and the underwriters described in "Underwriting," but may be sold into the market in the near future. These shares will become available for sale following the expiration of the lock-up agreements, which, without the prior consent of the representatives of the underwriters, is 180 days after the date of this prospectus, subject to compliance with the applicable requirements under Rule 144 of the Securities Act of 1933, or the Securities Act.

        We cannot predict the size of future issuances of our common stock or the effect, if any, that future issuances and sales of our common stock will have on the market price of our common stock. Sales of substantial amounts of our common stock (including sales pursuant to Carlyle's registration rights and shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices for our common stock. See "Certain Relationships and Related Party Transactions" and "Shares Eligible for Future Sale."

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FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements. The words "believe," "expect," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Although forward-looking statements reflect management's good faith beliefs, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements speak only as of the date the statements are made. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to:

        We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations are disclosed under "Risk Factors" in this prospectus. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements as well as other cautionary statements that are made from time to time in our public communications. You should evaluate all forward-looking statements made in this prospectus in the context of these risks and uncertainties.

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USE OF PROCEEDS

        All of the shares of common stock offered by this prospectus are being sold by the selling stockholders. The selling stockholders in this offering include                        . We will not receive any of the proceeds from the sale of shares in this offering, including from any exercise by the underwriters of their overallotment option. For information about the selling stockholders, see "Principal and Selling Stockholders."

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DIVIDEND POLICY

        We have not paid dividends in the past and we do not intend to pay any cash dividends for the foreseeable future. We intend to retain earnings, if any, for the future operation and expansion of our business and the repayment of debt. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend upon our results of operations, cash requirements, financial condition, contractual restrictions, restrictions imposed by applicable laws and other factors that our board of directors may deem relevant. Our existing indebtedness effectively limits our ability to pay dividends and make distributions to our stockholders. For additional information on these limitations see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Senior Secured Credit Facilities—New Senior Secured Credit Facilities."

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CAPITALIZATION

        The following table sets forth our consolidated cash and cash equivalents and capitalization as of March 31, 2011 on an actual basis and as adjusted basis giving effect to the following, each of which will occur immediately prior to the effectiveness of this registration statement: (i) the adoption of our amended and restated certificate of incorporation, which will provide for authorized capital stock consisting of (1) 950,000,000 shares of common stock, $0.001 par value per share, and (2) 50,000,000 shares of preferred stock, $0.001 par value per share, (ii) the conversion of        shares of Class B common stock into shares of common stock, on a one-for-one basis, pursuant to our amended and restated certificate of incorporation, which will be effective prior to the consummation of this offering, and (iii) the effectuation of a    for    stock split with respect to our common stock, which will include the shares of Class B common stock that will have been converted, on a one-for-one basis, into shares of common stock.

        The information in this table should be read in conjunction with "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and related notes thereto included elsewhere in this prospectus.

 
  March 31, 2011  
 
  Actual   As Adjusted  
 
  (unaudited; in thousands,
except share and per share
data)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

  $ 45,670   $    
           

Long-term debt, less current portion:

             
 

First lien credit facility(1)

  $ 477,243   $    
 

Second lien credit facility(1)

    129,000        
           
   

Total long-term debt, less current portion

    606,243        

Capital lease obligations, less current portion

    1,725        

Total stockholders' equity:

             
 

Preferred stock, $0.001 par value per share: 1,000,000 shares authorized, no shares issued and outstanding, actual; 50,000,000 shares authorized, no shares issued and outstanding, as adjusted

   
    
   
    
 
 

Common stock, $0.001 par value per share: 19,000,000 shares authorized; 9,319,450 shares issued and outstanding, actual; 950,000,000 shares authorized,         shares issued and outstanding, as adjusted

    9        
 

Class B common stock, $0.001 par value per share: 2,000,000 shares authorized; 126,039 shares issued and outstanding, actual; no shares authorized, no shares issued and outstanding, as adjusted

    1        
 

Additional paid-in capital

    330,166        
 

Retained earnings:

             
   

Beginning of period

    223,761        
   

Current period earnings

    43,608        
   

Accumulated other comprehensive loss

    (6,955 )      
           
   

Total stockholders' equity

    590,590        
           

Total capitalization

  $ 1,198,558   $    
           

(1)
On April 7, 2011, we entered into the new senior secured credit facilities. See "Prospectus Summary—Recent Developments." The proceeds of the new senior secured credit facilities were used to repay the old senior secured credit facilities and pay certain related fees and expenses. For a description of the new senior secured credit facilities and the old senior secured credit facilities,

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    see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Senior Secured Credit Facilities."

        The table set forth above is based on the number of shares of our common stock outstanding as of March 31, 2011. The table does not reflect:

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DILUTION

        If you invest in our common stock, your interest will be diluted to the extent of the difference between the initial public offering price per share and the net tangible book value per share after this offering.

        As of March 31, 2011, we had a negative net tangible book value of approximately $            , or $            per share. Net tangible book value per share represents total tangible assets less total liabilities divided by the number of shares of common stock outstanding. After deducting estimated offering expenses payable by us in connection with this offering, our net tangible book value as of March 31, 2011 would have been approximately $         million, or $        per share. This represents an immediate                        in net tangible book value of $        per share to existing stockholders and an immediate dilution of $        per share to new investors purchasing common stock in this offering. The following table illustrates this dilution on a per share basis:

 
  Per Share

Assumed initial public offering price per share

   

Net tangible book value per share as of March 31, 2011

   

                        in net tangible book value per share attributable to this offering

   

Net tangible book value per share after this offering

   

Dilution per share to new investors

   

        The following table sets forth, as of March 31, 2011, the total number of shares of common stock owned by existing stockholders and to be owned by new investors, the total consideration paid and the average price per share paid by our existing stockholders and to be paid by new investors purchasing shares of common stock in this offering. The calculation below is based on an assumed initial public offering price of $            per share, the midpoint of the price range set forth on the cover page of this prospectus, before deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

 
  Shares Purchased   Total Consideration    
 
 
  Average
Price Per
Share
 
 
  Number   Percent   Amount   Percent  
 
  (In thousands, other than shares and percentages)
 

Existing stockholders

                                  % $                               % $               

New investors

                                                                                      
                         
 

Total

                                  % $                               % $               
                         

        Each $1.00 increase (decrease) in the assumed initial public offering price of $            per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) total consideration paid by all investors in this offering by $             million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us and assuming that the number of shares offered by the selling stockholders, as set forth on the cover page of this prospectus, remains the same. Each increase (decrease) of 1.0 million in the number of shares offered by the selling stockholders would increase (decrease) total consideration paid by all investors in this offering by $             million, at the assumed public offering price of $             per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, assuming the assumed public offering price of $            per share, which is the midpoint of the price range set forth on the cover page of this prospectus.

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        If the underwriters' overallotment option to purchase                        additional shares from the selling stockholders in this offering is exercised in full, the following will occur:

        The tables and calculations above assume no exercise of outstanding options. As of            , there were            shares of common stock issuable upon exercise of outstanding options at a weighted average exercise price of approximately $            per share. To the extent that the            outstanding options are exercised, there will be further dilution to new investors purchasing common stock in the offering. See "Description of Capital Stock."

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SELECTED CONSOLIDATED FINANCIAL DATA

        The selected income statement and other data for each of the years ended September 30, 2008, 2009 and 2010 and the selected balance sheet data as of September 30, 2009 and 2010 have been derived from our audited consolidated financial statements that are included in this prospectus. The selected income statement and other data for the years ended September 30, 2006 and 2007 and the selected balance sheet data as of September 30, 2006, 2007 and 2008 have been derived from audited consolidated financial statements that are not included in this prospectus. The table below presents separately the period prior to the Carlyle Acquisition, or the Predecessor, on September 29, 2006 and the periods after the Carlyle Acquisition, or the Successor, to recognize the application of a different basis of accounting. Our selected historical income statement data for the six months ended March 31, 2010 and March 31, 2011 and our selected historical balance sheet data as of March 31, 2011 have been derived from our unaudited financial statements included elsewhere in this prospectus that, in the opinion of management, include normal recurring adjustments necessary for a fair presentation of the results for the unaudited interim period. The selected historical balance sheet data as of March 31, 2010 have been derived from our unaudited financial statements not included in this prospectus. Results for the six months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the year ending September 30, 2011 or for any other period.

        The financial data set forth below are not necessarily indicative of future results of operations. This data should be read in conjunction with, and is qualified in its entirety by reference to, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Capitalization" sections and our financial statements and notes thereto included elsewhere in this prospectus.

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  Successor  
 
  Predecessor    
   
   
   
  Six Months Ended
March 31,
 
 
  Year Ended September 30,  
 
  Year Ended
September 30,
2006(1)
 
(Dollars in thousands, except share and per share data)
  2007   2008   2009   2010   2010   2011  
 
   
   
   
   
   
  (unaudited)
 

Consolidated statements of income (loss):

                                           

Net sales:

                                           
 

North America

  $ 336,670   $ 416,899   $ 551,135   $ 557,874   $ 603,809   $ 283,285   $ 318,808  
 

Rest of the World

    68,033     89,888     112,623     102,796     95,342     47,259     57,527  
 

Intercompany elimination

    (27,071 )   (38,207 )   (59,415 )   (47,983 )   (43,115 )   (19,633 )   (26,792 )
                               
   

Net sales

    377,632     468,580     604,343     612,687     656,036     310,911     349,543  

Gross profit:

                                           
 

North America

    144,015     171,006     221,898     204,296     226,497     103,788     117,725  
 

Rest of the World

    22,412     36,698     42,143     39,733     34,167     17,265     19,523  
 

Intercompany elimination

    (2,746 )   (5,078 )   (7,433 )   (5,742 )   (6,434 )   (3,214 )   (3,123 )
                               
   

Gross profit

    163,681     202,626     256,608     238,287     254,230     117,839     134,125  

Selling, general and administrative expenses:

                                           
 

North America

    158,494     71,998     84,807     86,007     81,674     40,140     39,593  
 

Rest of the World

    16,599     18,320     20,951     17,888     18,241     9,185     10,288  
                               
   

Selling, general and administrative expenses

    175,093 (2)   90,318     105,758     103,895     99,915     49,325     49,881  
                               

Income (loss) from operations

    (11,412 )   112,308     150,850     134,392     154,315     68,514     84,244  

Interest income (expense), net

    1,018     (55,817 )   (48,743 )   (37,707 )   (36,270 )   (18,214 )   (12,586 )

Other income (expense), net

    (11,318 )   (2,857 )   746     (376 )   (458 )   1,056     (177 )
                               

Income (loss) before provision for income taxes

    (21,712 )   53,634     102,853     96,309     117,587     51,356     71,481  
                               

Provision for income taxes

    872     20,596     44,251     37,862     43,913     19,171     27,873  
                               
   

Net income (loss)

  $ (22,584 ) $ 33,038   $ 58,602   $ 58,447   $ 73,674   $ 32,185   $ 43,608  
                               

Earnings per share data:

                                           

Net income per share:

                                           
   

Basic

        $ 3.52   $ 6.22   $ 6.19   $ 7.32   $ 3.20   $ 4.33  
   

Diluted

        $ 3.48   $ 6.02   $ 5.87   $ 7.28   $ 3.20   $ 4.24  

Weighted average shares outstanding:

                                           
   

Basic

          9,384,384     9,420,433     9,440,596     10,063,237     10,063,237     10,065,678  
   

Diluted

          9,487,710     9,740,158     9,964,748     10,118,648     10,063,473     10,292,912  

 
  Successor  
 
  Year Ended September 30,   Six Months Ended
March 31,
 
 
  2006(3)   2007   2008   2009   2010   2010   2011  
 
   
   
   
   
   
  (unaudited)
 

Consolidated balance sheet data:

                                           
 

Cash and cash equivalents

  $ 80,022   $ 12,863   $ 15,998   $ 11,406   $ 39,463   $ 24,056   $ 45,670  
 

Total assets

    1,017,416     987,228     1,173,620     1,254,812     1,279,012     1,266,090     1,300,286  
 

Total long-term debt and capital lease obligations(4)

    600,143     589,269     688,128     684,268     622,032     674,701     607,968  
 

Total stockholders' equity

    285,967     335,783     409,773     473,940     545,739     502,416     590,590  

(1)
The effective date of the Carlyle Acquisition was at the close of business on September 29, 2006, the last business day of the Predecessor's 2006 fiscal year. September 30, 2006 was a weekend day and, as a result, the successor did not conduct any operations on that day. Due to the immateriality of the one day period ended September 30, 2006, the successor has accounted for the commencement of its operations as of October 1, 2006.

(2)
Includes $72.6 million of compensation costs related to the Carlyle Acquisition.

(3)
The selected balance sheet data as of September 30, 2006 presents the financial position of the Successor after giving effect to the acquisition as a business combination, which resulted in a new valuation for our assets and liabilities and our subsidiaries based upon fair value as of the date of the acquisition.

(4)
Total long-term debt and capital lease obligations excludes current portion.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward looking statements as a result of various factors, including, without limitation, those set forth in "Risk Factors," "Forward-Looking Statements" and other matters included elsewhere in this prospectus. The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the notes thereto included elsewhere in this prospectus, as well as the information presented under "Selected Consolidated Financial Data."

Executive Overview

        We are one of the world's largest distributors and providers of comprehensive supply chain management services to the global aerospace industry on an annual sales basis. Our services range from traditional distribution to the management of supplier relationships, quality assurance, kitting, JIT delivery and point-of-use inventory management. We supply approximately 450,000 different SKUs, including hardware, bearings, tools and more recently, electronic components and machined parts. In fiscal 2010, sales of hardware represented 80% of our net sales, with highly engineered fasteners constituting 83% of that amount. We serve our customers under three types of arrangements: JIT contracts, which govern comprehensive outsourced supply chain management services; LTAs, which set prices for specific parts; and ad hoc sales. JIT contracts and LTAs, which together comprised approximately 63% of our fiscal 2010 net sales, are multi-year arrangements that provide us with significant visibility into our future sales.

        Founded in 1953 by the father of our current CEO, Wesco has grown to serve over 7,200 customers in the commercial, military and general aviation sectors, including the leading OEMs and their subcontractors, through which we support nearly all major Western aircraft programs. We have grown our net sales at a 16% CAGR over the past 10 years to $656.0 million in fiscal 2010. We serve a large and growing global market, and believe that with more than 1,000 employees across 28 locations in 10 countries, we are well positioned to continue our track record of strong long-term growth and profitability.

        On September 29, 2006, 100% of the outstanding stock of Wesco Aircraft Hardware Corp., Wesco Aircraft Israel and the European entities of Flintbrook Ltd., Wesco Aircraft France and Wesco Aircraft Germany were acquired by Wesco Aircraft Holdings, Inc., which we refer to as the Carlyle Acquisition. The acquisition was completed in a leveraged transaction in which affiliates of Carlyle, the prior owner and certain employees of Wesco contributed the equity portion of the purchase price. The prior owner's and certain employees' investment represented a contribution of ownership in the predecessor company to the newly formed holding company. In accordance with Accounting Standards Codification, or ASC, 805, Business Combinations , the acquired assets and liabilities have been recorded at fair value for the interests acquired by new investors and at carryover basis for the continuing investors.

        On June 30, 2008, Wesco Aircraft Hardware Corp. acquired 100% of the outstanding stock of Airtechnics Inc., or Airtechnics, a distributor of electronic components for the aerospace industry, which we refer to as the Airtechnics Acquisition. The acquisition was funded through a provision in the old senior secured credit facilities (as defined below) that provided for additional borrowing under existing credit terms. Operating cash was also used by us to pay a portion of the purchase price and cover transaction fees and expenses. The assets and liabilities have been recorded at fair value for the interests we acquired.

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Recent Developments

        On April 7, 2011, Wesco Aircraft Hardware Corp. entered into a new $765.0 million senior secured credit facility with Barclays Bank PLC, as administrative agent and collateral agent, and Merrill Lynch, Pierce, Fenner & Smith, Incorporated, Key Bank, N.A. and Barclays Capital, as joint lead arrangers, which we refer to as the new senior secured credit facilities.

        The purpose of the refinancing was to extend the maturity dates under the term loans of Wesco Aircraft Hardware Corp.'s existing senior secured credit facilities, which we refer to as the old senior secured credit facilities, increase the borrowing capacity under our revolver and pay related fees and expenses. The new senior secured credit facilities consist of a (i) $150.0 million revolving credit facility, which we refer to as the new revolving facility, (ii) $265.0 million term loan A facility, which we refer to as the new term loan A facility, and (iii) $350.0 million term loan B facility, which we refer to as the new term loan B facility. Wesco Aircraft is a guarantor of the new senior secured credit facilities.

        As a result of the refinancing, we will be recording a loss on extinguishment of debt in the amount of $7.1 million, consisting of write-offs of unamortized debt issuance costs and third party fees of $6.5 million and $0.6 million, respectively. The loss on extinguishment will be recorded as a component of interest expense, net in the consolidated statement of income during the nine months ended June 30, 2011. Additionally, $1.9 million of unamortized debt issuance costs will remain capitalized and new creditor fees associated with the April 7, 2011 refinancing in the amount of $12.5 million will be capitalized. These fees will be amortized over the term of the debt using the effective interest rate method.

Industry Trends Affecting Our Business

        We rely on demand for new commercial aircraft for a significant portion of our sales. Commercial aircraft demand is driven by many factors, including airline passenger volumes, airline profitability, the introduction of new aircraft models, general economic conditions and the aging life cycle of current fleets.

        During 2008 and 2009, our customers were impacted by the global recession and weak demand for air passenger travel, which resulted in significant losses for the global airline industry. According to Airline Monitor, during 2010, as the global economy began to recover, RPMs, a key measure of airline passenger volumes, grew approximately 5.5%. RPMs are expected to grow at approximately 5.9% annually, on average, from 2010 to 2020, due to the economic recovery in developed economies, continued growth in emerging markets, particularly in the Asia-Pacific region, and the secular trend towards increased air travel globally. Increased passenger traffic volumes and the return to profitability of the global airline industry have renewed demand for commercial aircraft, particularly for more fuel efficient models, such as the Boeing 787 and Airbus A350. According to Airline Monitor, annual deliveries of the Boeing 787 are projected to increase from 20 in 2011 to over 100 by 2014, and Airbus expects A350 deliveries to commence in 2013. Commercial MRO providers are expected to benefit from similar growth trends to those impacting the commercial OEM market, in particular, increased RPMs, which will in turn drive growth in the commercial fleet and greater utilization of existing aircraft.

        Growth in the commercial aerospace market is also expected to be aided by a recovery in business jet and regional jet deliveries. According to the FAA, business jet activity increased by over 11% in 2010 compared to 2009, and Honeywell projects that deliveries of business jets will increase from approximately 675 in 2010 to in excess of 1,000 in 2015. According to Airline Monitor, regional jet deliveries are expected to increase from approximately 135 in 2010 to 270 in 2015.

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        A significant portion of our sales are also reliant on demand for new military aircraft, which is primarily driven by government spending, the timing of military aircraft orders and evolving DoD strategies and policies. We believe the diversity of the military aircraft programs we service can help us mitigate the impact of program delays, changes or cancellations, through increased sales to other active programs that directly benefit from such delays, changes or cancellations. For example, we believe the delay in production of the Lockheed Martin JSF has resulted in an increase in our sales to manufacturers of the F-18. Going forward, we believe that our military aerospace business will be driven by increases in the production of the JSF, a program on which we believe our business is well positioned. According to Forecast International, deliveries of the JSF are expected to increase from 20 in 2011 to 98 by 2016.

        We also support customers in the military aerospace MRO market and believe that our presence in this market helps us mitigate the volatility of new military aircraft sales with sales to the aftermarket. We expect demand in the military MRO market to be driven by requirements to maintain aging military fleets, changes in the overall fleet size and the level of U.S. military activity overseas.

Other Factors Affecting Our Financial Results

        There are many factors, such as fluctuations in ad hoc sales, timing of aircraft deliveries, changes in selling prices and the volume or timing of customer orders, that can cause fluctuations in our financial results from quarter-to-quarter. To normalize for short-term fluctuations, we tend to look at our performance over several quarters or years of activity rather than discrete short-term periods. As such, it can be difficult to determine longer-term trends in our business based on quarterly comparisons.

        We will continue our strategy of seeking to expand our relationships with existing customers by transitioning them to our comprehensive JIT supply chain management services as well as expanding relationships with our existing JIT customers to include additional customer sites and additional SKUs. We believe this strategy serves to mitigate fluctuations in our net sales. However, we have recently been notified by Boeing of its intent to perform certain supply chain management functions in-house that we are currently providing at two Boeing facilities under JIT contracts that were awarded to us when these particular facilities were under different ownership. In fiscal 2010, sales under these contracts accounted for approximately 5.8% of our net sales. If any of our customers attempt to implement additional in-sourcing initiatives, it could have a negative effect on our strategy to mitigate fluctuations in our net sales. Additionally, although we derive a significant portion of our net sales from the building of new commercial and military aircraft, we have not typically experienced extreme fluctuations in our net sales when sales for an individual aircraft program decrease, which we believe is attributable to our diverse base of customers and programs. In addition, we believe our substantial sales under JIT contracts and LTAs help to mitigate fluctuations in our financial results, as JIT and LTA customers tend to have steadier purchasing patterns than ad hoc customers.

        We entered the electronic components business in 2008 after the Airtechnics Acquisition. As we continue to grow our electronics products group, or EPG, business, we expect that EPG sales as a percentage of our total net sales will increase. Gross profit margins on EPG products are lower than the gross profit margins on many of our other products, which we believe will result in a reduction in our overall gross profit margins as our EPG sales increase.

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        We believe that our strategy of growing our JIT and LTA sales and converting ad hoc customers into JIT and LTA customers will negatively affect our gross profit margins, as gross profit margins tend to be higher on ad hoc sales than they are in JIT and LTA-related sales. However, we believe any potential adverse impact on our gross profit margins is outweighed by the more stable long-term revenue stream attributable to JIT contracts and LTAs.

        Our JIT contracts and LTAs generally provide for fixed prices, which can expose us to risks if prices we pay to our suppliers rise due to increased raw material or other costs. However, we believe our expansive product offerings and inventories, our ad hoc sales and, where possible, our longer-term agreements with suppliers have enabled us to mitigate this risk.

        We believe our cash flows may be affected by fluctuations in our inventory that can occur over time. When we are awarded new programs, we generally increase our inventory to account for expected sales related to the new program, which often take time to materialize. As a result, if certain programs for which we have procured inventory are delayed, we may experience a more sustained inventory increase. For example, we increased our inventory in anticipation of deliveries of the Boeing 787, which have been significantly delayed.

        Inventory fluctuations may also be attributable to general industry trends. For example, as production in the global aerospace industry increases, we typically see an increase in demand from our customers and a delay in deliveries from our suppliers, which tends to result in a temporary inventory reduction and increased cash flow. However, when production in the aerospace industry decreases, our suppliers are able to catch up on our outstanding orders, while demand from our customers decreases, which tends to result in an increase in inventory levels and decreased cash flow. For example, in 2009, as a result of the global economic recession, production in the aerospace industry decreased, freeing up our suppliers to ship previously ordered products to us faster than expected. As a result, we experienced an inventory build of approximately $111.1 million during fiscal 2009. Although we have made, and continue to make, adjustments to our purchasing practices in order to mitigate the effect of inventory fluctuations on our cash flows, inventory fluctuations continue to occur and, as a result, will continue to impact our cash flows.

Segment Presentation

        We conduct our business through two reportable segments: North America and Rest of the World. We evaluate segment performance based on segment operating earnings or loss. Each segment reports its results of operations and makes requests for capital expenditures and acquisition funding to our chief operating decision-maker, or CODM. Our Chief Executive Officer serves as our CODM. Each operating segment has separate management teams and infrastructures dedicated to providing a full range of products and services to their respective customers.

Key Components of Our Results of Operations

        The following is a discussion of the key line items included in our financial statements for the periods presented below under the heading "Results of Operations." These are the measures that management utilizes to assess our results of operations, anticipate future trends and evaluate risks in our business.

        Our net sales include sales of C class aerospace parts, including hardware, bearings, electronic components, machined parts and installation tooling, and eliminate all intercompany sales. We also provide certain services to our customers, including quality assurance, kitting and JIT supply chain

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management. However, these services are generally performed in connection with the sale of our products, and as such, the price of such services is included in the price of the products delivered to customers. We do not account for these services as a separate element, as the services do not generally have stand-alone value and typically cannot be separated from the product element of the arrangement. There are no significant post-delivery obligations associated with these services.

        We sell products and services to our customers using three types of contractual arrangements: JIT supply chain management contracts, LTAs and individual ad hoc sales. In fiscal 2009 and 2010, we experienced a decrease in ad hoc sales due to a weakening aerospace market that resulted in customers reducing their on-hand inventory and our strategy of transitioning ad hoc sales to JIT contracts or LTAs in an effort to achieve a more predictable revenue stream. JIT contracts and LTAs typically run for three to five years. Under JIT contracts, customers commit to purchase specified parts from us at a fixed price, on an if-and-when needed basis, and we are responsible for maintaining high levels of stock availability of those parts. LTAs are essentially negotiated price lists for customers or individual customer sites that cover a range of pre-determined parts, purchased on an as-needed basis. Ad hoc customers purchase parts from us on an as-needed basis and are generally supplied out of our existing inventory. In addition, JIT and LTA customers often purchase parts that are not captured under their contract on an ad hoc basis.

        EPG was not fully integrated into our enterprise resource planning, or ERP, system until the middle of 2009. As a result, in the discussion of our results of operations, the discussion related to JIT, LTA and ad hoc sales as a percentage of net sales does not include EPG sales, other than for the comparison of the six months ended March 31, 2010 to the six months ended March 31, 2011. We expect that future discussions of our JIT, LTA and ad hoc sales will include EPG sales.

        The principal component of our cost of sales is product cost, which averaged approximately 93.2% of our total cost of sales for the three-year period ended September 30, 2010. The remaining components are freight and expediting fees, import duties, tooling repair charges, amortization of inventory step-up, inventory excess and obsolescence write-down, packaging supplies and physical inventory adjustment charges, which collectively averaged approximately 6.8% of our total cost of sales for the three-year period ended September 30, 2010.

        Product cost is determined by the current weighted average cost of each inventory item and is a function of many factors, including fluctuations in the price of raw materials, the effect of inflation, the terms of long-term agreements we negotiate with certain of our suppliers, the timing of bulk purchases that allow us to take advantage of price breaks from suppliers and general market trends that can result in increases or decreases in our suppliers' available production capacity. Although we cannot specifically quantify trends relating to the costs of our products in inventory, during fiscal 2009 and 2010, as a result of the economic downturn and its effect on the global aerospace industry, our suppliers' collective production capacity increased, which generally resulted in a decrease in per part prices and a corresponding decrease in our product costs. We expect that conditions within the aerospace industry will continue to improve, and as a result, that per part prices will increase as our suppliers' capacity becomes more limited. However, we believe the long-term agreements we have with certain of our suppliers and our ability to make opportunistic, large-scale product purchases will allow us to mitigate the impact of future per part price increases. In addition, we believe we will be able to further mitigate the impact of any such price increases on our results of operations by passing along the price increases to customers who are not a party to contracts with pre-negotiated price lists.

        Inventory write-down is calculated to estimate the amount of excess and obsolete inventory we currently have on-hand, based on historical and forecasted sell-through rates. We review inventory for

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excess and obsolescence write-down monthly and adjust the expense and future forecasted sell-through rates as necessary.

        Cost of sales, as a percentage of net sales, trended up during fiscal 2009 and 2010, as our ad hoc sales, as a percentage of net sales, declined. This occurred as a result of our strategy to transition more ad hoc sales to LTA and JIT sales, as well as the effect of the recession. Ad hoc sales typically have higher margins than LTA and JIT sales. Also, in 2009 we had the first full year impact of EPG sales after the Airtechnics Acquisition, which sales typically have lower margins than hardware sales.

        The principal components of our selling, general and administrative expenses are salaries, wages, benefits and bonuses paid to our employees; stock-based compensation; commissions paid to outside sales representatives, or OSRs; travel and other business expenses; training and recruitment costs; marketing, advertising and promotional event costs; rent; bad debt expense; professional services fees (including legal, audit and tax); and ordinary day-to-day business expenses. Depreciation and amortization expense is also included in selling, general and administrative expenses, and consists primarily of scheduled depreciation for leasehold improvements, machinery and equipment, vehicles, computers, software and furniture and fixtures. Depreciation and amortization also includes intangible amortization expense.

        Selling, general and administrative expenses, as a percentage of net sales, have continued to decline as we have leveraged the fixed cost and labor component of our infrastructure while consolidated net sales have grown. We may experience an increase in selling, general and administrative expenses as a result of one-time costs associated with our initial public offering and ongoing costs associated with being a public company.

        Interest Expense, net.     Interest expense, net consists of the interest we pay on our short-term and long-term debt, fees on our revolver and our line-of-credit, deferred financing costs and the costs of hedging agreements, net of interest income.

        Other Income (Expense), net.     Other income (expense), net is primarily comprised of unrealized foreign exchange gain or loss associated with transactions denominated in currencies other than the respective functional currency of the reporting subsidiary.

Critical Accounting Policies and Estimates

        The methods, estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our financial statements. We evaluate our estimates and judgments on an on-going basis. We base our estimates on historical experience and on assumptions that we believe to be reasonable under the circumstances. Our experience and assumptions form the basis for our judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may vary from what we anticipate, and different assumptions or estimates about the future could change our reported results. We believe the following accounting policies are the most critical in that they significantly affect our financial statements, and they require our most significant estimates and complex judgments.

        Our inventory is comprised solely of finished goods. Inventories are stated at the lower of weighted-average cost or market and in-bound freight-related costs are included as part of the cost of inventory held for resale. We record provisions, as appropriate, to write-down excess and obsolete

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inventory to estimated net realizable value. The process for evaluating excess and obsolete inventory often requires us to make subjective judgments and estimates concerning future sales levels, quantities and prices at which such inventories will be able to be sold in the normal course of business.

        Demand for our products can fluctuate significantly. Our estimates of future product demand may prove to be inaccurate, in which case we may have understated or overstated the write-down required for excess and obsolete inventories. In the future, if our inventories are determined to be overvalued, we would be required to recognize such costs in our cost of goods sold at the time of such determination. Likewise, if our inventories are determined to be undervalued, we may have over-reported our costs of goods sold in previous periods and would be required to recognize such additional operating income at the time such products are sold.

        Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a purchase business combination. In accordance with the provisions of ASC 350, Intangibles—Goodwill and Other , goodwill and indefinite-lived intangible assets acquired in a business combination are not amortized, but instead tested for impairment at least annually or more frequently should an event occur or circumstances indicate that the carrying amount may be impaired. Such events or circumstances may be a significant change in business climate, economic and industry trends, legal factors, negative operating performance indicators, significant competition, changes in strategy, or disposition of a reporting unit or a portion thereof. Goodwill impairment testing is performed at the reporting unit level on July 1 of each year.

        Goodwill impairment testing is a two-step test. The first step identifies potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. For all periods presented, our reporting units are consistent with our operating segments. The estimates of fair value of a reporting unit are determined based on a discounted cash flow analysis and market earnings multiples. A discounted cash flow analysis requires us to make various judgmental assumptions, including assumptions about future cash flows, growth rates and discount rates. These assumptions about future cash flows and growth rates are based on the forecast and long-term business plans of each operating segment. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting units. If the fair value exceeds its carrying amount, goodwill is not considered impaired and the second step of the test is unnecessary. If the carrying amount of a reporting unit's goodwill exceeds its fair value, the second step measures the impairment loss, if any. The second step compares the implied fair value of goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. If the carrying amount of goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

        Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment for each reporting unit.

        We reviewed the carrying value of our indefinite lived intangible assets by comparing such amount to its fair value and determined that the carrying amount did not exceed its respective fair value. During the years ended September 30, 2008, 2009 and 2010 the fair value of our reporting units was substantially in excess of the reporting units' carrying values. Additionally, the fair value of our indefinite lived intangible assets was substantially in excess of its carrying value. Accordingly, management believes there are no impairments as of September 30, 2010 related to either goodwill or the indefinite-lived intangible asset.

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        We recognize product and service revenue when (i) persuasive evidence of an arrangement exists, (ii) title transfers to the customer, (iii) the sales price charged is fixed or determinable and (iv) collection is reasonably assured. In instances where title does not pass to the customer upon shipment, we recognize revenue upon delivery or customer acceptance, depending on the terms of the sales contract.

        In connection with the sale of our products, we often provide certain supply chain services. These services are provided exclusively in connection with the sale of products, and as such, the price of such services is generally included in the price of the products delivered to the customer. We do not account for these services as a separate element, as the services do not have stand-alone value and cannot be separated from the product element of the arrangement. There are no significant post-delivery obligations associated with these services.

        We also enter into sales rebates and profit sharing arrangements. Such customer incentives are accounted for as a reduction to gross sales and recorded based upon estimates at the time products are sold. These estimates are based upon historical experience for similar programs and products. We review such rebates and profit sharing arrangements on an ongoing basis and accruals are adjusted, if necessary, as additional information becomes available.

        Management provides allowances for credits and returns based on historic experience and adjusts such allowances as considered necessary. To date, such provisions have been within the range of management's expectations and the allowance established. Sales tax collected from customers is excluded from net sales in the accompanying consolidated statements of income.

        We account for income taxes in accordance with ASC 740, Income Taxes . ASC 740, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established, when necessary, to reduce net deferred tax assets to the amount expected to be realized. Our foreign subsidiaries are taxed in local jurisdictions at local statutory rates.

        We account for all stock-based compensation awards to employees and members of our board of directors based upon their fair values as of the date of grant using a fair value method and recognize the fair value of each award as an expense over the requisite service period using the graded vesting method.

        For purposes of calculating stock-based compensation, we estimate the fair value of stock options using a Black-Scholes-Merton valuation model, which requires the use of certain subjective assumptions including expected term, volatility, expected dividend, risk-free interest rate, forfeiture rate and the fair value of our common stock. These assumptions generally require significant judgment.

        We estimate the expected term of employee options using the average of the time-to-vesting and the contractual term. We derive our expected volatility from the historical volatilities of several unrelated public companies within our industry because we have little information on the volatility of the price of our common stock since we have no trading history. When making the selections of our industry peer companies to be used in the volatility calculation, we also consider the size and financial

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leverage of potential comparable companies. These historical volatilities are weighted based on certain qualitative factors and combined to produce a single volatility factor. Our expected dividend rate is zero, as we have never paid any dividends on our common stock and do not anticipate any dividends in the foreseeable future. We base the risk-free interest rate on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to each grant's expected life.

        We estimate our forfeiture rate based on an analysis of our actual forfeitures and will continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover behavior and other factors. Quarterly changes in the estimated forfeiture rate can have a significant effect on reported stock-based compensation expense, as the cumulative effect of adjusting the rate for all expense amortization is recognized in the period the forfeiture estimate is changed. If a revised forfeiture rate is higher than the previously estimated forfeiture rate, an adjustment is made that will result in a decrease to the stock-based compensation expense recognized in the consolidated financial statements. If a revised forfeiture rate is lower than the previously estimated forfeiture rate, an adjustment is made that will result in an increase to the stock-based compensation expense recognized in the consolidated financial statements.

        The following table summarizes the amount of non-cash stock-based compensation expense recognized in our statements of operations:

 
  Year Ended September 30,   Six Months
Ended
March 31,
 
(Dollars in thousands)
  2008   2009   2010   2010   2011  

Non-cash stock-based compensation

  $ 13,700   $ 10,389   $ 2,510   $ 1,281   $ 910  

        For the years ending September 30, 2011 and September 30, 2012, we expect to incur stock-based compensation expense of $1.9 million and $0.3 million, respectively.

        If factors change and we employ different assumptions, stock-based compensation expense may differ significantly from what we have recorded in the past. If there is a difference between the assumptions used in determining stock-based compensation expense and the actual factors that become known over time, we may change the input factors used in determining stock-based compensation costs for future grants. These changes, if any, may materially impact our results of operations in the period such changes are made. We expect to continue to grant stock options in the future, and to the extent that we do, our actual stock-based compensation expense recognized in future periods will likely increase.

    Significant Factors Used in Determining Fair Value of Our Common Stock

        The fair value of the common stock that underlies our stock options has historically been determined by management and approved by our board of directors based upon information available to it at the time of grant. The following table summarizes, by grant date, the number of stock options granted since October 1, 2009 and the associated per share exercise price, which was not less than the fair value of our common stock for each of these grants.

Grant Date
  Number of Options
Granted
  Exercise Price Per
Share of
Common Stock
  Estimated Fair
Value Per Share of
Common Stock
 

October 1, 2009

    7,557   $ 56.64   $ 36.39  

December 2, 2010

    30,500   $ 70.00   $ 55.00  

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        Because there has been no public market for our common stock, our management has determined the fair value of our common stock-based on an analysis of relevant factors, including the following:

        In addition, we have obtained periodic valuation studies from an independent third-party valuation firm. In performing its valuation analysis, the valuation firm engaged in discussions with management, analyzed historical and forecasted financial statements and reviewed our corporate documents. In addition, these valuation studies were based on a number of assumptions, including industry, general economic, market and other conditions that could reasonably be evaluated at the time of the valuation. Third-party valuations were performed as of September 30, 2009 and June 30, 2010 using generally accepted valuation methodologies.

Results of Operations

 
  Year Ended September 30,   Six Months Ended
March 31,
 
(Dollars in thousands)
  2008   2009   2010   2010   2011  

Consolidated statements of income:

                               

Net sales:

                               
 

North America

  $ 551,135   $ 557,874   $ 603,809   $ 283,285   $ 318,808  
 

Rest of the World

    112,623     102,796     95,342     47,259     57,527  
 

Intercompany elimination

    (59,415 )   (47,983 )   (43,115 )   (19,633 )   (26,792 )
                       
   

Net sales

    604,343     612,687     656,036     310,911     349,543  

Gross profit:

                               
 

North America

    221,898     204,296     226,497     103,788     117,725  
 

Rest of the World

    42,143     39,733     34,167     17,265     19,523  
 

Intercompany elimination

    (7,433 )   (5,742 )   (6,434 )   (3,214 )   (3,123 )
                       
   

Gross profit

    256,608     238,287     254,230     117,839     134,125  

Selling, general and administrative expenses:

                               
 

North America

    84,807     86,007     81,674     40,140     39,593  
 

Rest of the World

    20,951     17,888     18,241     9,185     10,288  
                       
   

Selling, general and administrative expenses

    105,758     103,895     99,915     49,325     49,881  
                       

Income from operations

    150,850     134,392     154,315     68,514     84,244  

Interest expense, net

   
(48,743

)
 
(37,707

)
 
(36,270

)
 
(18,214

)
 
(12,586

)

Other income (expense), net

    746     (376 )   (458 )   1,056     (177 )
                       

Income before provision for income taxes

    102,853     96,309     117,587     51,356     71,481  
                       

Provision for income taxes

    44,251     37,862     43,913     19,171     27,873  
                       
   

Net income

  $ 58,602   $ 58,447   $ 73,674   $ 32,185   $ 43,608  
                       

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  Year Ended September 30,   Six Months Ended
March 31,
 
(as a % of total net sales; numbers have been rounded)
  2008   2009   2010   2010   2011  

Consolidated statements of income:

                               

Net sales:

                               
 

North America

    91.2 %   91.1 %   92.0 %   91.1 %   91.2 %
 

Rest of the World

    18.6     16.8     14.5     15.2     16.5  
 

Intercompany elimination

    (9.8 )   (7.8 )   (6.6 )   (6.3 )   (7.7 )
                       
   

Net sales

    100.0     100.0     100.0     100.0     100.0  

Gross profit:

                               
 

North America

    36.7     33.3     34.5     33.4     33.7  
 

Rest of the World

    7.0     6.5     5.2     5.6     5.6  
 

Intercompany elimination

    (1.2 )   (0.9 )   (1.0 )   (1.0 )   (0.9 )
                       
   

Gross profit

    42.5     38.9     38.8     37.9     38.4  

Selling, general and administrative expenses:

                               
 

North America

    14.0     14.0     12.4     12.9     11.3  
 

Rest of the World

    3.5     2.9     2.8     3.0     2.9  
                       
   

Selling, general and administrative expenses

    17.5     17.0     15.2     15.9     14.3  
                       

Income from operations

    25.0     21.9     23.5     22.0     24.1  

Interest expense, net

   
(8.1

)
 
(6.2

)
 
(5.5

)
 
(5.9

)
 
(3.6

)

Other income (expense), net

    0.1     (0.1 )   (0.1 )   0.3     (0.1 )
                       

Income before provision for income taxes

    17.0     15.7     17.9     16.5     20.4  
                       

Provision for income taxes

    7.3     6.2     6.7     6.2     8.0  
                       
   

Net income

    9.7 %   9.5 %   11.2 %   10.4 %   12.5 %
                       

Six Months Ended March 31, 2010 compared with the Six Months Ended March 31, 2011

        Consolidated net sales of $349.5 million for the six months ended March 31, 2011 increased approximately $38.6 million, or 12.4%, compared to the six months ended March 31, 2010. JIT, LTA and ad hoc sales as a percentage of net sales represented 32%, 30% and 38%, respectively, for the six months ended March 31, 2011, as compared to 30%, 32% and 38%, respectively, for the six months ended March 31, 2010.

        Net sales of $318.8 million in our North America segment for the six months ended March 31, 2011 increased approximately $35.5 million, or 12.5%, compared to the six months ended March 31, 2010. JIT, LTA and ad hoc net sales increased by $12.5 million, $3.6 million and $13.0 million for the six months ended March 31, 2011 as compared to the six months ended March 31, 2010. The increase in JIT net sales was primarily due to accelerated sales of $10.5 million of inventory to two customers in connection with the completion of their sales contracts with us, approximately $8.0 million of which we originally expected to occur during the three months ended June 30, 2011, as well as new SKUs added to existing contracts. The increase in LTA net sales was primarily driven by a new contract signed in the third quarter of fiscal 2009 with one of our major customers, which generated $3.4 million of additional revenue during the six months ended March 31, 2011. $3.3 million of the increase in ad hoc net sales was related to the completion of a contract with one of our customers as mentioned above and the remaining $9.7 million was attributable to general growth across numerous customers as no new material contracts were added during the period.

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        Net sales of $57.5 million in our Rest of the World segment for the six months ended March 31, 2011 increased approximately $10.2 million, or 21.7%, compared to the six months ended March 31, 2010. JIT, LTA and ad hoc net sales increased by $8.8 million, $1.6 million and $1.7 million, respectively. The JIT increase primarily resulted from new long-term contracts entered into in the latter half of fiscal 2010, which accounted for $5.7 million in net sales and the conversion of ad hoc sales to JIT contracts. $1.1 million of the LTA growth resulted from strong demand in B-787 sales with subcontractors, who had reduced spending in prior periods. Ad hoc net sales improved, despite the JIT conversions, due to a strengthening in demand across our customer base, with customers replenishing inventories that declined during the recession.

        Consolidated gross profit of $134.1 million for the six months ended March 31, 2011 increased approximately $16.3 million, or 13.8%, compared to the six months ended March 31, 2010. Gross profit as a percentage of net sales was 38.4% for the six months ended March 31, 2011, compared to 37.9% for the six months ended March 31, 2010.

        Gross profit of $117.7 million in our North America segment for the six months ended March 31, 2011 increased approximately $13.9 million, or 13.4%, compared to the six months ended March 31, 2010. Gross profit as a percentage of net sales in our North America segment was 36.9% for the six months ended March 31, 2011 compared to 36.6% for the six months ended March 31, 2010. The increase in gross profit as a percentage of net sales was primarily driven by an additional $13.0 million of ad hoc sales for the six months ended March 31, 2011, which are typically higher margin sales, as well as a $12.5 million increase in JIT business with higher than average margins.

        Gross profit of $19.5 million in our Rest of the World segment for the six months ended March 31, 2011 increased approximately $2.3 million, or 13%, compared to the six months ended March 31, 2010. Gross profit as a percentage of net sales in our Rest of the World segment was 33.9% for the six months ended March 31, 2011 compared to 36.5% for the six months ended March 31, 2010. The lower gross profit percentage was primarily a result of changes in our sales mix. Overall, our ad hoc gross profit fell by $0.6 million as a result of fewer ad hoc purchases being made by the B-787 program. However, decreases in these higher margin sales were partially offset by increases in lower margin JIT and LTA sales, which generated margins of $2.3 million and $0.4 million, respectively.

        Total selling, general and administrative expenses of $49.9 million for the six months ended March 31, 2011 increased approximately $0.6 million, or 1.1%, compared to the six months ended March 31, 2010. However, total selling, general and administrative expenses as a percentage of net sales during the six months ended March 31, 2011 decreased by 1.6% compared to the six months ended March 31, 2010, as we continued to leverage our existing infrastructure.

        Selling, general and administrative expenses of $39.6 million in our North America segment for the six months ended March 31, 2011 decreased approximately $0.5 million, or 1.4%, compared to the six months ended March 31, 2010. This decrease was primarily due to a $2.2 million recovery of bad debt, partially offset by $0.6 million, $0.5 million, $0.4 million and $0.2 million in higher payroll costs, depreciation, group insurance costs and professional service fees, respectively.

        Selling, general and administrative expenses of $10.3 million in our Rest of the World segment for the six months ended March 31, 2011 increased approximately $1.1 million, or 12.0%, compared to the six months ended March 31, 2010. The increase was primarily due to increased payroll costs of $0.8 million driven by an 11% increase in headcount to support new contracts.

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        Interest expense, net of $12.6 million for the six months ended March 31, 2011 decreased approximately $5.6 million, or 30.9%, compared to the six months ended March 31, 2010. This decrease was a result of a $66.0 million reduction in the outstanding debt balances of the old senior secured credit facilities stemming from the repayment of principal under these facilities, as well as a $4.7 million decrease in swap expense for the six months ended March 31, 2011 as compared to the six months ended March 31, 2010.

        Other expense, net of $0.2 million for the six months ended March 31, 2011 increased approximately $1.2 million compared to the six months ended March 31, 2010. This change was primarily due to unrealized foreign exchange losses associated with transactions denominated in currencies other than the respective functional currency of the reporting subsidiary.

        Provision for income taxes of $27.9 million for the six months ended March 31, 2011 increased approximately $8.7 million, or 45.4%, compared to the six months ended March 31, 2010. Our effective tax rate was 37.3% and 39.0% during the six months ended March 31, 2010 and 2011, respectively. The increase in provision for income taxes was primarily a result of a $20.1 million, or 39.2%, increase in pre-tax income from the six months ended March 31, 2011 as compared to the six months ended March 31, 2010. Other items impacting our overall tax provision included a decrease in our effective tax rate in the U.S. for the six months ended March 31, 2010 related to the filing of an amended 2008 California return, which resulted in a $1.4 million refund.

        Due to the factors described above, we reported a net income of $43.6 million for the six months ended March 31, 2011, compared to net income of $32.2 million for the six months ended March 31, 2010. Net income as a percent of net sales increased 2.1% for the six months ended March 31, 2011, primarily due to an increase in gross profit as a percent of net sales and a decrease in selling, general and administrative expenses as a percent of net sales.

Year Ended September 30, 2009 compared with the Year Ended September 30, 2010

        Consolidated net sales of $656.0 million for the year ended September 30, 2010 increased $43.3 million, or 7.1%, compared to the year ended September 30, 2009. Excluding EPG products, JIT, LTA and ad hoc sales as a percentage of net sales represented 34%, 34% and 32%, respectively, for the year ended September 30, 2010, as compared to 29%, 31% and 40%, respectively, for the year ended September 30, 2009.

        Net sales of $603.8 million in our North America segment for the year ended September 30, 2010 increased $45.9 million, or 8.2%, compared to the year ended September 30, 2009. JIT and LTA net sales increased by $43.9 million and $42.0 million, respectively, while ad hoc and EPG net sales decreased by $9.6 million and $27.3 million, respectively, year over year. Approximately $21.0 million of the JIT increase was driven by increased sales relating to the B-787 program, $8.1 million by the addition of new sites for one of our major customers and $7.0 million by military programs such as the Chinook and V-22, while the remaining $7.8 million was attributable to general growth across numerous customers. $17.0 million of the LTA increase was due to a new contract for the F-18 program,

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$8.2 million related to the addition of new sites for one of our major customers and $5.1 million to other increases in military programs such as Chinook and V-22. The remaining $11.7 million was attributable to general growth across numerous customers. The decrease in ad hoc net sales was primarily driven by business shifting to JIT and LTA contract sales. The decrease in EPG net sales was due to the decline in the general aviation markets.

        Net sales of $95.3 million in our Rest of the World segment for the year ended September 30, 2010 decreased $7.5 million, or 7.3%, compared to the year ended September 30, 2009. JIT net sales increased by $4.4 million, while ad hoc and LTA net sales decreased by $9.3 million and $1.7 million, respectively. The reduction in ad hoc sales was attributed to a general market slowdown. JIT sales grew primarily due to $2.4 million of net sales related to the B-737 program, and $2.1 million related to growth in several of our military contracts. Other smaller increases in JIT net sales were driven primarily by the conversion of B-787 LTAs to JIT contracts in Italy.

        Consolidated gross profit of $254.2 million for the year ended September 30, 2010 increased $15.9 million, or 6.7% compared to gross profit for the year ended September 30, 2009. Gross profit as a percentage of net sales was 38.8% for the year ended September 30, 2010 compared to 38.9% for the year ended September 30, 2009.

        Gross profit of $226.5 million in our North America segment for the year ended September 30, 2010 increased $22.2 million, or 10.9%, compared to the year ended September 30, 2009. Gross profit as a percentage of net sales in our North America segment was 37.5% for the year ended September 30, 2010 compared to 36.6% for the year ended September 30, 2009. The increase in gross profit as a percentage of net sales was primarily driven by the $27.3 million decrease in EPG sales, which have lower margins than hardware sales.

        Gross profit of $34.2 million in our Rest of the World segment for the year ended September 30, 2010 decreased $5.6 million, or 14.0%, compared to the year ended September 30, 2009. Gross profit as a percentage of net sales was 35.8% for the year ended September 30, 2010 compared to 38.7% for the year ended September 30, 2009. The lower gross profit resulted from a $4.2 million decrease in higher margin ad hoc sales as well as a reduction in the average ad hoc gross profit percentage reducing the gross profit by $1.4 million. This was due to the general market decline. The increased JIT sales came at a reduced margin of $0.6 million, offsetting the margin lost from lower LTA sales of $0.5 million.

        Total selling, general and administrative expenses of $99.9 million for the year ended September 30, 2010 decreased $4.0 million, or 3.8%, compared to the year ended September 30, 2009, as we leveraged our infrastructure to support sales growth.

        Selling, general and administrative expenses of $81.7 million in our North America segment for the year ended September 30, 2010 decreased $4.3 million, or 5.0%, compared to the year ended September 30, 2009. This decrease was primarily a result of a reduction in non-cash stock-based compensation expense of $7.9 million, which was predominantly associated with restricted stock units that became fully vested on September 30, 2009, and a $1.6 million decrease in amortization expense related to certain intangible assets becoming fully amortized. These deductions were partially offset by increases of $0.6 million and $0.2 million in depreciation and professional service fees, respectively, as well as an increase in payroll expenses of $4.3 million, which was primarily driven by a $3.5 million increase in bonus expense.

        Selling, general and administrative expenses of $18.2 million in our Rest of the World segment for the year ended September 30, 2010 increased $0.4 million, or 2.0%, compared to the year ended

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September 30, 2009. This increase was primarily a result of increased payroll costs related to $0.4 million of additional bonus expense.

        Interest expense, net of $36.3 million for the year ended September 30, 2010 decreased $1.4 million, or 3.8%, compared to the year ended September 30, 2009. This decrease was primarily a result of principal debt payments of $67.4 million and a decrease in the average London Inter-Bank Offer Rate, or LIBOR, of 0.7% during the year ended September 30, 2010 as compared the year ended September 30, 2009. This was partially offset by $9.0 million in interest rate swap expense for the year ended September 30, 2010, an increase of $3.3 million as compared to the year ended September 30, 2009. We entered into our interest rate swap agreements midway through the year ended September 30, 2009 to hedge against interest rate fluctuations.

        Other expense, net of $0.5 million for the year ended September 30, 2010 increased $0.1 million, compared to the year ended September 30, 2009. This change was primarily due to unrealized foreign exchange losses associated with transactions denominated in currencies other than the respective functional currency of the reporting subsidiary.

        Provision for income taxes of $43.9 million for the year ended September 30, 2010, increased $6.1 million, or 16.0%, compared to the year ended September 30, 2009. Our effective tax rate was 39.3% and 37.3% during the years ended September 30, 2009 and 2010, respectively. The increase in the provision for income taxes was primarily a result of a $21.3 million, or 22.1%, increase in pre-tax income for the year ended September 30, 2010. Other items impacting the overall tax provision included a decrease in our effective tax rate in the U.S. for the year ended September 30, 2009 related to the filing of an amended 2008 California return, which resulted in a $1.4 million refund.

        Due to the factors described above, we reported a net income of $73.7 million for the year ended September 30, 2010, compared to net income of $58.4 million for the year ended September 30, 2009. Net income as a percent of net sales increased 1.7% for the year ended September 30, 2010 primarily due to a decrease in operating expenses as a percent of net sales as we continued to leverage our infrastructure to support sales growth.

Year Ended September 30, 2008 Compared with the Year Ended September 30, 2009

        Consolidated net sales of $612.7 million for the year ended September 30, 2009 increased $8.3 million, or 1.4%, compared to the year ended September 30, 2008. The U.S. dollar strengthened against the British pound from $0.51 to $0.65 from the year ended September 30, 2008 to the year ended September 30, 2009, impacting net sales negatively by $22.1 million on a consolidated basis. Without the negative foreign exchange impact, consolidated net sales would have increased by $30.4 million, or 5.0%, as compared to the year ended September 30, 2008. Excluding EPG products, JIT, LTA and ad hoc sales as a percentage of net sales represented 29%, 31% and 40%, respectively, for the year ended September 30, 2009, as compared to 26%, 27% and 47%, respectively, for the year ended September 30, 2008.

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        Net sales of $557.9 million in our North America segment for the year ended September 30, 2009 increased $6.7 million, or 1.2%, compared to the year ended September 30, 2008. EPG net sales increased by $60.2 million year over year as a result of the Airtechnics Acquisition. JIT and LTA net sales increased by $3.6 million and $10.2 million, respectively, while ad hoc net sales decreased by $55.8 million year over year. The increase in JIT net sales was primarily driven by increased sales relating to the B-787 platform. The increase in LTA net sales was primarily related to $10.4 million in increased sales to the military market, in part due to the startup of the JSF program. The decrease in ad hoc net sales was primarily due to the effect of the general economic decline across numerous customers as we did not lose any significant contracts during the period.

        Net sales of $102.8 million in our Rest of the World segment for the year ended September 30, 2009 decreased $9.8 million, or 8.7%, compared to net sales for the year ended September 30, 2008. The strengthening of the U.S. dollar impacted net sales negatively by $26.9 million. Without the negative foreign exchange impact, net sales in our Rest of the World segment would have increased by $17.1 million, or 15.2%, as compared to the year ended September 30, 2008. JIT sales increased $11.4 million and LTA sales increased $3.5 million, which was primarily due to increased sales to the European military market, and ad hoc sales increased by $0.8 million, which was primarily due to general increases across our customer base as a result of longer lead times from manufacturers.

        Consolidated gross profit of $238.3 million for the year ended September 30, 2009 decreased approximately $18.3 million, or 7.1% compared to the year ended September 30, 2008. Gross profit as a percentage of net sales was 38.9% for the year ended September 30, 2009, compared to 42.5% for the year ended September 30, 2008.

        Gross profit of $204.3 million in our North America segment for the year ended September 30, 2009 decreased $17.6 million, or 7.9%, compared to the year ended September 30, 2008. Gross profit as a percentage of net sales in our North America segment was 36.6% for the year ended September 30, 2009 compared to 40.3% for the year ended September 30, 2008. The decrease was primarily driven by a $60.2 million increase in EPG sales, which generally have lower margins than hardware sales, as well as a $55.8 million decrease in higher margin ad hoc sales.

        Gross profit of $39.7 million in our Rest of the World segment for the year ended September 30, 2009 decreased $2.4 million, or 5.7%, compared to the year ended September 30, 2008. Gross profit as a percentage of net sales in our Rest of the World segment was 38.7% for the year ended September 30, 2009 compared to 37.4% for the year ended September 30, 2008. The decline in gross profit of $2.4 million is primarily the result of an adverse foreign exchange impact of $8.8 million, partially offset by gross profit increases of $4.3 million, $0.9 million and $0.3 million for JIT, LTA and ad hoc sales, respectively.

        Total selling, general and administrative expenses of $103.9 million for the year ended September 30, 2009 decreased $1.9 million, or 1.8%, compared to the year ended September 30, 2008, as we continued to leverage our infrastructure to support sales growth and implemented cost saving initiatives around our travel and entertainment policy.

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        Selling, general and administrative expenses of $86.0 million in our North America segment for the year ended September 30, 2009 increased $1.2 million, or 1.4%, compared to the year ended September 30, 2008. This increase was primarily a result of a $4.2 million increase in payroll costs and $1.2 million in group insurance costs during the year ended September 30, 2009. This increase was primarily due to a full year of increased headcount related to the Airtechnics Acquisition as compared to only three months of expense in the year ended September 30, 2008. Amortization expense increased by $2.8 million due to a full year of amortization expense related to the intangibles acquired during the Airtechnics Acquisition. Offsetting these increases was a $3.3 million decrease in non-cash stock compensation related to stock option expense, a $0.3 million reduction in travel related expenses and a $3.4 million decrease in bad debt expense for the year ended September 30, 2009 as compared to the year ended September 30, 2008. The decrease in bad debt expense was primarily due to a one-time charge taken in the year ended September 30, 2008 for two customers who filed for bankruptcy during the year.

        Selling, general and administrative expenses of $17.9 million in our Rest of the World segment for the year ended September 30, 2009 decreased $3.1 million, or 14.6%, compared to the year ended September 30, 2008. This decrease was primarily a result of the exchange rate change during the periods. The foreign exchange impact to the year ended September 30, 2009 was a $5.5 million reduction to selling, general and administrative expenses as compared to September 30, 2008. Without the foreign exchange impact selling, general and administrative expenses would have increased $2.8 million over the prior year. This increase was primarily due to $1.2 million related to a full year of operational expenses of a new branch office.

        Interest expense, net of $37.7 million for the year ended September 30, 2009 decreased $11.0 million, or 22.6%, compared to the year ended September 30, 2008. This decrease was primarily a result of a decrease in LIBOR rates during the year ended September 30, 2009 as compared to the year ended September 30, 2008. The average LIBOR rate for the year ended September 30, 2008 was 3.9%, which dropped to an average rate of 1.0% for the year ended September 30, 2009, reducing interest expense by $17.2 million. This decrease was offset by an increase in the interest rate swap expense of $3.7 million and a $100.0 million increase to the first lien debt under the old senior secured credit facilities on June 30, 2008, in conjunction with the Airtechnics Acquisition, which increased interest expense by $2.0 million for the year ended September 30, 2009 as compared to the year ended September 30, 2008. Upon the maturity of our previous interest rate swaps, we entered into two interest rate swaps arrangements that expire in February and June 2012.

        Other expense, net was $0.4 million for the year ended September 30, 2009 compared to $0.7 million of income for the year ended September 30, 2008. This change was primarily due to unrealized foreign exchange losses associated with transactions denominated in currencies other than the respective functional currency of the reporting subsidiary.

        Provision for income taxes of $37.9 million for the year ended September 30, 2009 decreased $6.4 million, or 14.4%, compared to the year ended September 30, 2008. Our effective tax rate was 43.0% and 39.3% during the years ended September 30, 2008 and 2009, respectively. The decrease in provision for income taxes was primarily a result of a $6.5 million, or 6.4%, decrease in pre-tax income. Additionally, for the year ended September 30, 2009, we recognized a larger foreign tax credit than the

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prior year, resulting in an additional benefit of $0.8 million, which reduced the effective tax rate by almost 1.0%.

        Due to the factors described above, we reported a net income of $58.5 million for the year ended September 30, 2009, compared to net income of $58.6 million for the year ended September 30, 2008. Net income as a percent of net sales decreased 0.2% for the year ended September 30, 2009, primarily as a result of a 3.6% decrease in gross profit as a percent of net sales.

Supplemental Quarterly Financial Information

        The following table sets forth our historical unaudited quarterly consolidated statements of operations for each of the last eight quarters ended March 31, 2011. This unaudited quarterly information has been prepared on the same basis as our consolidated audited financial statements appearing elsewhere in this prospectus, and includes all adjustments, consisting only of normal and recurring adjustments, that we consider necessary to present fairly the financial information for the quarters presented. We have not historically experienced any significant seasonality with respect to our results of operations.

        The quarterly data should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this prospectus.

 
  Three Months Ended  
(Dollars in thousands)
  June 30,
2009
  September 30,
2009
  December 31,
2009
  March 31,
2010
  June 30,
2010
  September 30,
2010
  December 31,
2010
  March 31,
2011
 
 
  (unaudited)
 

Consolidated statements of income:

                                                 

Net sales

  $ 150,715   $ 150,680   $ 146,806   $ 164,105   $ 171,116   $ 174,009   $ 173,528   $ 176,015  
                                   

Gross profit

    56,878     53,758     54,643     63,197     68,240     68,150     66,699     67,426  
                                   

Selling, general and administrative expenses

    24,079     25,904     24,758     24,568     24,968     25,621     25,388     24,493  
                                   

Income from operations

    32,799     27,854     29,885     38,629     43,272     42,529     41,311     42,933  
                                   

Interest expense, net

    (9,002 )   (10,628 )   (8,579 )   (9,635 )   (9,199 )   (8,857 )   (6,277 )   (6,309 )

Other income (expense), net

    (985 )   920     (41 )   1,098     (495 )   (1,020 )   516     (693 )
                                   

Income before provision for income taxes

    22,812     18,146     21,265     30,092     33,578     32,652     35,550     35,931  
                                   

Provision for income taxes

    9,188     6,925     7,194     11,978     12,121     12,620     13,880     13,993  
                                   
 

Net income

  $ 13,624   $ 11,221   $ 14,071   $ 18,114   $ 21,457   $ 20,032   $ 21,670   $ 21,938  
                                   

Liquidity and Capital Resources

    Overview

        We have historically funded our operations, debt payments, capital expenditures and discretionary funding needs from our cash from operations. We had total available cash and cash equivalents of approximately $24.1 million and $45.7 million as of March 31, 2010 and 2011, respectively, and approximately $16.0 million, $11.4 million and $39.5 million as of September 30, 2008, 2009 and 2010,

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respectively. In addition, as of March 31, 2011, we had no amounts outstanding under the old revolving facility.

        Following the completion of this offering, our primary sources of liquidity will continue to be cash flow from operations and available borrowings under our new revolving facility. Our primary uses of cash following this offering will be for:

    operating expenses;

    working capital requirements to fund the growth of our business;

    capital expenditures that primarily relate to IT equipment and our warehouse operations; and

    debt service requirements for borrowings under the new senior secured credit facilities.

        Generally, cash provided by operating activities has been adequate to fund our operations. Due to fluctuations in our cash flows and the growth in our operations, it may be necessary from time to time in the future to borrow under our new revolving facility to meet cash demands. We anticipate that cash provided by operating activities, cash and cash equivalents and borrowing capacity under our new revolving facility will be sufficient to meet our cash requirements for the next twelve months. As of March 31, 2011, we did not have any material capital expenditure commitments.

    Senior Secured Credit Facilities

    Old Senior Secured Credit Facilities

        As of March 31, 2011, our outstanding indebtedness under our old senior secured credit facilities was approximately $606.2 million. The old senior secured credit facilities consisted of a $625.0 million first lien credit facility, which we refer to as the old first lien credit facility, and a $150.0 million second lien credit facility, which we refer to as the old second lien credit facility. At the time of initial incurrence, the old first lien credit facility was comprised of a $450.0 million first lien term loan facility and a $75.0 million first lien revolving line of credit. On June 30, 2008, we modified the terms of the old first lien credit facility to include an additional $100.0 million of term loan borrowings thereunder to fund the Airtechnics Acquisition, bringing the old first lien term loan facility up to $550.0 million at such time. As of March 31, 2011, we had approximately $477.2 million outstanding under the old first lien credit facility.

        The interest rate on term loans under the old first lien credit facility was calculated using either Alternate Base Rate, or ABR (which is defined as Prime Rate plus an applicable margin rate of 1.25%), or Eurocurrency rate (defined as LIBOR plus an applicable margin rate of 2.25%), at our option. The interest rate on the term loans under the old first lien credit facility was 2.50% as of March 31, 2011.

        There were no outstanding borrowings under the old revolving facility as of March 31, 2011, or at any point during fiscal 2010 or the six months ended March 31, 2011. The annual commitment fees for the old revolving facility were approximately $0.3 million.

        As of March 31, 2011, we had approximately $129.0 million outstanding under the old second lien credit facility. The interest rate on the old second lien credit facility was calculated using ABR (defined as Prime Rate plus the applicable margin rate of 4.75%) or Eurocurrency rate (defined as LIBOR plus an applicable margin rate of 5.75%), at our option. The interest rate on the old second lien credit facility was 6.00% as of March 31, 2011.

        During the year ended September 30, 2010, we made repayments totaling approximately $60.4 million with respect to the term loans under the old first lien credit facility and $7.0 million with respect to the old second lien credit facility, inclusive of contractually scheduled payments.

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        Our subsidiary, Wesco Aircraft Europe Limited, has a £10.0 million (approximately $16.0 million based on the March 31, 2011 exchange rate) line of credit available that automatically renews annually on October 1, which we refer to as the UK Line of Credit. This line of credit bears interest based on the base rate plus an applicable margin of 1.15%. There were no outstanding borrowings under the UK Line of Credit as of March 31, 2011.

    New Senior Secured Credit Facilities

        Borrowings under the new revolving facility and new term loan A facility bear interest at the Eurocurrency rate plus the applicable margin or the ABR plus the applicable margin. Borrowings under the new term loan B facility bear interest at a rate equal to (A) the greater of (x) the Eurocurrency rate and (y) 1.25% or (B) the greater of (x) the ABR and (y) 1.25%, plus, in each case, the applicable margin.

        The applicable margin for the new revolving facility and the new term loan A facility is 3.00% for Eurocurrency loans and 2.00% for ABR loans for the six-month period after the closing of the new senior secured credit facilities, and thereafter the applicable margin will be based on our total net leverage ratio as determined in the most recently delivered financial statements, with the respective margins ranging from 2.25% to 3.25% for Eurocurrency loans and 1.25% to 2.25% for ABR loans. The applicable margin for the new term loan B facility is 3.00% for Eurocurrency loans and 2.00% for ABR loans for the period from the closing date of the new senior secured credit facilities until June 30, 2012, and thereafter the applicable margin will be based on our total net leverage ratio as determined in the most recently delivered financial statements, with the respective margins ranging from 2.75% to 3.00% for Eurocurrency loans and 1.75% to 2.00% for ABR loans.

        The new revolving facility and new term loan A facility each mature on April 7, 2016 and the new term loan B facility matures on April 7, 2017.

        The obligations under the new senior secured credit facilities are guaranteed by us and all of our direct and indirect, wholly owned, domestic restricted subsidiaries (subject to certain exceptions) and secured by a first lien on substantially all of our assets and the assets of our guarantor subsidiaries, including capital stock of subsidiaries (in each case, subject to certain exceptions).

        The new senior secured credit facilities contain customary negative covenants, including restrictions on our and our restricted subsidiaries' ability to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances or investments, pay dividends, sell or otherwise transfer assets, optionally prepay or modify terms of any junior indebtedness or enter into transactions with affiliates. The new senior secured credit facilities also require the maintenance of a net-debt-to-EBITDA ratio (as such ratio is defined in the new senior secured credit facilities) of less than 4.00 and a EBITDA-to-net cash interest expense ratio (as such ratio is defined in the new senior secured credit facilities) of no lower than 2.25. Had the new senior secured credit facilities been in effect as of March 31, 2011, our net-debt-to-EBITDA ratio would have been 3.11 and our EBITDA-to-net cash interest expense ratio would have been 7.21.

        The new senior secured credit facilities contain customary affirmative covenants, including delivery of financial and other information to the administrative agent, notice to the administrative agent upon the occurrence of certain material events, preservation of existence, payment of material taxes and other claims, maintenance of properties and insurance, maintenance of books and records, access to properties and records for inspection by administrative agent and lenders, further assurances and provision of additional collateral and guarantees.

        The new senior secured credit facilities provide that, upon the occurrence of certain events of default, the obligations thereunder may be accelerated and the lending commitments terminated. Such events of default include payment defaults to the lenders, material inaccuracies of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, voluntary and involuntary bankruptcy proceedings, material money judgments, material ERISA events, certain change of control events and other customary events of default.

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    Cash Flows

        A summary of our operating, investing and financing activities are shown in the following table:

 
  Year Ended September 30,   Six Months Ended
March 31,
 
(In thousands)
  2008   2009   2010   2010   2011  

Consolidated statements of cash flows data:

                               

Net cash provided by operating activities

  $ 24,702   $ 1,266   $ 100,773   $ 31,117   $ 23,657  

Net cash used in investing activities

    (115,798 )   (4,135 )   (3,077 )   (1,325 )   (2,761 )

Net cash provided by (used in) financing activities

    94,114     (1,720 )   (69,483 )   (16,471 )   (14,875 )

    Operating Activities

        Our operating activities generated $23.7 million of cash in the six months ended March 31, 2011, a decrease of $7.5 million, compared to the six months ended March 31, 2010. This was primarily the result of a $14.8 million increase in the change in accounts receivable for the six months ended March 31, 2011 as compared to the six months ended March 31, 2010. This increase in accounts receivable was due to the increase in net sales between the two periods. Our accounts receivable balance as a percentage of net sales was 30.7% and 29.9% for the six months ended March 31, 2010 and March 31, 2011, respectively.

        Our operating activities generated $100.8 million of cash in the year ended September 30, 2010, an increase of $99.5 million compared to the year ended September 30, 2009. This increase was primarily the result of a $112.7 million net decrease in the change in inventory for the year ended September 30, 2010 as compared to the year ended September 30, 2009. Net income also increased $15.2 million during the year ended September 30, 2010. This was offset by a $12.2 million increase in the net change in accounts receivable for the year ended September 30, 2009 as compared to the year ended September 30, 2010. This increase was primarily driven by a $43.3 million, or 7.1%, increase in net sales for the year ended September 30, 2010. Our accounts receivable balance as a percentage of net sales was 13.6% and 13.6% for the years ended September 30, 2009 and September 30, 2010, respectively.

        Our operating activities generated $1.3 million of cash in the year ended September 30, 2009, a decrease of $23.4 million compared to the year ended September 30, 2008. This decrease was primarily the result of a $52.4 million increase in the net change in inventory for the year ended September 30, 2009 as compared to the year ended September 30, 2008. This significant inventory increase was caused by increased supplier capacity that resulted in shorter lead times and faster shipments of our pre-existing orders. This was offset by a decrease of $15.6 million in accounts receivable driven by a lower days sales outstanding ratio. Our accounts receivable balance as a percentage of net sales was 15.1% and 13.6% for the years ended September 30, 2008 and September 30, 2009, respectively. The 1.5% increase for fiscal 2008 compared with fiscal 2009 was primarily the result of increased net sales during the last two months of fiscal 2008.

        Our accounts receivable balance as a percentage of net sales may fluctuate from quarter-to-quarter. These fluctuations are primarily driven by changes, from quarter-to-quarter, in (i) the timing of sales and (ii) the current average days sales outstanding. The completion of customer contracts with accelerated payment terms can also contribute to these quarter-to-quarter fluctuations.

        Our allowance for doubtful accounts may also fluctuate from quarter-to-quarter. These fluctuations are primarily driven by changes in our accounts receivable balance, and can also be impacted by the repayment of amounts owed to us that had previously been categorized as bad debt.

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    Investing Activities

        Our investing activities used $1.3 million and $2.8 million of cash in the six months ended March 31, 2010 and 2011, respectively, and $115.8 million, $4.1 million and $3.1 million in cash during the years ended September 30, 2008, 2009 and 2010, respectively. These amounts were used for investments in various capital expenditures and to purchase property and equipment. In addition, during the year ended September 30, 2008, $109.0 million of cash was used in the Airtechnics Acquisition.

        Our purchases of property and equipment may vary from period to period due to the timing of the expansion of our business and the investment requirements to provide us with technology that allows us to better serve our customers.

    Financing Activities

        Our financing activities used $14.9 million of cash in the six months ended March 31, 2011. This amount primarily consisted of $14.0 million used to repay principal against the old second lien credit facility, and the remaining amount was used to make repayments under our capital lease obligations.

        Our financing activities used $16.5 million of cash in the six months ended March 31, 2010. This primarily consisted of $14.0 million used to repay principal against the old first lien credit facility, $1.4 million to make a required quarterly debt payment on our old senior secured credit facilities, $0.8 million to pay off the UK Line of Credit and $0.3 million to make repayments under our capital lease obligations.

        Our financing activities used $69.5 million of cash in the year ended September 30, 2010. This amount consisted of $67.4 million used to make repayments under the old senior secured credit facilities, $1.3 million used to make repayments under our capital lease obligations and $0.8 million used to make repayments under our UK Line of Credit.

        Our financing activities used $1.7 million of cash in the year ended September 30, 2009. This amount consisted of $0.7 million used to redeem vested stock options, $1.0 million used to make repayments under our capital lease obligations and less than $0.1 million used to make repayments under our UK Line of Credit, partially offset by less than $0.1 million in cash proceeds from the exercise of stock options.

        Our financing activities generated $94.1 million of cash in the year ended September 30, 2008. This amount consisted of $100.0 million in borrowings under the old first lien credit facility and $1.0 million in cash proceeds from the issuance of common stock, which was partially offset by approximately $2.4 million used to make repayments under our UK Line of Credit, $3.0 million used to pay certain financing fees associated with the Airtechnics Acquisition and $1.5 million used to make repayments under our capital lease obligations.

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Contractual Obligations

        The following table is a summary of contractual cash obligations at September 30, 2010 (in thousands):

 
  Payments Due by Period  
 
  Less Than
1 Year
  1 - 3
Years
  3 - 5
Years
  More Than
5 Years
  Total  

Long-Term Debt Obligations(1)

  $   $ 477,243   $ 143,000   $   $ 620,243  

Capital Lease Obligations(2)

    1,577     1,676     99         3,352  

Operating Lease Obligations(3)

    3,629     6,314     4,395     7,166     21,504  

Purchase Obligations(4)

    193,696     2,565     110         196,371  
                       

Total

  $ 198,902   $ 487,798   $ 147,604   $ 7,166   $ 841,470  
                       

(1)
This line item includes our obligations under the old senior secured credit facilities. This line item does not reflect payment obligations for the new senior secured credit facilities. The payment obligations for the new senior secured credit facilities assuming an outstanding principal amount of $615.0 million, the balance as of April 7, 2011, the closing date of the new senior secured credit facilities, are $4,188, $35,156, $58,343 and $517,313 for the periods Less Than 1 Year, 1-3 Years, 3-5 Years and More Than 5 Years, respectively. These amounts assume no repayment of principal during such period and do not include interest payments required to be made under the old senior secured credit facilities and the new senior secured credit facilities, which bear interest at a variable rate. See "—Liquidity and Capital Resources—Senior Secured Credit Facilities—New Senior Secured Credit Facilities."

(2)
This line item includes our payment obligations under leases classified as a capital lease.

(3)
This line item includes any payment obligations under leases classified as an operating lease.

(4)
This line item includes our current open purchase orders with respect to the purchase of products and the estimated timing of the transaction.

Off-Balance Sheet Arrangements

        We are not a party to any off-balance sheet arrangements.

Recently Adopted Accounting Pronouncements

        Changes to GAAP are established by the Financial Accounting Standards Board, or the FASB, in the form of Accounting Standards Updates, or ASUs, to the FASB's ASC.

        We consider the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position and results of operations.

        In January 2010, the FASB issued guidance that revised two disclosure requirements concerning fair value measurements and clarifies two others. It requires separate presentation of significant transfers into and out of Levels 1 and 2 of the fair value hierarchy and disclosure of the reasons for such transfers. It will also require the presentation of purchases, sales, issuances and settlements within Level 3 on a gross basis rather than a net basis. The amendments also clarify that disclosures should be disaggregated by class of asset or liability and that disclosures about inputs and valuation techniques should be provided for both recurring and non-recurring fair value measurements. These new disclosure requirements will become effective for our financial statements for the period ended September 30, 2011, except for the requirement concerning gross presentation of Level 3 activity, which will become

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effective for fiscal years beginning after December 15, 2010. Since we do not currently have any Level 3 fair value measurements, the adoption of this standard will not have an impact on our consolidated financial statements.

        In October 2009, the FASB issued guidance on revenue arrangements with multiple deliverables effective for our 2012 fiscal year, although early adoption is permitted. The guidance revises the criteria for separating, measuring, and allocating arrangement consideration to each deliverable in a multiple element arrangement. The guidance requires companies to allocate revenue using the relative selling price of each deliverable, which must be estimated since we do not have a history of selling the deliverable on a stand-alone basis or third-party evidence of selling price. We do not believe that the adoption of this guidance will significantly change the timing in which revenue is recorded as the pricing of our service components are included in the per unit price of the products delivered to the customer, which is solely contingent on the number of units sold. As a result, the revenue earned on the service element does not become fixed or determinable until delivery of the product has taken place.

        In June 2009, the FASB issued guidance to revise the approach to determine when a variable interest entity, or VIE, should be consolidated. The new consolidation model for VIEs considers whether we have the power to direct the activities that most significantly impact the VIEs' economic performance and shares in the significant risks and rewards of the entity. The guidance on VIEs requires companies to continually reassess VIEs to determine if consolidation is appropriate and provide additional disclosures. We adopted the provisions of this VIE guidance at the beginning of fiscal year 2011, and the adoption did not have a material impact on our financial statements.

Quantitative and Qualitative Disclosures about Market Risk

        Our exposure to market risk consists of foreign currency exchange rate fluctuations, changes in interest rates and fluctuations in fuel prices.

    Foreign Currency Exposure

    Currency translation

        During the year ended September 30, 2010 and the six months ended March 31, 2011, approximately 15% and 17%, respectively, of our net sales were made by our foreign subsidiaries, and our total non-U.S. net sales represented approximately 26% and 29%, respectively, of our total net sales. As a result of these international operating activities, we are exposed to risks associated with changes in foreign exchange rates, principally exchange rates between the U.S. dollar, British pound and the Euro.

        The results of operations of our foreign subsidiaries are translated into U.S. dollars at the average exchange rate for each relevant period. This translation has no impact on our cash flow. However, as foreign exchange rates change, there are changes to the U.S. dollar equivalent of sales and expenses denominated in foreign currencies. Any adjustments resulting from the translation are recorded in accumulated other comprehensive income on our statements of changes in stockholders' equity. We do not consider the risk associated with exchange rate fluctuations to be material to our financial condition or results of operations.

        A hypothetical 5% increase in the value of the British pound and the Euro relative to the U.S. dollar would have resulted in an increase in our net income of approximately $0.3 million and less than $0.1 million, respectively, during fiscal 2010 and $0.2 million and less than $0.1 million, respectively, during the six months ended March 31, 2011. A corresponding decrease would have resulted in a decrease in our net income of approximately $0.3 million and less than $0.1 million,

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respectively, during fiscal 2010 and $0.2 million and less than $0.1 million, respectively, during the six months ended March 31, 2011.

    Currency transactions

        Currency transaction exposure arises where actual sales and purchases are made by a company in a currency other than its own functional currency. During the year ended September 30, 2010, our subsidiary in the United Kingdom had sales in U.S. dollars and Euros of approximately $66.0 million and €8.2 million, respectively, and had purchases in U.S dollars and Euros of approximately $47.9 million and €8.7 million, respectively. During the six months ended March 31, 2011, our subsidiary in the United Kingdom had sales in U.S. dollars and Euros of approximately $40.8 million and €4.6 million, respectively, and had purchases in U.S. dollars and Euros of approximately $33.5 million and €7.1 million, respectively. To the extent possible, we structure arrangements where the purchase transactions are denominated in U.S. dollars in order to minimize near-term exposure to foreign currency fluctuations.

        From September 30, 2008 to September 30, 2009, the average value of the U.S. dollar strengthened against the British pound by $0.42 (from $1.97 to $1.55). From September 30, 2009 to September 30, 2010, the British pound stabilized against the dollar. From September 30, 2010 through March 31, 2011, the pound strengthened slightly against the dollar by $0.04 (from $1.55 to $1.59). A strengthening of the U.S. dollar means we realize a lesser amount of U.S. dollar revenue on sales that were denominated in British pounds. In fiscal 2009, the strengthening of the U.S. dollar relative to the British pound resulted in a negative impact of approximately $22.1 million in net sales as compared to the exchange rate during fiscal 2008 and resulted in a decrease of approximately $2.9 million in our net income in fiscal 2009. As a result of the stabilization of the value of the British pound against the U.S. dollar during fiscal 2010 and the slight weakening of the U.S. dollar during the six months ended March 31, 2011, currency transactions did not have a material impact on our financial results during those periods. A hypothetical 5% increase in the value of the British pound relative to the U.S. dollar would have resulted in an increase in our net income of approximately $0.3 million and $0.2 million during fiscal 2010 and the six months ended March 31, 2011, respectively, attributable to our foreign currency transactions. A corresponding decrease would have resulted in a decrease in our net income of approximately $0.3 million and $0.2 million during fiscal 2010 and the six months ended March 31, 2011, respectively.

        We have historically entered into currency forward and option contracts to limit exposure to currency rate changes and will continue to monitor our transaction exposure to currency rate changes. Gains and losses on these contracts are deferred until the transaction being hedged is finalized. As of March 31, 2011, we had no outstanding currency forward and option contracts.

    Interest Rate Risk

        Our principal interest rate exposure relates to the new senior secured credit facilities, which bear interest at a variable rate. See "—Liquidity and Capital Resources—Senior Secured Credit Facilities New Senior Secured Credit Facilities." If there is a rise in interest rates, our debt service obligations on the borrowings under the new senior secured credit facilities would increase even though the amount borrowed remained the same, which would affect our results of operations, financial condition and liquidity. At our debt level and borrowing rates as of April 7, 2011, the closing date of the new senior secured credit facilities, annual cash interest expense, including fees under our new revolving facility, would have been approximately $24.4 million. If variable interest rates were to change by 1.0%, our interest expense would fluctuate approximately $6.2 million per year, without taking into account the effect of any hedging instruments or the minimum LIBOR requirement.

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        We periodically enter into interest rate swap agreements to manage interest rate risk on our borrowing activities. Upon the maturity of our previous interest rate swap agreements, we entered into two interest rate swap agreements that expire in February and June 2012, respectively, which we refer to collectively as the Swaps. Each Swap converts the interest rate on approximately $200.0 million (notional amount) of our outstanding indebtedness from variable rates to a fixed interest rate. During the year ended September 30, 2010 and the six months ended March 31, 2011, we recorded a loss in the amount of approximately $2.6 million and a gain in the amount of $2.9 million, respectively, as a result of changes in fair value of derivative financial instruments. These gains and losses are recorded as a component of interest expense.

        We do not hold or issue derivative financial instruments for trading or speculative purposes.

    Fuel Price Risk

        Our principal direct exposure to increases in fuel prices is as a result of potential increased freight costs caused by fuel surcharges or other fuel cost-driven price increases implemented by the third-party package delivery companies on which we rely. We estimate that our annual freight costs are approximately $2.5 million, and, as a result, we do not believe the impact of these potential fuel surcharges or fuel cost-driven price increases would have a material impact on our business, financial condition and results of operations. In addition, increases in fuel prices may have an indirect material adverse effect on our business, financial condition and results of operations, as such increases may contribute to decreased airline profitability and, as a result, decreased demand for new commercial aircraft that utilize the products we sell. See "Risk Factors—We may be materially adversely affected by high fuel prices."

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INDUSTRY OVERVIEW

        According to Stax, the global market for C class aerospace parts, which includes hardware, bearings, electronic components and machined parts for both commercial and military customers, was approximately $6.5 billion in 2010. This market is generally segmented by end customer or sales channel. On a customer basis, OEMs and their subcontractors, which we refer to collectively as the OEM market, accounted for approximately $4.5 billion of sales and the remaining approximately $2.0 billion of sales was made to airlines and aftermarket MRO providers. On a sales channel basis, approximately $4.2 billion of all C class aerospace parts flow through distributors and approximately $2.2 billion of sales are made directly to end customers. The following charts provide additional information on the breakdown of the C class aerospace parts market as of 2010.

GRAPHIC


Source: Stax.

We believe that the key trends and drivers of growth in the aerospace parts distribution market include:

    Increased Demand for New Aircraft Production

        The OEM market for C class aerospace parts in 2010 was approximately $4.5 billion according to Stax, with approximately $2.7 billion of this total relating to sales of commercial aircraft and business jets. According to Airline Monitor, the global commercial aircraft fleet has grown approximately 4.5% per year over the last 20 years, exceeding global GDP growth of 3% per year over the same period. RPMs, a key measure of airline passenger volumes, grew approximately 5.5% in 2010 and are expected to grow at 5.9% annually, on average, from 2010 to 2020, due to the economic recovery in developed economies, continued growth in emerging markets, particularly in the Asia-Pacific region, and the secular trend towards increased air travel globally. Increased passenger traffic volumes and the return to profitability of the global airline industry have renewed demand for commercial aircraft, particularly for more fuel efficient models such as the Boeing 787 and Airbus A350. According to Airline Monitor, annual deliveries of the Boeing 787 are projected to increase from 20 in 2011 to over 100 by 2014, and Airbus expects A350 deliveries to commence in 2013. Airline Monitor forecasts that overall commercial aircraft deliveries will grow at a CAGR of 4.5% over the next ten years. It further estimates that there were approximately 8,100 planes in the commercial aircraft order backlog as of December 31, 2010, which represents over five years of projected commercial aircraft deliveries. According to the General Aviation Manufacturers Association, business jet deliveries, which are generally correlated with market indicators, including the earnings and price performance of the S&P 500, suffered a 23% decline on average from 2008 to 2010. According to the FAA, however, business jet activity increased by over 11% in 2010. We also expect commercial aircraft production to be supplemented by increases in business and regional jet deliveries.

        According to Stax, the market for military C class aerospace parts was approximately $1.8 billion in 2010. Future military aerospace OEM demand is expected to be driven by increases in the production

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of the Lockheed Martin JSF. The JSF is a next-generation fighter that is designed for the U.S. Navy, Marines and Air Force, along with key U.S. allies such as the United Kingdom, Italy and The Netherlands. According to Forecast International, production of the JSF is expected to increase from 20 in 2011 to 98 by 2016.

    Increased Demand from the MRO Market

        According to Stax, the combined commercial and military MRO market represented approximately $2.0 billion of the total C class aerospace parts market in 2010. We expect commercial MRO providers to benefit from the same trends as those impacting the commercial OEM market, including increased RPMs, which will in turn drive growth in the commercial fleet and greater utilization of existing aircraft. According to Boeing, RPM growth is forecasted to be particularly strong in the Asia Pacific and Middle East regions, with annual growth projected to be 7.6% in China, 7.4% in South Asia, including India, and 7.1% in the Middle East from 2010 to 2019. The commercial MRO market may also benefit from directives or notifications announced by international industry regulators and trade associations. Such directives or notifications can serve to bolster required maintenance, and thus the demand for new and existing C class aerospace parts. We expect demand in the military MRO market to be driven by requirements to maintain aging military fleets, changes in the overall fleet size and the level of U.S. military activity overseas.

    Industry Consolidation

        We are one of the top two aerospace distribution companies by sales and, together with our largest competitor, accounted for approximately $1.4 billion, or 22%, of the approximately $6.5 billion C class aerospace parts market in 2010, of which approximately $656.0 million, or 10%, was attributable to us. The remainder of the market is highly fragmented, which creates significant opportunities for further consolidation. Several benefits typically accrue to distributors through consolidation, including efficiencies in leveraging costs over a larger revenue base, increased customer penetration facilitated by a larger product offering and a reduction in purchasing costs driven by larger volume-based discounts. We expect these benefits to support further consolidation in the industry.

    Globalization

        The manufacture of aircraft and aircraft structures is becoming more globalized, as nations such as China, India and the UAE invest heavily to develop their aerospace industries. In addition, many U.S. and European OEMs continue to expand their operations in international markets in order to benefit from labor cost savings as local businesses seek to partner with established global companies. These OEMs and subcontractors expect to receive the same quality parts and services in new markets that they receive in their home markets. We believe that these quality and service expectations and the overall growth rates in international aerospace markets present significant opportunities for supply chain managers such as Wesco.

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BUSINESS

Company Overview

        We are one of the world's largest distributors and providers of comprehensive supply chain management services to the global aerospace industry on an annual sales basis. Our services range from traditional distribution to the management of supplier relationships, quality assurance, kitting, JIT delivery and point-of-use inventory management. We supply approximately 450,000 different SKUs, including hardware, bearings, tools and more recently, electronic components and machined parts. In fiscal 2010, sales of hardware represented 80% of our net sales, with highly engineered fasteners constituting 83% of that amount. We serve our customers under three types of arrangements: JIT contracts, which govern comprehensive outsourced supply chain management services; LTAs, which set prices for specific parts; and ad hoc sales. JIT contracts and LTAs, which together comprised approximately 63% of our fiscal 2010 net sales, are multi-year arrangements that provide us with significant visibility into our future sales.

        Founded in 1953 by the father of our current CEO, Wesco has grown to serve over 7,200 customers in the commercial, military and general aviation sectors, including the leading OEMs and their subcontractors, through which we support nearly all major Western aircraft programs. We have grown our net sales at a 16% CAGR over the past 10 years to $656.0 million in fiscal 2010. We serve a large and growing global market, and believe that with more than 1,000 employees across 28 locations in 10 countries, we are well positioned to continue our track record of strong long-term growth and profitability. The following charts illustrate the composition of our 2010 net sales based on our sales data or management estimates.

GRAPHIC

        We have invested in building an integrated, highly customized IT system that enables our purchasing and sales organization to make more informed decisions and our inventory management system to operate at maximum efficiency. Specifically, our customized IT system provides us visibility into inventory quantities, stocking locations and purchases across our customer base by individual SKU, enabling us to accurately fill approximately 8,000 orders per day and provide an exceptional level of customer service. The scalable nature of our IT system helps us improve productivity and financial performance as sales volume increases. We believe our customized IT system is a key competitive advantage and critical element in our unique business model that creates significant value for our customers and our suppliers.

        We believe that our success has been driven by our focus on customer service and our ability to offer tailored solutions to our customers. We believe customers that utilize our comprehensive JIT supply chain management services are frequently able to realize significant benefits including:

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        Our customers also benefit from the strong relationships we maintain with a diverse group of over 1,100 suppliers. We believe these suppliers in turn derive several benefits from our scale, global reach and unique business model, including:

We believe we are well positioned to continue our track record of strong growth by partnering with our suppliers to provide a compelling combination of value-added services to our customers.

Competitive Strengths

        We believe that our key competitive strengths include the following:

        Leader in Attractive Global Market.     We are one of the world's largest distributors and providers of comprehensive supply chain management services to the global aerospace industry on an annual sales basis. We believe we offer the world's broadest inventory of aerospace parts comprised of approximately 450,000 SKUs. In addition, we fill approximately 8,000 orders per work day and manage approximately 350,000 stocking bins throughout our customers' facilities. Stax estimates the market for the C class aerospace parts we offer at approximately $6.5 billion on an annual basis, and we expect that it will continue to grow, driven by a broad-based recovery in the delivery of new aircraft. This market is fragmented, and we estimate that we and our top competitor together account for approximately 22% of the market, with the balance served by smaller regional or local distributors, or directly by the parts manufacturers. We believe that the scale of our global distribution network, our value-added services and the depth, breadth and dollar investment in our inventory provide us with a significant competitive advantage in an attractive market.

        Compelling Value Proposition.     We offer a compelling value proposition to our customers by combining access to what we believe to be the world's broadest inventory of aerospace parts with our unique capabilities in comprehensive supply chain management. Our services can significantly improve on-time-delivery performance, enabling our customers to reduce their inventory while at the same time decreasing the frequency of production interruptions caused by part shortages. Due to the high levels of precision and engineering standards in the aerospace industry, our customers must ensure the highest levels of quality assurance. Many of our customers have chosen to outsource these critical quality assurance functions to us, relying on our rigorous inspection processes. Aerospace companies that do not outsource to a supply chain manager like Wesco can incur significant additional overhead and administrative costs relating to internal procurement, quality assurance, inventory stocking and other related personnel.

        Diverse Customer and Program Base.     We maintain strong relationships with over 7,200 active customers including major OEMs such as Airbus, Boeing, Bombardier, Embraer, Cessna, Gulfstream, BAE Systems, Bell Helicopter, Lockheed Martin, Northrop Grumman and Raytheon. We supply

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products to nearly every major Western aircraft in production, including the B-787, B-737, B-747, A-320, JSF and V-22. During fiscal 2010, no single customer or aircraft program represented more than 15% of our net sales. We have actively worked to transition our largest customers from ad hoc purchases to multi-year LTAs or comprehensive JIT supply chain management agreements, the latter two of which together represented approximately 63% of our fiscal 2010 net sales. By developing strong, long-term relationships with a diverse set of customers, we have significant visibility into our future sales.

        Superior Purchasing Capabilities and Supplier Relationships.     Our management is highly skilled in analyzing supply, demand, cost and pricing factors in order to make optimal inventory investment decisions, and we maintain close relationships with the leading suppliers in the industry. In particular, Precision Castparts and Alcoa Fastening Systems supplied approximately 22% and 20%, respectively, of the products we purchased during fiscal 2010. Our top 10 suppliers have been doing business with us for an average of more than 10 years. We believe that our business model allows our suppliers to smooth out production, improve their cash flow and reduce administrative cost. As a result of our scale and the strength of our relationships, many of our suppliers offer us attractive volume-based price discounts. Our success in making optimal inventory purchasing decisions is driven by our management's deep understanding of our industry and their skill in analyzing fundamental supply, demand, cost and pricing data. These decisions are facilitated by our highly customized IT system. Our superior inventory purchasing capabilities and the strength of our supplier relationships have contributed substantially to what we believe are our industry-leading operating margins.

        Experienced Management Team with Significant Equity Ownership.     Our management team has extensive industry experience and company tenure. Our Chief Executive Officer and other executive officers have an average of more than 20 years of experience with us and more than 30 years in our industry. In addition, our executive officers will own approximately        % of the common stock of the Company following this offering. We believe that this significant equity ownership aligns the interests of our executive officers with our stockholders.

Our Strategy for Continued Growth

        We intend to pursue the following strategies in order to continue to grow our business:

        Continued Focus on Operational Excellence.     We have built strong relationships with our existing customers and suppliers through a relentless focus on operational excellence and improvement. We intend to continue providing our customers with best-in-class on-time delivery performance and quality assurance. We also intend to continue investing in our integrated, highly customized IT system and process automation technology. We believe that by focusing on operational excellence, we will be able to maintain high customer satisfaction and industry-leading operating margins.

        Win New Business from Existing Customers.     We will continue our strategy of expanding our relationships with existing customers by transitioning them to our comprehensive JIT supply chain management services as well as expanding our programs to include additional customer sites and SKUs. We are a key partner supplying fasteners and other C class parts to support the launch of new aircraft programs, such as the Boeing 787 and Lockheed Martin JSF. We will continue to support our customers in the launch of new aircraft programs by introducing new supply chain solutions that minimize costs, improve productivity, lower inventory investment and ensure a seamless supply of parts for new production and aftermarket support.

        Expand Customer Base.     We believe that our services and capabilities are attractive to potential new customers and plan to expand our customer base. We have had significant success in winning business when competing distributors have been unable to meet customer service level requirements and in situations where customers have outsourced work that was previously performed internally.

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Historically, we have focused our activities on the major OEMs and their subcontractors and less on airlines and airline maintenance organizations due to their tendency to order parts in smaller quantities with greater frequency, which makes them more costly to serve. We are in the process of adding a significant number of SKUs to an airline industry automated quoting system that we believe will provide us with a cost-effective way to penetrate this commercial MRO market that Stax estimates is approximately $950 million in size.

        Further Expand into International Markets.     We have recently established a presence in international locations such as China, India and Saudi Arabia, and we intend to expand into other high growth regions such as Mexico to support new and existing customers. Our international expansion efforts will enable us to better reach new customers and more effectively serve our existing customer base as the manufacture of aircraft and aircraft structures continues to become more globalized. We believe that we mitigate many of the risks associated with international expansion by entering into customer contracts before we establish a new stocking facility. Our international expansion efforts will enable us to better reach new customers and more effectively serve our existing customer base as the manufacture of aircraft and aircraft structures continues to become more globalized.

        Selectively Pursue Strategic Acquisitions.     Our industry is highly fragmented and we believe that there are opportunities for continued consolidation. In 2008, we acquired Airtechnics, which enabled us to expand our product offering to include electronic components, as well as gain additional customers. We believe that we are well positioned to expand our product offering and geographical footprint through strategic acquisitions. Consistent with this strategy, we continue to evaluate potential acquisition opportunities.

Our Products and Services

        We offer more than 450,000 different SKUs, consisting of C class aerospace hardware, bearings, electronic components and machined parts, which are generally priced below $350 per part. Stax estimates that C class parts typically contribute approximately 3.0% of the total cost of a large commercial aircraft. Many of the products we sell are highly engineered, precision parts that are specified for use in particular aircraft programs.

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        Our product categories include the following:

 
 
   
   
  Hardware
   
  Bearings
   
  Electronic
Components

   
  Machined Parts
and Other

   

  

  % of Total Market for C Class Aerospace Parts*       46%       26%       16%       12%    

  

  Wesco Fiscal 2010 Net Product Sales (in millions)       $527       $42       $70       $17    

  

  % of Wesco Fiscal 2010 Net Product Sales       80%       7%       11%       2%    

  

  Types of Products Offered      

•        Blind fasteners

•        Panel fasteners

•        Bolts and screws

•        Clamps

•        Hi lok pins and collars

•        Hose assemblies

•        Hydraulic fittings

•        Inserts

•        Lockbolts and collars

•        Nuts

•        Rivets

•        Springs

•        Valves

•        Washers

     

•        Airframe control bearings

•        Rod ends

•        Spherical bearings

•        Ball bearing rod ends

•        Roller bearings

•        Bushings
  
  
  
  
  
  
    

     

•        Connectors

•        Relays

•        Switches

•        Circuit breakers

•        Lighted products
  
  
  
  
  
  
    

     

•        Brackets

•        Milled parts

•        Shims

•        Stampings

•        Turned parts

•        Welded assemblies

•        Installation tooling
 
 
 
 
 
 
    

   

*    Source: Stax.

                                   

        Sales of C class aerospace hardware represented approximately 80% of our fiscal 2010 product sales. Fasteners are our largest product category, comprising approximately 83% of our hardware sales in fiscal 2010. Fasteners include a wide range of highly engineered aerospace parts that are designed to hold together two or more components, such as rivets (both blind and solid), bolts (including blind bolts), screws, nuts and washers. Many of these fasteners are designed for use in specific aircraft platforms and others can be used across multiple platforms. Materials used in the manufacture of these fasteners range from standard alloys, such as aluminum, steel or stainless steel, to more advanced materials, such as titanium, Inconel and Waspalloy.

        We began to offer aerospace bearings after acquiring the bearing distribution business of Kaman Industrial Technologies in 1999, which enabled us to support new customers and expand our product offering. Our product offering includes a variety of standard anti-friction products designed to both commercial and military aircraft specifications, such as airframe control bearings, rod ends, spherical bearings, ball bearing rod ends, roller bearings and bushings.

        In 2008, we acquired Wichita, Kansas-based Airtechnics, one of the largest distributors of aerospace electronic components in North America, which helped expand our product offering to our customer base. We offer highly reliable interconnect and electro-mechanical products, including connectors, relays, switches, circuit breakers and lighted products. We also offer value-added assembled products including mil-circular and rack and panel connectors and illuminated push button switches. We maintain large quantities of connector components in inventory, which allows us to respond quickly to customer orders. In addition, our lighted switch assembly operation affords customers same day service, including engraving capabilities in multiple languages.

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        Machined parts are designed for a specific customer and are assigned unique OEM-specific SKUs. The machined parts we distribute include laser cut or stamped brackets, milled parts, shims, stampings, turned parts and welded assemblies made of materials ranging from high-grade steel or titanium to nickel based alloys.

        We stock a full range of tools needed for the installation of our products, including air and hydraulic tools as well as drill motors, and we also offer factory authorized maintenance and repair services for these tools. In addition to selling these tools, we also rent or lease these tools to our customers.

        In addition to our traditional distribution services, we have developed innovative value-added services, such as quality assurance, kitting and JIT supply chain management for our customers.

        Our quality assurance, or QA, function is a key component of our service offering, with approximately 10% of our employees dedicated to this area. We believe we offer an industry-leading QA function as a result of our rigorous processes, sophisticated testing equipment and dedicated QA staff, and as evidenced by a comparison of our customers' aggregate rejection rate of the products we deliver, which was approximately 0.3% during fiscal 2010, to our rejection rate of the products we receive from our suppliers, which was approximately 3.2% during fiscal 2010.

        Our QA department inspects the inventory we purchase to ensure the accuracy and completeness of documentation. We also maintain an electronic copy of the relevant certifications for the inventory, which can include a manufacturer certificate of conformance, test reports, process certifications, material distributor certifications and raw material mill certifications. In addition, dimensional inspections are performed on all lots from suppliers that are not certified by our QA department, and all lots for our JIT customers undergo dimensional, and in some cases, structural inspections. For many of our customers, these inspections are conducted at our in-house laboratory, where we operate sophisticated testing equipment. Our industry-leading QA capabilities also allow our JIT customers to reduce the number of personnel dedicated to the QA function and reduce the delays caused by the rejection of improperly inspected parts.

        Kitting involves the packaging of an entire bill of materials or a complete "ship-set" of parts, which reduces the amount of time workers spend retrieving parts from storage locations. Kits can be customized in varying configurations and sizes and can contain up to several hundred different parts. All of our kits and components contain fully certified and traceable parts and are assembled by our full-service kitting department at our central stocking locations, or CSLs, or at our customer sites.

        JIT supply chain management involves the delivery of parts on an as-needed basis to the point-of-use at a customer's manufacturing line. JIT programs are designed to prevent excess inventory build-up and shortages and improve manufacturing efficiency. Each JIT contract requires us to maintain an efficient inventory tracking, analysis and replenishment program and is designed to provide high levels of stock availability and on-time delivery. We began offering JIT supply chain management services in 1993 as some OEMs began outsourcing certain support functions in an effort to cut costs at a time when defense spending was declining and the commercial aerospace industry was entering a

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cyclical downturn. Since that time, the popularity of our JIT programs has grown and we now support over 125 customer locations, including approximately 350,000 bins serviced worldwide. During fiscal 2010, our on-time delivery rate for JIT customers was over 99%. We believe customers that utilize our comprehensive JIT supply chain management services are frequently able to realize significant benefits including:

        Before signing a JIT contract, our customers typically experience outages of many SKUs and, in some cases, have up to a year's worth of inventory on hand. As part of our JIT programs, we generally assume the customer's existing inventory at the onset of the contract, immediately reducing their inventory on-hand and the associated management costs. Customer inventory is generally assumed on a consignment basis and is entered in our database in a distinct customer-specific "virtual warehouse." Software protocol in our IT system requires the system to first "look" to a customer's consigned inventory when parts replenishment is required. In many cases, we can sell this consigned inventory to our base of 7,200 active customers around the world, gradually drawing down the customer's inventory. As the consigned inventory for each SKU is exhausted, our stock of Wesco-sourced product is then used for replenishment. Due to the reliable nature of our services, our customers typically carry approximately 45 days worth of inventory in point-of-use bins instead of months or years worth of such products.

        Another key strength of our JIT program is our ability to utilize highly scalable and customizable point-of-use systems to develop an efficient supply chain management system and automated replenishment solution for any number of SKUs. In order to minimize inventory on hand, certain indicators are used to trigger the replenishment of product from a supplying location to the location of consumption. Our "Twin-Bin" system is an example of such an indicator. A JIT program designed around a Twin-Bin system utilizes a specially manufactured unit composed of two bins stacked on top of one another. In this system, a clear plastic bag, typically containing a 30-day supply of parts, is loaded in each bin. Production workers use all of the parts within the bottom bin before drawing a pullout slide between the two bins that drops the full plastic bag of parts from the top bin into the bottom bin. An empty top bin indicates the need to initiate replenishment of the parts and provides a clear visual management process on the manufacturing floor. All replenishment activity is done via hand-held scanners that transmit orders to our stocking locations.

Customer Contracts

        We sell parts to our customers under three types of arrangements: JIT supply chain management contracts, LTAs and ad hoc sales.

        JIT contracts are typically three to five years in length and are structured to supply the parts requirement for specific SKUs, production lines or facilities. Given our direct involvement with JIT customers, volume requirements and purchasing frequency under these contracts is highly predictable. Under JIT contracts, customers commit to purchase specified parts from us at a fixed

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price, on an if-and-when needed basis, and we are responsible for maintaining high levels of stock availability of those parts. JIT contracts typically contain termination for convenience provisions, which generally allow our customers to terminate their contracts on short notice without meaningful penalties, provided that we are reimbursed for the cost of any inventory specifically procured for the customer. JIT customers also often purchase parts from us that are not captured under their contracts on an ad hoc basis. Approximately 31% of our net sales during fiscal 2010 were generated from JIT contracts.

        Like JIT contracts, LTAs also typically run for three to five years. LTAs are essentially negotiated price lists for customers or individual customer sites that cover a range of pre-determined parts, purchased on an as-needed basis. The negotiated prices are typically tiered based on order size. LTAs generally obligate the customer to buy contracted SKUs from us and may obligate us to maintain stock availability for those parts. Once an LTA is in place, the customer is then able to place individual purchase orders with us for any of the contractually specified parts. LTAs typically contain termination for convenience provisions, which generally allow for our customers to terminate their contracts on short notice without meaningful penalties, provided that we are reimbursed for the cost of any inventory specifically procured for the customer. LTA customers also frequently purchase parts from us that are not captured under the pricing arrangement on an ad hoc basis. Approximately 32% of our net sales during fiscal 2010 were derived from our LTAs.

        Ad hoc customers purchase parts from us on an as-needed basis and are generally supplied out of our existing inventory. Typically, ad hoc orders are for smaller quantities of parts than those ordered under either JIT contracts or LTAs, and are often urgent in nature. Given our breadth and volume of inventory, it is not uncommon for our competitors to purchase parts from us on an ad hoc basis. In an environment of increasing aircraft production, parts shortages can become increasingly common for OEMs, subcontractors, MROs and distributors with less sophisticated forecasting abilities and procurement organizations. Approximately 37% of our net sales during fiscal 2010 were generated from ad hoc sales.

        Under each of the sales arrangements described above we typically warrant that the products we sell conform to the drawings and specifications that are in effect at the time of delivery in the applicable contract, and that we will replace defective or non-conforming products for a period of time that varies from contract to contract. The product manufacturer, in turn, typically indemnifies us for liabilities resulting from defective or non-conforming products. We do not accrue for warranty expenses as our claims related to defective and non-conforming products have been nominal to date.

        We believe that backlog is not a relevant measure of our business, given the long-term nature of our JIT contracts and LTAs with our customers.

Customers

        We sell to over 7,200 active customers worldwide. Boeing was our largest customer during fiscal 2010 and accounted for approximately 15% of our net sales. No other customer accounted for more than 10% of our net sales during fiscal 2010, and only three customers accounted for over 5% of our net sales during the same period, with each consisting of multiple independent programs. Our top 10 customers collectively accounted for 48% of our net sales during fiscal 2010.

        Approximately 87% of our fiscal 2010 net sales were derived from major OEMs, such as Airbus, Boeing, Bombardier, Embraer, Cessna, Gulfstream, BAE Systems, Bell Helicopter, Lockheed Martin, Northrop Grumman and Raytheon, and certain of their subcontractors. Government sales comprised roughly 5% of our net sales during fiscal 2010 and were derived from various military parts

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procurement agencies such as the U.S. Defense Logistics Agency, or from defense contractors buying on their behalf. Aftermarket sales to airline-affiliated or independent MROs made up roughly 2% of our fiscal 2010 net sales. Airlines and airline maintenance organizations traditionally order parts in smaller quantities with greater frequency, making them more costly to serve. However, we are in the process adding a significant number of products to an airline industry automated quoting system that we believe will provide us with a cost-effective way to penetrate this commercial MRO market. We are currently targeting international airlines and aircraft maintenance centers that are assuming an expanded role within the MRO market. The balance of our net sales are to other distributors.

        We estimate that during fiscal 2010, approximately 53% of our net sales were derived from customers supporting military programs and approximately 47% of our net sales were derived from customers supporting commercial programs. Our customers are principally located in the United States, comprising approximately 74% of our net sales during fiscal 2010. We also service international customers in markets that include Canada, the United Kingdom, Italy, France, Germany, China, South Korea and Australia.

Suppliers

        We source our inventory from over 1,100 suppliers, including Precision Castparts, Alcoa Fastening Systems, Amphenol Corporation, Lisi Aerospace and Monogram Aerospace Fasteners. During fiscal 2010, we purchased approximately 42% of our inventory from Precision Castparts and Alcoa Fastening Systems. Suppliers typically prefer to deal with a relatively small number of large and sophisticated distributors in order to improve machine utilization, reduce finished goods inventory and maintain pricing discipline. As a result of the scale of our operations and our long-standing relationships with many of our suppliers, we are often able to take advantage of significant volume-based discounts when purchasing inventory. Given our industry position, financial strength and philosophy of cooperation with suppliers, we believe we are in an excellent position to become a distributor for new product lines as they become available.

Procurement

        We consider our procurement expertise to be one of our principal competitive advantages. Our management is highly skilled in analyzing supply, demand, cost and pricing factors to make optimal inventory investment decisions and we maintain close relationships with the leading suppliers in the industry. In particular, Precision Castparts and Alcoa Fastening Systems supplied approximately 22% and 20%, respectively, of the products we purchased during fiscal 2010. Our strong understanding of the global aerospace industry is derived from our long-term relationships with major OEMs, subcontractors and suppliers. In addition, our direct insight into our customers' production rates often allows us to detect industry trends. Furthermore, our ability to forecast demand and place purchase orders with our suppliers well in advance of our customer requirements provides us with a distinct advantage in an industry where inventory availability is critical for customers that need specific parts within a stipulated timeframe to meet their own production and delivery commitments.

        We have created a structured procurement process that focuses on return on invested capital, or ROIC, and minimization of excess inventory, which helps us maintain what we believe are our industry-leading operating margins and parts availability. Prior to placing a purchase order, members of our supply chain organization analyze a "buy requisition," which is generated by our IT system. Buy requisitions provide several key pieces of information, including the amount of that SKU currently on-hand, a listing of all active customers that use the specific SKU, the quantities and rates at which the part has been consumed by these customers in the past, tiered pricing for various quantities at which the supplier offers price breaks and recent selling prices of various order sizes. Using the information obtained from the buy requisition, a Wesco employee then conducts an ROIC analysis to determine the expected payback period and margin on the specified inventory investment before

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making the final procurement decision. This calculated approach to inventory investment, combined with our unique market insight, has enabled us to generate and sustain industry-leading operating margins.

Operations

        We have developed a highly structured system in order to manage the receipt, processing and shipment of inventory. This system is based on an efficient warehouse layout, automated machinery, our customized IT system and hand-held scanners. The typical process that each lot of inventory undergoes is outlined below.

GRAPHIC

        Our warehouse operations are divided between CSLs and forward stocking locations, or FSLs. Our primary CSL is located at our global headquarters in Valencia, California. We also operate a CSL in Wichita, Kansas, which primarily serves our global EPG business, and a CSL in Clayton West, U.K., which primarily serves Europe, India and the Middle East. Our CSLs serve as the primary supply warehouses for most of our net sales and also house our procurement, customer service, document control, IT, material support and quality assurance functions. Our CSLs are supported by sales offices throughout the U.S., Canada, Germany, France, Italy and China.

        Complementing our CSLs and sales offices are FSLs. An FSL is a specialized stocking point for one or more JIT contracts located within a geographic region. FSLs are typically located either nearby or within a customer facility and are established to support large contracts. In certain instances, FSLs initially established to service a single customer are expanded to service other regional customers.

        All inventory enters our warehouses through a common receiving area. When shipments are received, each package is opened and the documentation is examined. If the documentation is missing or deficient, the shipment is either returned to the supplier or set aside in a designated holding area until accurate documentation is received. If the documentation is acceptable, a Wesco employee inputs the relevant information into our inventory management system, including the SKU, lot number, receipt date, quantity and unit cost.

        After a shipment has gone through receiving, it is then processed by the QA department. This department inspects the inventory we purchase to ensure the accuracy and completeness of documentation. We also maintain an electronic copy of the relevant certifications for the inventory, which can include a manufacturer certificate of conformance, test reports, process certifications, material distributor certifications and raw material mill certifications. In addition, dimensional inspections are performed on all lots from suppliers that are not certified by our QA department, and

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all lots for our JIT customers undergo dimensional, and in some cases, structural inspections. For many of our customers, these inspections are conducted at our in-house laboratory, where we operate sophisticated testing equipment.

        Inventory that passes the quality assurance inspection is placed on a conveyor to a staging area, where warehouse employees assign stocking locations to the parts. Upon arrival at the designated stocking location, an employee scans the bar code affixed to the lot of inventory and the bar code corresponding to the specific shelf location where the lot is to be placed. This stocking information is then transmitted wirelessly to our inventory management system.

        When we receive a purchase order from a customer, a notification is sent to the warehouse, where an employee uses a picker truck to retrieve the required part from its stocking location. Each picker truck is equipped with scales used to count the requested number of parts. Each different part type is then placed in a clear plastic bag and sealed. Labels are then generated using hand-held equipment and placed on the bags, and any required documentation is printed and placed along with the bags into color coded crates (crates are color coded based on order urgency so warehouse staff can effectively prioritize shipping requirements). The crates then travel on a conveyer system to the shipping area.

        Upon arriving in the shipping area, parts bags and related documentation are placed into boxes and sealed. The shipping clerk enters the order into a third-party shipping system, generating a label based on the shipping requirements for that customer (e.g., FedEx, UPS, DHL, etc.). Once processed, the system uploads tracking numbers and freight costs, if applicable, and can send an automatic notification to a customer that their order has shipped, or automatically send documentation via e-mail to a freight forwarder to prepare shipments for export. A variety of shipping options are available (same day, overnight, etc.) depending on customer requirements. The picking and shipping processes are organized such that, if necessary, we are able to ship product on the same day a purchase order is received in order to satisfy urgent customer requirements.

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Properties

        Our global headquarters is located at 27727 Avenue Scott, Valencia, California 91355. As of March 31, 2011, we have a total of 28 administrative, sales and/or stocking facilities located in 10 countries, all of which are either leased or located at a customer site. The following table sets forth certain information regarding these facilities:

Region
  Location   Purpose   Facility Size (Sq. Feet)

North America

  Valencia, CA (Wesco headquarters)   Sales, CSL and Administrative   150,428

  Wichita, KS (EPG headquarters)   Sales, CSL and Administrative   67,500

  Auburn, WA   Sales and FSL   9,370

  Charleston, SC   FSL   22,159

  Charleston, SC   FSL*   <500

  Fort Worth, TX   Sales and FSL   40,000

  Glen Cove, NY   Sales   3,700

  Holbrook, NY   Sales   1,050

  Indianapolis, IN   FSL   10,800

  Mesa, AZ   Sales   3,648

  Nashville, TN   FSL*   7,200

  Orlando, FL   Sales   4,636

  West Chester, PA   FSL   3,227

  St. Louis, MO   FSL   10,750

  Mississauga, Ontario   Sales   2,164

  Lachine, Quebec   Sales and FSL   31,037

Rest of the World

  Clayton West, UK   Sales, CSL and Administrative   36,577

  Filton, UK   FSL*   2,200

  Bremen, Germany   Sales   2,508

  Blagnac, France   Sales and FSL   4,746

  Marcon, Italy   Sales   1,865

  Grottaglie, Italy   FSL*   10,500

  Tessera, Italy   FSL*   1,076

  Holon, Israel   FSL   5,381

  Busan, South Korea   FSL*   <500

  Shanghai, China   Sales   1,222

  Xi'An, China   FSL*   1,500

  Ta'if, Saudi Arabia   FSL*   1,264

*
Located at customer site.

Information Technology System

        Our scalable IT infrastructure is based on IBM servers and the Oracle JD Edwards EnterpriseOne, or JDE, ERP system. Our IT system provides a powerful, highly distributed computing environment that enables us to quickly scale on demand as business dictates. We also employ virtualization technology to increase system availability, reduce hardware and maintenance costs and respond efficiently to market dynamics. Our entire data services infrastructure runs 24/7 and is protected by network security technologies, an uninterrupted power supply and a backup diesel generator. Remote access to our systems is provided via separate, high speed connections. Our IT infrastructure supports our business critical applications, such as JDE, TRA/X Shipping, AIMS Warehouse Management, or AIMS, and Electronic Data Interchange, or EDI.

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        At the core of our IT system is our JDE ERP system. JDE covers the full lifecycle of our distribution process, including procurement, planning, supply chain management, sales and accounting. JDE is fully capable of interfacing to external business systems and we have developed additional functionality within JDE for JIT delivery and direct line feed of the products we sell. This functionality includes recognition of signals and actions to fill customer bins from hand-held scanners, min/max data or proprietary signals from a customer's ERP system. JDE also supports our EDI functionality, which allows our system to interface with customers and suppliers, regardless of technology, data format or connectivity.

        For our shipping logistics and export compliance support, we employ Precision Software's TRA/X. TRA/X enables us to ship globally while maintaining tracking numbers and rating information for each customer shipment. In addition, at several of our distribution facilities, we use Minerva's AIMS inventory management system in order to provide the best possible warehouse flow and cycle times. AIMS is tailored to fit our global warehouse operational needs and allows us to provide an expandable warehouse management system that can also incorporate transaction processing, work-in-progress and other manufacturing operations. AIMS interfaces with a broad range of material handling equipment, including horizontal and vertical carousels, conveyors, sorting equipment, pick systems and cranes.

Competition

        The industry in which we operate is highly competitive and fragmented. We believe the principal competitive factors in our industry include the ability to provide superior customer service and support, on-time delivery, sufficient inventory availability, competitive pricing and an effective quality assurance program. Our competitors include both U.S. and foreign companies, including divisions of larger companies, some of which have significantly greater financial resources than we do, and therefore may be able to adapt more quickly to changes in customer requirements than we can. We estimate that Wesco and BE Aerospace together comprised approximately 22% of the $6.5 billion global market for C class aerospace parts during 2010, of which approximately $656.0 million, or 10%, was attributable to us. Our next largest competitors include the Pentacon business of Anixter International and the Pattonair business of Umeco.

        In addition to facing competition for JIT customers from our primary competitors, JIT customers or potential JIT customers may also determine that it is more cost effective to establish or re-establish an in-house supply chain management system. Under these circumstances, we may be unable to sufficiently reduce our costs in order to provide competitive pricing while also maintaining acceptable operating margins.

Sales and Marketing

        As of March 31, 2011, we employed 226 sales personnel with an average of over 8 years of experience at Wesco. Our sales professionals as of that date were located in the following regions: 167 in the U.S., 45 in Europe and 14 in Canada. Our marketing efforts are continuing to expand into emerging markets, including a recent office opening in India. We believe that maintaining both inside and outside sales representatives who are extremely facile in the technical details of the products we sell provides a substantial competitive advantage over our smaller competitors. As of March 31, 2011, we had 207 inside sales representatives who provide access to our entire inventory, as well as technical expertise on the products we sell. In addition, as of March 31, 2011, we also had 19 OSRs worldwide who provide support at certain of our customer sites. The support provided by these OSRs includes making recommendations for the products best suited for specific applications, providing technical assistance with drilling and the installation of fasteners and troubleshooting issues relating to installation tooling. Our OSRs' hands-on expertise and access to the customer site allows them a unique opportunity to market additional products to our customers.

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Employees

        As of March 31, 2011, we employed 1,021 personnel worldwide, 102 of which were located at customer sites. We have 238 employees located outside of North America. We are not a party to any collective bargaining agreements with our employees.

Regulatory Matters

        Governmental agencies throughout the world, including the FAA in the United States, prescribe standards for aircraft components, including virtually all commercial airline and general aviation products, as well as regulations regarding the repair and overhaul of airframes and engines. Specific regulations vary from country to country, although compliance with FAA requirements generally satisfies regulatory requirements in other countries. In addition, the products we distribute must also be certified by aircraft and engine OEMs. If any of the material authorizations or approvals that allow us to supply products is revoked or suspended, then the sale of the related products would be prohibited by law, which would have an adverse effect on our business, financial condition and results of operations.

        From time to time, the FAA or equivalent regulatory agencies in other countries propose new regulations or changes to existing regulations, which are usually more stringent than existing regulations. If these proposed regulations are adopted and enacted, we could incur significant additional costs to achieve compliance, which could have a material adverse effect on our business, financial condition and results of operations.

        We are also subject to government rules and regulations that include the FCPA, ITAR and the False Claims Act. See "Risk Factors—We are subject to unique business risks as a result of supplying equipment and services to the U.S. Government" and "—Our international operations require us to comply with anti-corruption laws and regulations of the U.S. government and various international jurisdictions."

Environmental Matters

        Although we are subject to various environmental regulations, we are not aware of any environmental issues that would be likely to have a materially adverse impact upon our business or financial condition.

Legal Proceedings

        We are involved in various legal matters that arise in the normal course of our business. We believe that the ultimate outcome of such matters will not have a material adverse effect on our financial position, results of operations or cash flows. There can be no assurance, however, that such actions will not be material or adversely affect our business, financial position, and results of operations or cash flows.

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MANAGEMENT

Directors and Executive Officers

        The following table sets forth certain information regarding our executive officers and directors, as of the date of this prospectus:

Name
  Age   Position
  Randy J. Snyder     61   Chairman of the Board of Directors, President and Chief Executive Officer
  Hal Weinstein     57   Executive Vice President of Sales and Marketing
  Tommy Lee     63   Executive Vice President
  Gregory A. Hann     56   Executive Vice President and Chief Financial Officer
  Alex Murray     41   Vice President of Global Operations
  Dayne A. Baird     35   Director
  Peter J. Clare     46   Director
  Paul E. Fulchino     64   Director
  John P. Jumper     66   Director
  Adam J. Palmer     38   Director
  Robert D. Paulson     65   Director
  David L. Squier     65   Director

         Randy J. Snyder has served as our President and Chief Executive Officer since 1977 and has been the Chairman of the Board of Directors since 2006.

        Our board of directors has concluded that Mr. Snyder should serve on our board of directors based upon his intimate knowledge of our operations and his role in leading our transition from a small niche distributor to the largest C class aerospace component distributor in the world and an authorized stocking distributor for all major aerospace hardware manufacturers worldwide. Mr. Snyder is a director nominee designated by the Wesco Stockholders, pursuant to the terms of the Stockholders Agreement described under "Certain Relationships and Related Party Transactions—Amended and Restated Stockholders Agreement."

         Hal Weinstein joined Wesco in 1983 and has served as the head of sales and marketing for the Company since 1988. Mr. Weinstein oversees our worldwide sales and marketing operations and is responsible for global marketing strategy, inclusive of advertising and website development and maintenance. He previously served as our Regional Sales Manager from 1983 to 1988. Prior to joining Wesco, Mr. Weinstein served as Director of Sales for Asset Financing International, an equipment leasing company based in Ridgefield, Connecticut, from 1981 to 1983.

         Tommy Lee joined Wesco in 1984 and has served as our Executive Vice President in charge of all of our operations, with special emphasis on procurement and supplier relations, since 1990. He previously served as our Vice President of Sales from 1984 to 1990. Mr. Lee has been actively involved in sales and management in the aerospace industry since 1967. Prior to joining Wesco, Mr. Lee worked for a Lockheed Martin Corporation-owned company from 1967 to 1971 and was the National Sales Manager for a major fastener distributor from 1971 to 1984.

         Gregory A. Hann has served as our Executive Vice President and Chief Financial Officer since joining Wesco in 2009. Mr. Hann was previously the Chief Financial Officer of Transamerican Auto Parts, a privately held retailer and distributor of 4-wheel drive and off road vehicle parts, from 2007 to 2009, and the Chief Financial Officer of publicly traded Ducommun Incorporated, a manufacturer of aerospace structures, from 2006 to 2007. Mr. Hann is a certified public accountant.

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         Alex Murray joined Wesco in 2000 and has served as Vice President of Global Operations since 2010. He previously served as our Logistic Manager from 2000 to 2003, Director of Contract Business from 2003 to 2005, and EU Managing Director from 2005 to 2010. Prior to joining Wesco, Mr. Murray was employed by BAE Systems in various roles within the logistics, procurement, supply chain and quality organizations.

         Dayne A. Baird has been a member of our board of directors since 2010. Mr. Baird is a Vice President at Carlyle where he focuses on U.S. buyout opportunities in the aerospace, defense and government services sectors. Mr. Baird has been with Carlyle since 2003. Prior to joining Carlyle, Mr. Baird worked in the mergers and acquisitions and global industrial groups of Lehman Brothers from 2000 to 2003, where he focused on transactions in the industrial, aerospace and defense sectors. Mr. Baird currently serves on the board of directors of ARINC Incorporated.

        Our board of directors has concluded that Mr. Baird should serve as a director because in addition to his demonstrated leadership as a Vice President of Carlyle, he brings valuable insight to our board of directors about the global aerospace and defense industries. Mr. Baird is a director nominee designated by Carlyle pursuant to the terms of the Stockholders Agreement described under "Certain Relationships and Related Party Transactions—Amended and Restated Stockholders Agreement."

         Peter J. Clare has been a member of our board of directors since 2006. Mr. Clare is a Managing Director of Carlyle and has served as Co-head of the U.S. Buyout group since 2011. He previously served as the Deputy Head of the U.S. Buyout group and as the Head of the Global Aerospace and Defense sector team. Mr. Clare has been with Carlyle since 1992. He currently serves on the boards of directors of ARINC Incorporated, Booz Allen Hamilton Holding Corporation, CommScope, Inc. and Sequa Corporation and previously served on the board of directors of Aviall, Inc., Avio SpA, Landmark Aviation, United Defense and Vought Aircraft Industries, Inc.

        Our board of directors has concluded that Mr. Clare should serve as a director because in addition to his demonstrated leadership as a Managing Director of Carlyle and his extensive experience in private equity, he brings valuable insight to our board of directors about the global aerospace and defense industries. In addition, as a result of his current service as a director of ARINC Incorporated, Booz Allen Hamilton Holding Corporation, CommScope, Inc. and Sequa Corporation, Mr. Clare brings valuable knowledge to our board of directors about the operations, compensation programs and corporate governance of other companies. Mr. Clare is a director nominee designated by Carlyle pursuant to the terms of the Stockholders Agreement described under "Certain Relationships and Related Party Transactions—Amended and Restated Stockholders Agreement."

         Paul E. Fulchino has been a member of our board of directors since 2008. From 2000 until his retirement in 2010, Mr. Fulchino served as Chairman, President and Chief Executive Officer of Aviall, Inc., which became a wholly-owned subsidiary of The Boeing Company on September 20, 2006. Mr. Fulchino had previously served as President and Chief Operating Officer of BE Aerospace, Inc. from 1996 to 1999 and President and Vice Chairman of Mercer Management Consulting, Inc. from 1990 to 1996. He currently serves on the boards of directors of Global Technologies and Spirit Aerosystems, Inc. and previously served on the board of directors of Aviall, Inc. and The Sports Authority, Inc.

        Our board of directors has concluded that Mr. Fulchino should serve as a director because in addition to his extensive experience in the aerospace MRO industry, he brings a unique perspective to our board of directors regarding the global aerospace industry. In addition, as a result of his current service as a director of Global Technologies and Spirit Aerosystems, Inc., Mr. Fulchino brings valuable knowledge to our board of directors about the operations, compensation programs and corporate governance of other companies. Mr. Fulchino is a director nominee designated by Carlyle pursuant to the terms of the Stockholders Agreement described under "Certain Relationships and Related Party Transactions—Amended and Restated Stockholders Agreement."

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         John P. Jumper has been a member of our board of directors since 2007. Mr. Jumper retired from the United States Air Force in 2005 after a distinguished 39-year military career. In his last position as Chief of Staff, he served as the senior military officer in the Air Force leading more than 700,000 military, civilian, Air National Guard and Air Force Reserve men and women. As Chief of Staff, he was a member of the Joint Chiefs of Staff providing military advice to the Secretary of Defense, the National Security Council and the President. In earlier assignments he served on the Joint Staff and as Senior Military Assistant to Secretary of Defense Dick Cheney and Secretary Les Aspin. He currently serves on the boards of directors of Goodrich Corporation, Jacobs Engineering, and SAIC, as well as on the non-profit board of directors of the Air Force Village Charitable Foundation, the American Air Museum at Duxford, England, the George C. Marshall Foundation and the VMT Board of Visitors. Mr. Jumper previously served on the board of directors of Tech Team Global and Somanetics Corporation.

        Our board of directors has concluded that Mr. Jumper should serve as a director because in addition to his demonstrated leadership throughout his 39-year military career, he brings knowledge regarding the military aerospace industry. In addition, as a result of his current service as a director of Goodrich Corporation, TechTeam Global, Jacobs Engineering, SAIC and Somanetics, Mr. Jumper brings valuable knowledge to our board of directors about the operations, compensation programs and corporate governance of other companies. Mr. Jumper is a director nominee designated by Carlyle pursuant to the terms of the Stockholders Agreement described under "Certain Relationships and Related Party Transactions—Amended and Restated Stockholders Agreement."

         Adam J. Palmer has been a member of our board of directors since 2006. Mr. Palmer is a Managing Director of Carlyle and has been the Head of the Global Aerospace and Defense sector team since 2011. Mr. Palmer joined Carlyle in 1996 as a member of the Aerospace, Defense and Government Services sector team. Prior to joining Carlyle, Mr. Palmer was with Lehman Brothers focusing on mergers, acquisitions and financings for defense electronics and information services companies. He currently serves on the boards of directors of RPK Capital Management Group, LLC, Sequa Corporation and Triumph Group, Inc. and previously served on the board of directors of Landmark Aviation, Standard Aero, Ltd., U.S. Investigations Services, Inc. and Vought Aircraft Industries, Inc.

        Our board of directors has concluded that Mr. Palmer should serve as a director because in addition to his demonstrated leadership as a Managing Director of Carlyle and his extensive experience in private equity and investment banking, he brings additional perspectives to our board of directors about the global aerospace and defense industries. In addition, as a result of his current service as a director of RPK Capital Management Group, LLC, Sequa Corporation and Triumph Group, Inc., Mr. Palmer brings valuable knowledge to our board of directors about the operations, compensation programs and corporate governance of other companies. Mr. Palmer is a director nominee designated by Carlyle pursuant to the terms of the Stockholders Agreement described under "Certain Relationships and Related Party Transactions—Amended and Restated Stockholders Agreement."

         Robert D. Paulson has been a member of our board of directors since 2006. Mr. Paulson has served as the Chief Executive Officer of Aerostar Capital LLC, a private equity investment firm, since he founded the firm in 1997. Prior to founding Aerostar Capital, Mr. Paulson retired from McKinsey & Company, Inc., an international management consulting firm, where he had served as the Los Angeles Office Manager from 1982 to 1989, led the Global Aerospace and Defense Practice from 1985 to 1997, and was twice elected to McKinsey's board of directors. He currently serves on the boards of directors of Ducommun Inc., Nationwide Health Properties, Inc. and the Grand Teton Music Festival, and previously served on the board of directors of US Rentals Inc. and Forgings International, L.P.

        Our board of directors has concluded that Mr. Paulson should serve as a director because in addition to his extensive experience in the aerospace defense industry, corporate governance practices,

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private equity and consulting, he brings unique insights to our board of directors regarding the global aerospace and defense industries. In addition, as a result of his current service as a director of Ducommun Inc. and Forgings International, LP, Mr. Paulson brings valuable knowledge to our board of directors about the operations, compensation programs and corporate governance of other companies. Mr. Paulson is a director nominee designated by Carlyle pursuant to the terms of the Stockholders Agreement described under "Certain Relationships and Related Party Transactions—Amended and Restated Stockholders Agreement."

         David L. Squier has been a member of our board of directors since 2007. Mr. Squier retired from Howmet Corporation in October 2000, where he served as the President and Chief Executive Officer for over eight years. Prior to his tenure as CEO of Howmet, Mr. Squier served in a number of senior management assignments at Howmet, including Executive Vice President and Chief Operating Officer. Mr. Squier was also a member of the board of directors of Howmet from 1987 until his retirement. Mr. Squier currently serves as an adviser to Carlyle. Mr. Squier currently serves on the board of directors of Sequa Corporation and previously served on the boards of directors of UCI International, Inc., Forged Metal, Inc. and Vought Aircraft Industries from 2003 to 2010.

        Our board of directors has concluded that Mr. Squier should serve as a director because in addition to his extensive industry experience and his current role as an advisor to Carlyle, he brings additional perspectives to our board of directors regarding the global aerospace and defense industries. In addition, as a result of his current service as a director of Sequa Corporation and prior experience with other companies, Mr. Squier brings valuable knowledge to our board of directors about the operations, compensation programs and corporate governance of other companies. Mr. Squier is a director nominee designated by Carlyle pursuant to the terms of the Stockholders Agreement described under "Certain Relationships and Related Party Transactions—Amended and Restated Stockholders Agreement."

Controlled Company

        For purposes of the rules of the New York Stock Exchange, we expect to be a "controlled company" upon completion of this offering. Controlled companies under those rules are companies of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company. We expect that Carlyle will continue to control more than 50% of the combined voting power of our common stock upon completion of this offering and will continue to have the right to nominate a majority of the members of our board of directors for nomination for election and the voting power to elect such directors following this offering. For these purposes, as a result of the provisions of the Amended and Restated Stockholders Agreement, the Wesco Stockholders and the affiliates of Carlyle which own shares, or the Carlyle Stockholders, will be treated as a "group," and therefore the Wesco Stockholders' shares will be included in determining whether we are a controlled company. Accordingly, we expect to be eligible to, and we intend to, take advantage of certain exemptions from corporate governance requirements provided in rules of the New York Stock Exchange. Specifically, as a controlled company, we would not be required to have (i) a majority of independent directors, (ii) a nominating and corporate governance committee composed entirely of independent directors, (iii) a compensation committee composed entirely of independent directors or (iv) an annual performance evaluation of the nominating and corporate governance and compensation committees. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the applicable rules of the New York Stock Exchange.

Board Composition

        Our board of directors is currently composed of eight directors, including Mr. Snyder, our Chairman of the Board of Directors, President and Chief Executive Officer.

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        We entered into a stockholders agreement with the Wesco Stockholders and the Carlyle Stockholders on September 29, 2006, which stockholders agreement was subsequently amended on November 30, 2007 and April 17, 2008, or as amended, the Stockholders Agreement. Upon effectiveness of the registration statement of which this prospectus forms a part, the Stockholders Agreement will be amended and restated, which we refer to as the Amended and Restated Stockholders Agreement. Under the Amended and Restated Stockholders Agreement, Carlyle Stockholders will have the right to nominate six board members and the Wesco Stockholders will have the right to nominate one board member. Our Board of Directors will be divided into three classes whose members will serve three-year terms expiring in successive years.

Board Committees

        Our board of directors directs the management of our business and affairs as provided by Delaware law and conducts its business through meetings of our board of directors and two standing committees: the audit committee and the compensation committee. Effective upon completion of this offering, our board of directors will also have a nominating and corporate governance committee.

        Our audit committee is responsible, among its other duties and responsibilities, for overseeing our accounting and financial reporting processes, the audits of our financial statements, the qualifications and independence of our independent registered public accounting firm, the performance of our internal audit function and independent registered public accounting firm. Our audit committee reviews and assesses the qualitative aspects of our financial reporting, our processes to manage business and financial risks and our compliance with significant applicable legal, ethical and regulatory requirements. Our audit committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. The charter of our audit committee will be available without charge on the investor relations portion of our website upon completion of this offering.

        Upon completion of this offering, the audit committee will consist of Messrs.             (chair),             and          . Our board of directors has determined that            is independent within the meaning of the rules of the New York Stock Exchange and Rule 10A-3 under the Exchange Act, and has also determined that Mr.             is an "audit committee financial expert," as such term is defined under the applicable regulations of the SEC.

        Our compensation committee is responsible, among its other duties and responsibilities, for reviewing and approving all forms of compensation to be provided to our executive officers and directors, establishing our general compensation policies and reviewing, approving and overseeing the administration of our employee benefits plans. Our compensation committee also periodically reviews management development and succession plans. The charter of our compensation committee will be available without charge on the investor relations portion of our website upon completion of this offering.

        Upon completion of this offering, the compensation committee will consist of Messrs.             (chair),           and          .

        Our nominating and corporate governance committee will have responsibility for, among other things: (1) recommending persons to be selected by our board of directors as nominees for election as directors; (2) recommending persons to be selected by our board of directors as members and

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chairperson for each committee of the board of directors; (3) analyzing and proposing for decision of the board of directors the governance policies of the Company; and (4) monitoring our performance in meeting our obligations with respect to professional ethics and integrity in internal and external matters and our principles of corporate governance. The charter of our nominating and corporate governance committee will be available without charge on the investor relations portion of our website upon completion of this offering.

        Upon completion of this offering, the nominating and corporate governance committee will consist of Messrs.                 (chair),                 and          .

        In addition, from time to time, other committees may be established under the direction of our board of directors when necessary to address specific issues.

Compensation Committee Interlocks and Insider Participation

        During fiscal 2010, our compensation committee consisted of Messrs. Fulchino, Jumper, Palmer and Squier. None of the members of our compensation committee is currently one of our officers or employees. During fiscal 2010, none of our executive officers served as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who serve as members of our board of directors or our compensation committee.

Code of Ethics

        We have adopted a code of ethics that applies to our executive officers. A copy of the code of ethics will be available on our website and will also be provided to any person without charge. Request should be made in writing to Director of Human Resources at 27727 Avenue Scott, Valencia, CA 91355.

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COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

        This Compensation Discussion and Analysis provides an overview and analysis of (i) the elements of our compensation program for our named executive officers, or NEOs, identified below, (ii) the material compensation decisions made under that program and reflected in the executive compensation tables that follow this Compensation Discussion and Analysis and (iii) the material factors considered in making those decisions. We intend to provide our NEOs with compensation that is significantly performance based. Our executive compensation program is designed to align executive pay with our performance on both short and long-term bases, link executive pay to specific, measurable results intended to create value for stockholders, and utilize compensation as a tool to assist us in attracting and retaining the high-caliber executives that we believe are critical to our long-term success.

        The primary elements of our executive compensation program and their corresponding objectives are summarized in the following table:

Compensation Element
  Objective

Base Salary

  To recognize performance of job responsibilities and as a necessary tool to attract and retain individuals with superior talent.

Annual performance-based compensation

  To promote our near-term performance objectives and reward individual contributions to the achievement of those objectives.

Discretionary long-term equity incentive awards

  To emphasize our long-term performance objectives, encourage the maximization of stockholder value and retain key executives by providing an opportunity to participate in the ownership of the Company.

Severance and change in control benefits

  To encourage the continued attention and dedication of key individuals and to focus the attention of key individuals when considering strategic alternatives.

Retirement savings (401(k))

  To provide an opportunity for tax-efficient savings and long-term financial security.

Other elements of compensation and perquisites

  To attract and retain talented executives in a cost-efficient manner by providing benefits with high perceived values at relatively low cost to us.

        To serve the foregoing objectives, our overall executive compensation program is generally designed to be flexible rather than formulaic. The compensation committee of our board of directors, or the compensation committee, has primary authority to determine and approve compensation decisions with respect to our NEOs. In alignment with the objectives set forth above, the compensation committee determines overall compensation, and its allocation among the elements described above, in reliance upon the judgment and general industry knowledge of its members obtained through years of service with comparably sized companies in our and similar industries.

        For the year ended September 30, 2010, our NEOs are Randy Snyder, our Chief Executive Officer, Greg Hann, our Executive Vice President and Chief Financial Officer, Hal Weinstein, our Executive Vice President, Sales and Marketing, Tommy Lee, our Executive Vice President, and Alex Murray, our Vice President, Global Operations. Our compensation decisions for the NEOs in fiscal 2010 are discussed below in relation to each of the above-described elements of our compensation program. The

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below discussion is intended to be read in conjunction with the executive compensation tables and related disclosures that follow this Compensation Discussion and Analysis.

Compensation Overview

        Our overall executive compensation program is structured to attract, motivate and retain highly qualified executive officers by paying them competitively, consistent with our success and their contribution to that success. We believe compensation should be structured to ensure that a significant portion of compensation opportunity will be related to factors that directly and indirectly influence stockholder value. Accordingly, we set goals designed to link each NEO's compensation to our performance. Consistent with our performance-based philosophy, we provide a base salary to our NEOs, significant incentive-based compensation, which includes variable cash awards under our annual incentive bonus program based on our financial and operational performance, as well as stock option and other equity and equity-based awards granted to our NEOs to align our NEOs' interests with our long-term performance.

        Total compensation for our NEOs has been allocated between cash and equity compensation taking into consideration the balance between providing short-term incentives and long-term investment in our financial performance to align the interests of management with stockholders. The variable annual incentive award and the equity awards are designed to ensure that total compensation reflects our overall success or failure and to motivate the NEOs to meet appropriate performance measures, thereby maximizing total return to stockholders. In anticipation of our initial public offering, we intend to adopt a new equity incentive plan, which we refer to as the "2011 Equity Incentive Award Plan."

Determination of Compensation Awards

        The compensation committee is provided with the primary authority to determine and approve the compensation awards available to our NEOs and is charged with reviewing our executive compensation policies and practices to ensure (i) adherence to our compensation philosophies and (ii) that the total compensation paid to our NEOs is fair, reasonable and competitive, taking into account our position within our industry and the level of expertise and experience of our NEOs in their positions. The compensation committee is primarily responsible for (i) determining each NEO's base salary and target bonus level (representing the bonus that may be awarded expressed as a percentage of base salary or as a dollar amount for the year), (ii) assessing the performance of the Chief Executive Officer and other NEOs for each applicable performance period and (iii) determining the amount of awards to be paid to our Chief Executive Officer and other NEOs under our annual incentive bonus program for each year, after taking into account any previously established target bonus levels and performance during the year, and the amount of any stock option or other equity or equity-based awards to be granted to our NEOs. To aid the compensation committee in making its determinations, our Chief Executive Officer provides recommendations annually to the compensation committee regarding the compensation of all officers, excluding himself. The performance of our senior executive management team is reviewed annually by the compensation committee and the compensation committee determines each NEO's compensation annually.

        In determining compensation levels for our NEOs, the compensation committee considers each NEO's unique position and responsibility and relies upon the judgment and industry experience of its members, including their knowledge of competitive compensation levels in our industry. We believe that our NEOs' base salaries should be competitive with salaries for executive officers in similar positions and with similar responsibilities in our marketplace and adjusted for financial and operating performance and previous work experience. In this regard, each NEO's current and prior compensation, including compensation paid by our predecessor or the NEO's prior employer, is considered as a base against which determinations are made as to whether increases are appropriate to retain the NEO in light of competition or in order to provide continuing performance incentives.

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        In making compensation determinations, the compensation committee historically has not made regular use of benchmarking or compensation consultants and historically has not referred to specific compensation survey data. Rather, in alignment with the considerations described above, the compensation committee determines the total amount of compensation for our NEOs, and the allocation of total compensation among each of our three main components of compensation, in reliance upon the judgment and general industry knowledge of its members obtained through years of service with comparably sized companies in our industry and other similar industries to ensure the attraction, development and retention of superior talent.

        We believe that direct ownership in our Company provides our NEOs with a strong incentive to increase the value of the Company and we therefore historically have encouraged equity ownership in the Company by NEOs and other employees through a variety of means, including direct stock ownership by NEOs and other employees, and the award of stock options and other equity-based interests that have been received by the NEOs. We believe that the equity ownership positions of our NEOs are substantial and therefore we have not implemented a formal policy with respect to requiring officers and directors to own our stock.

Base Compensation For 2010

        We set base salaries for our NEOs generally at a level we deem necessary to attract and retain individuals with superior talent, using the methodologies described above. Each year we determine base salary increases based upon the performance of the NEOs as assessed by the compensation committee, and for NEOs other than the Chief Executive Officer, in conjunction with recommendations made by the Chief Executive Officer. The compensation committee reviews and evaluates base salaries for our NEOs annually, but formulaic base salary increases are not provided to the NEOs.

        In fiscal 2009, the compensation committee determined to provide base salary increases to Messrs. Snyder, Weinstein, Lee and Murray to reward our continued superior performance through a period of economic uncertainty, to maintain their compensation at a fair, reasonable and competitive level and in recognition of the fact that they had not received base salary increases in several years. In addition, following the completion of the 2010 fiscal year, the compensation committee determined to adjust Mr. Hann's base salary, effective as of November 2, 2010, to reward Mr. Hann for our superior financial performance, to seek to ensure the retention of Mr. Hann as our Executive Vice President and Chief Financial Officer and in recognition of the fact that Mr. Hann had not received a base salary increase since commencing employment with us in February 2009. The base salaries for our NEOs before and after these increases are set forth in the following table:

Name and Principal Position
  Base Salary
Before Increase ($)
  Base Salary
After Increase ($)
 

Randy Snyder

    600,000     650,000  

Greg Hann

    300,000     325,000  

Hal Weinstein

    300,000     325,000  

Tommy Lee

    270,000     315,000  

Alex Murray(1)

    147,814     186,546  

(1)
Base salary amounts for Mr. Murray, who is employed in the United Kingdom, are presented based on an assumed conversion ratio of pounds to dollars of 1.5809, which was the exchange rate in effect on September 30, 2010.

Annual Performance-Based Compensation For 2010

        We structure our compensation programs to reward NEOs based on our performance and the individual executive's contribution to that performance. NEOs are eligible to receive bonus

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compensation under our Management Annual Incentive Plan in the event certain specified corporate performance measures are achieved.

        This annual bonus program consists of cash awards based upon our achievement of performance goals determined by the compensation committee. Under the terms of the annual bonus plan, NEOs have target bonus amounts based upon a percentage of their base salaries as of the start of the applicable fiscal year, as follows: Mr. Snyder: 100%; Mr. Hann: 60%; Mr. Weinstein: 60%; Mr. Lee: 45%; and Mr. Murray: 40%. Our NEOs have the ability to earn more or less than their target bonus amounts for over performance or under performance, as determined with reference to the applicable performance goals. None of our NEOs has a guaranteed minimum annual performance bonus. The maximum and minimum portions of target awards, if any, payable under the plan may vary from year to year and are set at levels that we determine are necessary to maintain competitive compensation practices and properly motivate our NEOs by rewarding them for our annual performance and their contributions to that performance.

        Awards paid under the plan are based upon the level of achievement in relation to two Company-wide performance metrics: Bonus EBITDA and Bonus Cash Flow. For this purpose, "Bonus EBITDA" is defined generally as our earnings before interest, taxes, depreciation expense and amortization expense, equity compensation expense, management and transaction fees and extraordinary and non-recurring items. "Bonus Cash Flow" is generally defined as our net cash from operating activities less capital expenditures. These terms may differ from Adjusted EBITDA and Adjusted Net Income presented elsewhere in this prospectus. We use Bonus EBITDA and Bonus Cash Flow as the primary performance metrics to determine the amount of awards paid under our annual bonus plan because the compensation committee believes that these metrics most directly correlate to the creation of value for our stockholders in relation to our financial performance over the annual performance period.

        For each performance year, the compensation committee assigns a target, minimum and maximum value to each performance metric. Minimum threshold goals must be met for performance metrics before awards may become payable under the plan. The maximum award (200% of target amounts) is payable only upon achievement of maximum-level performance for both metrics. Award amounts for performance between the baseline and maximum levels are determined at the beginning of the applicable performance period and depend upon the level of achievement for each metric relative to its assigned target value, in accordance with a pre-determined payout matrix. The board of directors makes final determinations of the amounts payable under the plan, in consultation with the Chief Executive Officer, after receipt of the applicable financial information. In addition, we, in our sole discretion, may adjust targets or awards to account for unusual events such as extraordinary transactions, asset dispositions and purchases, and mergers and acquisitions.

        The following chart sets forth the minimum, maximum and target values, and the performance achieved, for the performance metrics for the year ended September 30, 2010:

Performance Metric
  2010 Actual
($ MM)
  Minimum
($ MM)
  Target
($ MM)
  Maximum
($ MM)
 

Bonus EBITDA

    168.5     145.8     166.6     187.4  

Bonus Cash Flow

    97.7     59.6     79.5     109.3  

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        The following payout matrix sets forth an illustration of the payout levels in relation to the target bonus amounts that would apply under our annual bonus program under the range of possible performance scenarios, based on the minimum, target and maximum levels of performance as set forth above:

 
   
  Bonus Cash Flow vs. Target  
 
   
  < Minimum   75.0%   81.3%   87.5%   93.8%   100.0%   109.4%   118.75%   128.1%   137.5%  
      112.5%     0.0%     100.0%     112.5%     125.0%     137.5%     150.0%     162.5%     175.0%     187.5%     200.0%  
      109.4%     0.0%     87.5%     100.0%     112.5%     125.0%     137.5%     150.0%     162.5%     175.0%     187.5%  
      106.3%     0.0%     75.0%     87.5%     100.0%     112.5%     125.0%     137.5%     150.0%     162.5%     175.0%  
Bonus     103.1%     0.0%     62.5%     75.0%     87.5%     100.0%     112.5%     125.0%     137.5%     150.0%     162.5%  
                                               
EBITDA     100.0%     0.0%     50.0%     62.5%     75.0%     87.5%     100.0%     112.5%     125.0%     137.5%     150.0%  
                                               
vs. Target     96.9%     0.0%     37.5%     50.0%     62.5%     75.0%     87.5%     100.0%     112.5%     125.0%     137.5%  
      93.8%     0.0%     25.0%     37.5%     50.0%     62.5%     75.0%     87.5%     100.0%     112.5%     125.0%  
      90.6%     0.0%     12.5%     25.0%     37.5%     50.0%     62.5%     75.0%     87.5%     100.0%     112.5%  
      87.5%     0.0%     0.0%     12.5%     25.0%     37.5%     50.0%     62.5%     75.0%     87.5%     100.0%  
      < Minimum     0.0%     0.0%     0.0%     0.0%     0.0%     0.0%     0.0%     0.0%     0.0%     0.0%  

        Where actual performance falls in between the scenarios presented in the matrix above, the compensation committee uses the matrix as a guide in determining the appropriate percentage of the target bonus amounts to pay to our named executive officers. Therefore, for fiscal year 2010, where actual performance for Bonus EBITDA was approximately 101.1% of the target amount and actual performance for Bonus Cash Flow was approximately 122.9% of the target amount, the compensation committee determined that Messrs. Snyder, Hann, Weinstein and Lee were entitled to bonus payments in amounts equal to 135% of their target bonus amounts. In making its bonus determination for Mr. Murray, whose scope of responsibility primarily included our European operations, the compensation committee also considered the performance of these operations for fiscal year 2010. Because our business outside of North America underperformed relative to overall Company performance for fiscal year 2010, the compensation committee exercised its discretion under our annual bonus program to reduce the bonus payouts provided to our employees outside of North America, and, as a result, Mr. Murray did not receive a bonus at the same level as our other NEOs. Mr. Murray's cash bonus for fiscal year 2010 was reduced to 100% of his target bonus amount, which the compensation committee determined to be the appropriate level as a result of overall corporate level performance having exceeded the target amounts set forth above, and in order to promote a "one-Wesco" culture in relation to this success. The actual award amounts earned by our NEOs for 2010 are included in the "Non-Equity Incentive Plan Compensation" column of our Summary Compensation Table for 2010.

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Discretionary Long-Term Equity Incentive Awards

        We believe that providing a portion of our NEOs' total compensation in the form of equity-based awards encourages responsible and profitable growth, encourages executive retention, promotes a long-term focus and aligns executive and stockholder interests. Historically, rather than provide our NEOs with annual equity awards based upon short-term performance horizons, the compensation committee has determined to make larger, less frequent equity grants to our NEOs, generally with five year performance horizons, to better align the long-term interests of our NEOs with those of stockholders. None of our NEOs were granted equity-based awards during fiscal year 2010. Currently, with the exception of Mr. Hann, our NEOs hold equity incentive awards that consist of restricted stock and restricted stock units granted in September 2006 and/or stock options granted in May 2007. Mr. Hann holds stock options that we granted to him in February 2009 upon his commencement of employment with us. All of the stock options held by our NEOs have exercise prices that were equal to the fair market value of our common stock on the date of grant or, with respect to Mr. Hann, the date the stock option was amended.

        Generally, stock options granted under our equity incentive plan expire ten years from the date of the grant and have vesting provisions that are designed to encourage an optionee's continued employment and to reward an optionee for our performance. Twenty-five percent of each NEO's options are time vesting options that vest and become exercisable in five equal annual installments (three equal annual installments for Mr. Hann) beginning on the first September 30 following the date of grant, subject to the optionee's continued service with us through the applicable vesting date. The remaining 75% of the options for each NEO are eligible to vest in five annual installments (three annual installments for Mr. Hann), subject to the optionee's continued employment with us and attainment by us of financial performance targets as follows: one-half of each performance vesting installment is eligible to vest following the close of the applicable fiscal year if we attain a pre-determined Bonus EBITDA target for the year, and the remaining one-half of each performance vesting installment is eligible to vest following the close of the applicable fiscal year if we attain a pre-determined Cash Flow target for the year. If we do not attain the relevant Bonus EBITDA or Bonus Cash Flow targets for a given fiscal year, but we attain at least 90% of such targets, the applicable portion of the performance vesting options remains eligible to vest in future years if cumulative Bonus EBITDA and cumulative Bonus Cash Flow targets are attained in those years. The Bonus Cash Flow and Bonus EBITDA goals were established at the time the options were granted and were intended to be challenging but reasonably attainable. The Bonus EBITDA and Bonus Cash Flow targets for stock option vesting purposes differ from the Bonus EBITDA and Bonus Cash Flow targets levels that apply under our Management Annual Incentive Plan because the option vesting targets were generally set at the time of each grant with a five-year time horizon (three years for Mr. Hann) while the Management Annual Incentive Plan targets are short term goals set annually at the beginning of each applicable fiscal year.

        For 2010, the Bonus Cash Flow and Bonus EBITDA targets for the NEOs' performance vesting options were $82.4 million and $180.3 million, respectively, and actual results with respect to Bonus Cash Flow and Bonus EBITDA for the year were $97.7 million and $168.5 million, respectively. As a result, the Bonus Cash Flow portion of the NEOs' performance vesting options vested, effective as of September 30, 2010. In addition, although we did not attain the Bonus EBITDA target that was previously established for performance option vesting for 2010, the compensation committee determined that the failure to attain the Bonus EBITDA target did not result from a lack of performance by our management team, but rather from a change in overall market conditions that were beyond management's control, and that due to the near achievement of the target in light of such factors, and our outperformance as compared to the Bonus Cash Flow target for the year, the Bonus EBITDA portion of the 2010 performance options would become vested, effective as of September 30, 2010.

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        Early in fiscal year 2010, the compensation committee determined that we had not attained the 2009 Bonus Cash Flow target of $63.2 million that had previously been established for purposes of performance option vesting and that actual results with respect to 2009 Bonus Cash Flow were less than 90% of the target. As a result, the 2009 Bonus Cash Flow portion of the performance options did not become vested at that time. However, in order to provide additional incentives for management to achieve strong company-wide financial performance in fiscal years 2010 and 2011, the compensation committee determined to provide an additional opportunity for the 2009 Bonus Cash Flow portion of the performance options to vest as follows: one-half of the 2009 Bonus Cash Flow portion of the performance options would vest following the end of fiscal year 2010 if we attained a supplemental Bonus Cash Flow target of $98.9 million for 2010 and the remaining one-half of the 2009 Bonus Cash Flow portion of the performance options would vest following the end of fiscal year 2011 if we attain a supplemental Bonus Cash Flow target for 2011 that is in excess of the Bonus Cash Flow target that applies to the regular 2011 Bonus Cash Flow portion of the performance options and that the compensation committee believes is a challenging supplemental Bonus Cash Flow goal for fiscal year 2011. Following the close of fiscal year 2010, the compensation committee determined that although the supplemental Bonus Cash Flow target for 2010 was not fully attained, the applicable portion of the performance options described above would become vested and exercisable effective as of September 30, 2010 due to the near achievement of such supplemental Bonus Cash Flow target. In addition, in October 2009, the compensation committee determined to amend the stock option that we granted to Mr. Hann upon his commencement of employment by decreasing the exercise price of such stock options to the then-current fair market value of our common stock and revising the applicable Bonus EBITDA and Bonus Cash Flow targets, in each case, to motivate and encourage Mr. Hann's strong performance, in consideration of the fact that the value of our stock and our performance projections were at an all-time high when Mr. Hann's options were originally granted and to make the exercise price of Mr. Hann's stock options consistent with the fair market value of our stock at the time of the amendment (and the same as the exercise price of options granted to other employees at such time) and to conform the performance targets applicable to Mr. Hann's options with those applicable to our other NEOs and other employees.

        In addition, in connection with the Carlyle Acquisition in 2006, our NEOs, other than our CEO, who were with us at that time received awards of restricted stock and restricted stock units that relate to our common stock in recognition of their longstanding service to the company over a period of many years and as a means of seeking to retain these employees through the imposition of vesting requirements on the awards. All of these shares of restricted stock and restricted stock units have fully vested and the restricted stock units will be settled on the earlier of September 28, 2012 or the date we experience a change in control. Additional information regarding the restricted stock units held by our NEOs is set forth below in the non-qualified deferred compensation table that follows this Compensation Discussion and Analysis. In determining the allocation of the historical equity and equity-based awards for our NEOs between stock options on the one hand and restricted stock and restricted stock units on the other, the compensation committee considered the different goals intended to be achieved through these different types of awards as well as each NEO's service with and position within the company. The allocation of awards between restricted stock and restricted stock units for the NEOs who received these awards was determined based upon the different tax treatment applicable to these two types of awards.

Defined Contribution Plans

        We have a Section 401(k) Savings/Retirement Plan, or the 401(k) Plan, to cover our eligible employees. The 401(k) Plan permits eligible employees to defer a portion of their annual compensation, subject to certain limitations imposed by the Internal Revenue Code. The employees' elective deferrals are immediately vested and non-forfeitable upon contribution to the 401(k) Plan. We provide matching contributions to the 401(k) Plan in an amount equal to fifty cents for each dollar of

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participant contributions, up to a maximum matching contribution of three percent of the participant's annual salary and subject to certain other limits. After a full year of employment with us, plan participants vest in the amounts contributed by us pro rata over the following five years, subject to their continued employment with us. Employees are eligible to participate in the 401(k) Plan the first day of the first calendar quarter following their completion of six full calendar months of employment with us.

        The 401(k) Plan is offered on a nondiscriminatory basis to all of our employees, including NEOs, who meet the eligibility requirements. The compensation committee believes that matching and other contributions provided by us to assist us in attracting and retaining talented employees and executives. The 401(k) Plan provides an opportunity for participants to save money for retirement on a tax-qualified basis and to achieve financial security, thereby promoting retention.

Employment and Severance Arrangements

        The compensation committee considers the maintenance of a sound management team to be essential to protecting and enhancing our best interests. To that end, we recognize that the uncertainty that may exist among management with respect to their "at-will" employment with us may result in the departure or distraction of management personnel to our detriment. Accordingly, the compensation committee determined that severance arrangements are appropriate for certain of our NEOs to encourage the continued attention and dedication of these members of our management and to allow them to focus on the value to stockholders of strategic alternatives without concern for the impact on their continued employment. Mr. Snyder, Mr. Hann, Mr. Weinstein and Mr. Murray have each entered into an agreement with us providing for severance benefits upon termination of employment.

        Mr. Snyder's employment agreement with us, dated July 23, 2006 and amended December 31, 2008, has an original three-year term and is extended automatically for successive one-year periods thereafter unless either party delivers notice within specified notice periods to terminate the agreement. Upon termination of Mr. Snyder's employment either by us without "cause," by Mr. Snyder for "good reason" or due to the non-extension of the employment term by us, subject to his timely executing a general release of claims against us, Mr. Snyder is entitled to receive thirty-six months of his base salary, payable in installments in accordance with our regular payroll practices, a prorated portion of his annual performance bonus for the year in which termination occurs, the accelerated vesting of any outstanding unvested options we granted to Mr. Synder pursuant to his employment agreement that are subject to time-based vesting conditions and reimbursement for the premium costs of continued medical, dental and vision coverages under COBRA for a period of eighteen months. Mr. Snyder's employment agreement prohibits him from competing with certain of our businesses or from soliciting our employees, customers or suppliers to terminate their employment or arrangements with us during the term of his employment and for 36 months following his termination. "Cause" is defined in Mr. Snyder's agreement to mean Mr. Snyder's (i) material failure to comply with a reasonable directive of the board of directors, (ii) willful misconduct, gross negligence or breach of a fiduciary duty that results in material harm to us or our affiliates, (iii) willful and material breach of his employment agreement, (iv) conviction, plea of no contest or imposition of unadjudicated probation for any felony or crime involving moral turpitude, (v) unlawful use or possession of illegal drugs on Company premises or while performing his duties or responsibilities to us or (vi) commission of an act of fraud, embezzlement or misappropriation against us or our affiliates. "Good reason" is defined in Mr. Snyder's employment agreement to mean (a) a material reduction in duties or responsibilities, (b) a material reduction in base salary or annual target bonus opportunity, (c) a relocation of Mr. Snyder's principle place of employment by more than 25 miles, (d) our material breach of the agreement or (e) the failure of the Company, or any successor, following a change in control to reaffirm its obligations under the agreement or assume and comply with the agreement.

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        Pursuant to an agreement between Mr. Hann and us, dated January 22, 2009, which does not have a specified term, if we terminate Mr. Hann without "cause" or he resigns for "good reason," subject to his timely executing and not revoking a release of claims, Mr. Hann is entitled to payment of 12 months of his base salary, payable in installments in accordance with our regular payroll practices, and the right to continue his participation in one of our medical benefit plans for up to 12 months. For purposes of Mr. Hann's agreement, "cause" has substantially the same meaning as in Mr. Snyder's agreement, except that Mr. Hann's material breach of the agreement does not explicitly constitute cause. "Good reason" is defined in Mr. Hann's agreement to mean a material reduction in duties or responsibilities or a material reduction in his base salary.

        Mr. Weinstein's employment agreement with us, dated June 15, 2007 and amended December 31, 2008, has a perpetual term unless terminated by either party in accordance with the terms of the agreement. Upon termination of Mr. Weinstein's employment by us without "cause," subject to his timely executing a general release of claims against us, Mr. Weinstein is entitled to receive twelve months of his base salary, payable in installments in accordance with our regular payroll practices, and reimbursement for the premium costs of continued medical, dental and vision coverages under COBRA for a period of twelve months. Mr. Weinstein's employment agreement prohibits him from competing with certain of our businesses or from soliciting our employees, customers or suppliers to terminate their employment or arrangements with us during the term of his employment and for twelve months following his termination. "Cause" in Mr. Weinstein's agreement has the same meaning as in Mr. Snyder's agreement.

        Mr. Murray entered into an employment agreement with a subsidiary of the Company located in the United Kingdom. For simplicity, this subsidiary and its board of directors are referred to in this paragraph, respectively, as the company and the board. Mr. Murray's employment agreement, dated on March 24, 2011, has a perpetual term unless terminated by either party by giving not less than six months' written notice. The company may elect, however, to terminate Mr. Murray's employment without notice by paying Mr. Murray the amounts that would otherwise be paid to him during the notice period provided in his employment agreement. In addition, the company may terminate Mr. Murray's employment without notice or payment in the event that (i) the board reasonably believes Mr. Murray has committed a serious breach of his employment agreement, (ii) the board reasonably believes Mr. Murray has committed an act of gross or serious misconduct or willful neglect in the discharge of his duties, (iii) the board reasonably believes Mr. Murray has committed an act of fraud, dishonesty or other conduct tending to bring himself or the company into disrepute, (iv) Mr. Murray becomes prohibited by law from being or acting as a director of the company, (v) Mr. Murray is offered and refuses or fails to accept employment with the surviving entity following a merger or reorganization of the company on terms no less favorable than those in his employment agreement or (vi) Mr. Murray resigns as a director of the company other than at the request of the board. During his employment and for twelve months following his termination, Mr. Murray may not compete with certain businesses of the company or solicit certain employees, customers or potential customers of the company, in each case, without the company's consent, which may not be unreasonably withheld.

Other Elements of Compensation and Perquisites

        Our NEOs are eligible under the same plans as all other employees for medical, dental, vision and short-term disability insurance. In addition, we provide our NEOs with the personal use of Company automobiles and, for our U.S. based NEOs, dues related to golf club memberships which our NEOs use for both personal and professional purposes. We provide these benefits due to their relatively low cost and the high value they provide in attracting and retaining talented executives. Our NEOs do not receive any tax gross up in connection with our provision of these benefits.

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Summary Compensation Table for 2010

        The following table sets forth certain information with respect to the compensation paid to our NEOs for the year ended September 30, 2010.

Name and Principal Position
  Salary ($)   Non-Equity Incentive
Plan Compensation
($)(1)
  Option Awards
($)
  Bonus
($)
  All Other
Compensation ($)
  Total ($)  

Randy Snyder

    644,266     810,000               77,714 (4)   1,531,980  
 

Chief Executive Officer

                                     

Greg Hann

   
300,000
   
243,000
   
87,869

(2)
       
44,775

(5)
 
675,644
 
 

Executive Vice President and Chief Financial Officer

                                     

Hal Weinstein

   
322,133
   
243,000
         
20,000

(3)
 
51,793

(6)
 
636,926
 
 

Executive Vice President, Sales and Marketing

                                     

Tommy Lee

   
309,885
   
164,025
   
         
46,511

(7)
 
520,421
 
 

Executive Vice President

                                     

Alex Murray(8)

   
157,497
   
59,126
   
         
18,673

(9)
 
235,386
 
 

Vice President, Global Operations

                                     

(1)
Represents the bonus amounts earned under our annual bonus program for fiscal the year ended September 30, 2010. For a discussion of the determination of these amounts, see "—Annual Performance-Based Compensation for 2010" above.

(2)
Amount shown represents the incremental fair value attributable to an amendment to Mr. Hann's outstanding stock options, as described above in "—Discretionary Long-Term Equity Incentive Awards." This amount has been calculated in accordance with FASB ASC Topic 718 as of the date of such amendment. For information regarding the assumptions used when calculating this amount, refer to note 13 of our consolidated financial statements for the year ended September 30, 2010, which are included elsewhere in this prospectus.

(3)
Amount shown represents a discretionary bonus paid to Mr. Weinstein for his 2010 service, as determined by the compensation committee.

(4)
Includes $22,433 for country club membership dues and fees, $47,931 for use of Company automobile and $7,350 for 401(k) matching contribution. The cost for personal use of a company automoblile includes costs associated with the lease, gas, insurance and maintenance of such automobile.

(5)
Includes $16,910 for country club membership dues and fees, $20,515 for use of Company automobile and $7,350 for 401(k) matching contribution.

(6)
Includes $28,148 for country club membership dues and fees, $16,295 for use of Company automobile and $7,350 for 401(k) matching contribution.

(7)
Includes $20,864 for country club membership dues and fees, $18,297 for use of Company automobile and $7,350 for 401(k) matching contribution.

(8)
Amounts presented for Mr. Murray are based on an assumed conversion ratio of pounds to dollars of 1.5809, which was the exchange rate in effect on September 30, 2010.

(9)
Includes automobile allowance of $15,809 and $2,864 for supplemental medical benefits.

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Grants of Plan-Based Awards for 2010

 
   
  Estimated Possible
Payouts Under Non-Equity
Incentive Plan Awards(1)
 
Name
  Grant Date   Target ($)   Maximum ($)  

Randy Snyder

    10/1/2009     600,000     1,200,000  

Greg Hann

    10/1/2009     180,000     360,000  

Hal Weinstein

    10/1/2009     180,000     360,000  

Tommy Lee

    10/1/2009     121,500     243,000  

Alex Murray

    10/1/2009     59,126     118,252  

(1)
Amounts shown reflect the possible payment amounts to our NEOs under our Management Annual Incentive Plan for fiscal year 2010. There are no applicable threshold level performance metrics. Payments under the plan were made to the NEOs in December 2010. The amounts actually paid to each NEO are set forth under "Non-Equity Incentive Plan Compensation" in the "Summary Compensation Table for 2010" above.

Outstanding Equity Awards at Fiscal Year End

        The following table provides information regarding the stock options held by our NEOs as of September 30, 2010.

Name
  Number of
Securities
Underlying
Unexercised
Options—
Exercisable (#)
  Number of Securities
Underlying
Unexercised Options—
Unexercisable (#)
  Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
  Option Exercise
Price ($)
  Option Expiration
Date
 

Randy Snyder

    166,666     10,929 (1)   40,984 (2)   37.12     5/17/2017  

Greg Hann

    39,618     5,465 (1)   20,491 (2)   56.64     1/29/2019  

Hal Weinstein

    83,334     5,465 (1)   20,491 (2)   37.12     5/17/2017  

Tommy Lee

    25,000     1,640 (1)   6,147 (2)   37.12     5/17/2017  

Alex Murray

    33,333     2,186 (1)   8,197 (2)   37.12     5/17/2017  

(1)
These options will become exercisable on September 30, 2011, subject to the NEO's continued service with us on such date.

(2)
These options will become exercisable on September 30, 2011, subject to the NEO's continued service with us on such date and our attainment of EBITDA, Cash Flow and supplemental Cash Flow targets for such year, as described in more detail above under "Discretionary Long-Term Equity Incentive Awards."

Options Exercised and Stock Vested in 2010

        None of our NEOs exercised options or became vested in shares of our common stock during the year ended September 30, 2010.

Nonqualified Deferred Compensation

        The following table provides details with respect to the outstanding restricted stock units held by our NEOs. Mr. Weinstein holds 146,676.21 restricted stock units, Mr. Lee holds 90,972.21 restricted stock units and Mr. Murray holds 8,701.69 restricted stock units. The restricted stock units were

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granted to each of the NEOs in September 2006 and became fully vested on September 29, 2009. Each restricted stock unit represents the right to receive one share of our common stock, which will be distributed to the NEOs in the form of shares of our common stock on the first to occur of a change in control or September 28, 2012.

Name
  Plan Name   Executive
Contributions in
Last FY
($)
  Registrant
Contributions in
Last FY
($)
  Aggregate
Earnings in
Last FY
($)(1)
  Aggregate
Withdrawals/
Distributions
($)
  Aggregate
Balance at
Last FYE
($)(2)
 

Hal Weinstein

  Restricted Stock Units             1,959,594         10,267,334  

Tommy Lee

  Restricted Stock Units             1,215,389         6,368,055  

Alex Murray

  Restricted Stock Units             116,255         609,118  

(1)
Reflects the change in value of the shares underlying the restricted stock units during fiscal year 2010.

(2)
Reflects the aggregate value of the shares underlying the restricted stock units as of September 30, 2010, based on a per share value of $70.00 as of such date.

Potential Payments upon Termination or Change-in-Control

        Each of Messrs. Snyder, Hann, Weinstein and Murray has an agreement that provides for severance benefits upon a termination of employment. See "—Employment and Severance Arrangements" above for a description of the employment and severance agreements with our NEOs. Assuming a termination of employment effective as of September 30, 2010 (i) by us without cause, (ii) due to our nonextension of the executive's employment term or (iii) due to the executive's resignation for good reason, each of our NEOs would have received the following severance payments and benefits:

Name
  Payment Type   Termination Without
Cause ($)
  Resignation for Good
Reason ($)
  Termination due to Non-
Extension of Term ($)
 

Randy Snyder

  Salary     1,950,000     1,950,000     1,950,000  

  Bonus     877,500     877,500     877,500  

  Option vesting(1)     359,346     359,346     359,346  

  Benefit continuation(2)     56,186     56,186     56,186  
                   

  Total     3,243,032     3,243,032     3,243,032  

Greg Hann

 

Salary

   
325,000
   
325,000
   
 

Hal Weinstein

 

Salary

   
325,000
   
   
 

  Benefit continuation(2)     27,011          
                   

  Total     352,011          

Alex Murray

 

Salary(3)

         
   
 

(1)
Represents accelerated vesting of time vesting options granted pursuant to Mr. Snyder's employment agreement. Value has been determined by multiplying the number of options vesting by the difference between the exercise price of the option and $70.00, the fair market value of one share of our common stock as of September 30, 2010.

(2)
Consists of continuation of group health benefits. The value of the health benefits was calculated using an estimate of the cost to us of such health coverage based upon past experience.

(3)
Mr. Murray is entitled to receive the amounts that would otherwise be paid to him during the notice period provided in his employment agreement if we elect to terminate his employment without notice.

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        Pursuant to the stock option agreements covering each NEO's stock options, in the event of certain transactions, which could include a change in control of the Company, generally that result in Carlyle liquidating at least 70% of its equity investment in the Company, (i) the exercisability of all shares underlying the time vesting options would be accelerated and (ii) to the extent certain performance thresholds are achieved for the year in which the transaction occurs, the exercisability of all shares underlying the performance vesting options that have not previously become eligible to vest would be accelerated. Assuming such a transaction occurred on September 30, 2010, the following table sets forth the amounts the NEOs would have received from such accelerated vesting:

Name
  Option Type   Number of Securities (#)   Value ($)(1)  

Randy Snyder

  Time Vesting     10,929     359,346  

  Performance Vesting     40,984     1,347,554  

  Total     51,913     1,706,900  

Greg Hann

 

Time Vesting

   
5,465
   
73,012
 

  Performance Vesting     20,491     273,760  

  Total     25,956     346,772  

Hal Weinstein

 

Time Vesting

   
5,465
   
179,689
 

  Performance Vesting     20,491     673,744  

  Total     25,956     853,433  

Alex Murray

 

Time Vesting

   
2,186
   
71,876
 

  Performance Vesting     8,197     269,517  

  Total     10,383     341,393  

Tommy Lee

 

Time Vesting

   
1,639
   
53,890
 

  Performance Vesting     6,148     202,146  

  Total     7,787     256,036  

(1)
Value has been determined by multiplying the number of options vesting by the difference between the exercise price of the option and $70.00, the fair market value of one share of our common stock as of September 30, 2010.

Compensation Risk

        We have analyzed the potential risks arising from our compensation policies and practices, and have determined that there are no such risks that are reasonably likely to have a material adverse effect on us.

Director Compensation For 2010

        Directors who are our employees or employees of Carlyle (Messrs. Clare, Palmer, Snyder and Baird) receive no additional compensation for serving on our board of directors or its committees. For their services as an independent member of our board of directors, each of our "non-employee" directors (Messrs. Paulson, Squier, Jumper and Fulchino) receives an annual retainer of $50,000, which amount is payable in either cash or shares of our restricted common stock. For 2010 the compensation committee determined to pay the annual retainer 100% in shares of our common stock in order to more closely align the interests of our directors with those of our shareholders and to allow the directors to benefit from the potential for future appreciation in the value of common stock. The shares were fully vested upon grant and were granted to the non-employee directors after the completion of our 2010 fiscal year on December 15, 2010. The number of shares for the 2010 retainer was determined based on the fair market value of the shares at the start of the year, resulting in an award of 883 shares of our common stock as payment of the 2010 annual retainer. In addition, each of our non-employee directors received an option to purchase 725 shares of our common stock upon their

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commencement of service with us in fiscal year 2007 (2008, with respect to Mr. Fulchino). The options vest in five equal annual installments, with the first installment vesting on September 30, 2007 for Messrs. Paulson and Squier and September 30, 2008 for Messrs. Jumper and Fulchino.

        In 2010, we provided the following compensation to our independent directors:

Name
  Fees Earned or
Paid in Cash ($)
  Stock
Awards ($)(1)
  Total  

Robert D. Paulson

        61,810      

David L. Squier

        61,810      

John P. Jumper

        61,810      

Paul E. Fulchino

        61,810      

(1)
Stock awards intended as 2010 director compensation were granted to Messrs. Paulson, Squier, Jumper and Fulchino on December 15, 2010. As of September 30, 2010, Mr. Paulson held outstanding options to purchase 580 shares of our common stock and each of Messrs. Squier, Jumper and Fulchino held outstanding options to purchase 725 shares of our common stock. All such options were fully vested as of September 30, 2010, except for one installment of 145 options for Messrs. Paulson and Squier and two installments each of 145 options for Messrs. Jumper and Fulchino, which options will vest on September 30, 2011 and September 30, 2012, as applicable, subject to the non-employee director's continued service with us through the applicable date.

Executive Compensation Plans

        The following are summaries of the short-term and long-term incentive compensation plans for executive officers that our board of directors intends to adopt and, as applicable, submit to our stockholders for approval prior to the consummation of this offering. We are still in the process of implementing these plans, and, accordingly, the summaries below are subject to change prior to the effectiveness of the registration statement of which this prospectus is a part.

2011 Equity Incentive Award Plan

        Prior to the consummation of this offering, our board of directors intends to adopt and submit to our stockholders for approval a 2011 Equity Incentive Award Plan, or the 2011 Plan, which will be effective as of the day prior to the consummation of this offering. As of the effective date of the 2011 Plan, no new awards will be granted under our prior equity incentive plan, which we sometimes refer to as the Prior Plan, but our prior equity incentive plan will continue to govern our prior equity incentive awards, as described under "Compensation Discussion and Analysis—Discretionary Long-Term Equity Incentive Awards," outstanding as of such date.

        The principal purpose of the 2011 Plan is to attract, retain and engage selected employees, consultants and directors through the granting of stock-based compensation awards. The material terms of the 2011 Plan, as it is currently contemplated, are summarized below. We are still in the process of implementing the 2011 Plan, and, accordingly, the summary below is subject to change prior to the effectiveness of the registration statement of which this prospectus is a part.

        Eligibility and Administration.     Employees, consultants and directors of the Company and its subsidiaries will be eligible to receive awards under the 2011 Plan. Our compensation committee will administer the 2011 Plan unless our board of directors assumes authority for administration. The compensation committee may delegate its duties and responsibilities as plan administrator to subcommittees comprised of our directors and/or officers, subject to certain limitations. Our full board of directors will administer the 2011 Plan with respect to awards to non-employee directors.

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        Subject to the express terms and conditions of the 2011 Plan, the plan administrator has the authority to make all determinations and interpretations under the plan, prescribe all forms for use with the plan and adopt, amend and/or rescind rules for the administration of the plan. The plan administrator also sets the terms and conditions of all awards under the plan, including any vesting and vesting acceleration conditions.

        Limitation on Awards and Shares Available.     Initially, the aggregate number of shares of our common stock available for issuance pursuant to awards granted under the 2011 Plan will be                        . This number will be adjusted due to the following shares becoming eligible to be used or, as applicable, used again for grants under the 2011 Plan:

From and after the effective date of the 2011 Plan, we will no longer issue awards under the Prior Plan.

        Shares granted under the 2011 Plan may be treasury shares, authorized but unissued shares, or shares purchased in the open market. The payment of dividend equivalents in cash in conjunction with any outstanding awards will not be counted against the shares available for issuance under the 2011 Plan.

        Awards.     The 2011 Plan provides for the grant of stock options (including non-qualified stock options, or NQSOs, and incentive stock options, or ISOs), restricted stock, dividend equivalents, stock payments, restricted stock units, or RSUs, performance awards, stock appreciation rights, or SARs, and other equity-based awards, or any combination thereof. Awards under the 2011 Plan will generally be set forth in award agreements, which will detail the terms and conditions of the awards, including any applicable vesting and payment terms and post-termination exercise limitations. Awards will generally be settled in shares of our common stock, but the plan administrator may provide for cash settlement of any award. A brief description of each award type follows.

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        Certain Transactions.     The plan administrator has broad discretion to equitably adjust the provisions of the 2011 Plan and the terms and conditions of existing and future awards, including with respect to aggregate number and type of shares subject to the 2011 Plan and awards granted pursuant to the 2011 Plan, to prevent the dilution or enlargement of intended benefits and/or facilitate necessary or desirable changes in the event of certain transactions and events affecting our common stock, such as stock dividends, stock splits, mergers, acquisitions, consolidations and other corporate transactions. In the event of a change in control where the acquiror does not assume or replace awards granted

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under the 2011 Plan, such awards will be subject to accelerated vesting so that 100% of such awards will become vested and exercisable or payable, as applicable, prior to the consummation of the change in control transaction and, if not exercised or paid, will terminate upon consummation of the transaction. The administrator may also provide for the acceleration, cash-out, termination, assumption, substitution or conversion of awards in the event of a change in control or certain other unusual or nonrecurring events or transactions. A change in control is defined in the 2011 Plan to mean (i) the acquisition by a person or group of more than 50% of the total combined voting power of our outstanding securities, (ii) during any consecutive two-year period, the replacement of a majority of our incumbent directors with directors whose election was not supported by at least two-thirds of our incumbent directors, (iii) a merger, consolidation, reorganization or business combination or the sale of substantially all of our assets, in each case, other than a transaction that results in our voting securities before such transaction continuing to represent or being converted into a majority of the voting securities of the surviving entity and after which no person or group owns a majority of the combined voting power of the surviving entity or (iv) our stockholders approving a liquidation or dissolution of the Company.

        Transferability, Repricing and Participant Payments.     With limited exceptions for estate planning, domestic relations orders, certain beneficiary designations and the laws of descent and distribution, awards under the 2011 Plan are generally non-transferable prior to vesting and are exercisable only by the participant. The price per share of a stock option or SAR may not be decreased and an underwater stock option or SAR may not be replaced or cashed out without stockholder approval. With regard to tax withholding, exercise price and purchase price obligations arising in connection with awards under the 2011 Plan, the plan administrator may, in its discretion, accept cash or check, shares of our common stock that meet specified conditions, a "market sell order" or such other consideration as it deems suitable.

        Amendment and Termination.     Our board of directors may terminate, amend or modify the 2011 Plan at any time and from time to time. However, we must generally obtain stockholder approval to increase the number of shares available under the 2011 Plan (other than in connection with certain corporate events, as described above) or to the extent required by applicable law, rule or regulation (including any applicable stock exchange rule).

        Expiration Date.     The 2011 Plan will expire on, and no option or other award may be granted pursuant to the 2011 Plan after, the tenth anniversary of the date the 2011 Plan was approved by our board of directors in                                    , 2011. Any award that is outstanding on the expiration date of the 2011 Plan will remain in force according to the terms of the 2011 Plan and the applicable award agreement.

Incentive Plan

        Our board of directors intends to adopt an incentive plan, which we refer to as the Incentive Plan, under which we will provide cash incentives to our executive officers and other key employees following the consummation of this offering. The purpose of the Incentive Plan is to enable the Company and its subsidiaries to attract, retain, motivate and reward the best qualified executive officers and key employees by providing them with the opportunity to earn competitive compensation directly linked to the Company's performance. The material terms of the Incentive Plan, as it is currently contemplated, are summarized below. We are still in the process of implementing the Incentive Plan, and, accordingly, the summary below is subject to change prior to the effectiveness of the registration statement of which this prospectus is a part.

        Administration.     The Incentive Plan is administered by our compensation committee, which may delegate its authority under the Incentive Plan to any of its duly constituted subcommittees.

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        Performance Criteria.     The compensation committee may establish the performance objective or objectives that must be satisfied in order for a participant to receive an award under the Incentive Plan or may make discretionary payments from the plan. Performance objectives under the Incentive Plan may be based upon the relative or comparative achievement of performance criteria, whether in absolute terms or relative to the performance of one or more similarly situated companies or a published index covering the performance of a number of companies, as determined by the compensation committee for the applicable performance period, which performance criteria may include: earnings before interest, taxes, depreciation and amortization; operating earnings; net earnings; income; earnings before interest and taxes; total shareholder return; return on the Company's assets; increase in the Company's earnings or earnings per share; revenue; revenue growth; share price performance; return on invested capital; operating income; pre- or post-tax income; net income; economic value added; profit margins; cash flow; improvement in or attainment of expense or capital expenditure levels; improvement in or attainment of working capital levels; return on equity; debt reduction; gross profit; market share; cost reductions; workforce satisfaction and diversity goals; workplace health and safety goals; product quality goals; employee retention; customer satisfaction; customer retention; completion of key projects and strategic plan development and/or implementation; job profit or performance against a multiplier. Performance objectives may be established on a company-wide basis or with respect to one or more business units, divisions, subsidiaries or products, or with respect to an individual. The compensation committee may exclude any or all extraordinary, unusual or non-recurring items and the cumulative effects of accounting changes from performance objectives for a performance period and may also adjust performance objectives in its discretion.

        Payment.     Payment of awards will be made as soon as practicable after the compensation committee certifies that one or more of the applicable performance criteria have been attained or determines the payable amount of an award. The compensation committee will determine whether an award will be paid in cash, stock (including restricted stock or restricted stock units) or other awards under the 2011 Plan, or in a combination of cash, stock and other awards, and may impose whatever additional conditions on such shares or other awards as it deems appropriate, including conditioning the vesting of such shares or other awards on the performance of additional service.

        Maximum Award; Discretion.     The maximum award amount payable per fiscal year under the Incentive Plan is $5.0 million. The compensation committee may, in its discretion, increase, reduce or eliminate awards otherwise payable under the Incentive Plan for any reason.

        Termination of Employment.     Unless otherwise determined by the compensation committee in its discretion, any participant whose employment terminates will forfeit all rights to any and all unpaid awards under the Incentive Plan.

        Forfeiture; Disgorgement.     If we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws, and a participant knowingly or grossly negligently engaged in the misconduct or knowingly or grossly negligently failed to prevent the misconduct, or if the participant is one of the individuals subject to automatic forfeiture under section 304 of the Sarbanes-Oxley Act of 2002, then the participant must forfeit and disgorge any awards received during the twelve months following the filing of the financial document embodying such financial reporting requirement and any other awards earned based on the materially non-complying financial reporting. In addition, any award paid to a current or former executive officer during the three-year period preceding the date on which the restatement is required, based on erroneous data, must be forfeited and disgorged to us to the extent the award is in excess of what would have been paid to the officer under the restated data. Participants must also forfeit and disgorge any awards to the extent required by applicable law or regulations in effect on or after the effective date of the plan.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Management Agreement

        On September 29, 2006, Wesco Aircraft entered into a management agreement, or the Management Agreement, with TC Group, L.L.C., or TC Group, an affiliate of Carlyle, to provide certain financial, strategic advisory and consultancy services. Under the Management Agreement, we are obligated to pay TC Group an annual management fee of $1.0 million and to pay or reimburse TC Group for certain out-of-pocket expenses. We incurred expenses of approximately $1.2 million, $1.0 million and $1.1 million for the years ending September 30, 2008, 2009 and 2010, respectively, related to the Management Agreement. The Management Agreement will terminate at such time as TC Group or one or more of its affiliates no longer collectively control, in the aggregate, at least 15% of Wesco Aircraft, or such earlier date as Wesco Aircraft and TC Group may mutually agree. Upon the effectiveness of the registration statement of which this prospectus forms a part, the Management Agreement will be amended and restated in order to substitute TC Group with Carlyle Investment Management, L.L.C.

Amended and Restated Stockholders Agreement

        In connection with the Carlyle Acquisition, on September 29, 2006, we entered into a stockholders agreement with Falcon Aerospace Holdings, LLC, Randy Snyder, Susan Snyder, certain affiliates of the Snyder family and members of management who hold restricted shares of common stock or options to purchase common stock. We refer to Falcon Aerospace Holdings, LLC as the Carlyle Stockholders and Randy Snyder, Susan Snyder and the affiliates of the Snyder family collectively as the Wesco Stockholders. The stockholders agreement was amended on November 30, 2007 and further amended on April 17, 2008. Upon effectiveness of the registration statement of which this prospectus forms a part, the stockholders agreement will be amended and restated.

        Pursuant to the Amended and Restated Stockholders Agreement, our board of directors will consist of eight members, with the Carlyle Stockholders having the right to nominate six of the members of the board of directors, the Wesco Stockholders having the right to nominate one of the members of the board of directors and the board of directors having the right to nominate one of the members of the board of directors. The number of board members that the Carlyle Stockholders are entitled to nominate will be reduced (i) to four directors if the Carlyle Stockholders hold less than 40% of our common stock, (ii) to three directors if the Carlyle Stockholders hold less than 25% of our common stock, (iii) to two directors if the Carlyle Stockholders hold less than 15% of our common stock and (iv) to one director if the Carlyle Stockholders hold less than 10% of our common stock. The Carlyle Stockholders' rights under the board of directors nomination provisions of the Amended and Restated Stockholders Agreement will terminate at such time as they hold less than 5% of our common stock. The Wesco Stockholders' rights under the board of directors nominations provisions of the Amended and Restated Stockholders Agreement will also terminate at such time as the they hold less than 5% of our common stock. In addition, for so long as Randy Snyder remains involved with our business, Mr. Snyder must be the Wesco Stockholders' nominee. However, at such time as Mr. Snyder is no longer involved with our business, the Wesco Stockholders may nominate another director, provided that such nominee is deemed qualified to serve on the board of directors of a public company.

        The Amended and Restated Stockholders Agreement will contain restrictions on the transfer of our equity securities by the stockholders, as well as drag-along rights. In the event that we register any of our common stock following our initial public offering, these stockholders will also have the right to require us to use our best efforts to include the securities held by them, subject to certain limitations, including as determined by the underwriters, and will have the right to cause us to effect registrations of shares on their behalf. The Amended and Restated Stockholders Agreement will also require us to indemnify the stockholders in connection with any such registration of our securities.

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        The Amended and Restated Stockholders Agreement will terminate upon a sale or change in control of the Company or the approval of the Company and its stockholders who are parties to the Amended and Restated Stockholders Agreement.

Operating Leases

        We lease several office and warehouse facilities under operating lease agreements, or the Operating Lease Agreements, from entities affiliated with or controlled by Randy J. Snyder, who serves as our Chairman of the Board of Directors, President and Chief Executive Officer and is also a minority stockholder of Wesco Aircraft. Rent expense on these facilities was approximately $1.7 million, $1.7 million and $1.7 million for the years ended September 30, 2008, 2009 and 2010, respectively (see Note 4 to our condensed consolidated financial statements contained elsewhere in this prospectus). The Operating Lease Agreements expire by their terms between June 30, 2019 and December 31, 2020.

Purchase of Term Loan

        On June 30, 2008, Merrill Lynch Asset Management, or Merrill Lynch, on behalf of entities controlled by Randy J. Snyder, who serves as our Chairman of the Board of Directors, President and Chief Executive Officer and is also a minority stockholder of Wesco Aircraft, purchased approximately $50.0 million of our outstanding indebtedness. For the years ending September 30, 2008, 2009 and 2010, total interest paid to the entities controlled by Mr. Snyder related to the debt was approximately $0.6 million, $1.6 million and $1.2 million, respectively. Mr. Snyder sold the outstanding indebtedness he held as of January 2011 and no longer has an ownership interest in any of our outstanding indebtedness.

Related Party Transaction Policy

        Prior to the completion of this offering, we intend to adopt a written statement of policy for the evaluation of and the approval, disapproval and monitoring of transactions involving us and "related persons." For the purposes of the policy, "related persons" will include our executive officers, directors and director nominees or their immediate family members, or stockholders owning five percent or more of our outstanding common stock.

        Our related person transactions policy will require:

        In connection with the review and approval or ratification of a related person transaction:

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        In addition, the related person transaction policy provides that the audit committee, in connection with any approval or ratification of a related person transaction involving a non-employee director or director nominee, should consider whether such transaction would compromise the director or director nominee's status as an "independent," "outside," or "non-employee" director, as applicable, under the rules and regulations of the SEC, the applicable listing exchange and the Internal Revenue Code.

        All related party transactions described in this section occurred prior to adoption of this policy, and as such, these transactions were not subject to the approval and review procedures described above.

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PRINCIPAL AND SELLING STOCKHOLDERS

        We had 9,445,489 shares of common stock outstanding as of June 6, 2011, assuming a one-to-one conversion of shares of Class B common stock to common stock and prior to the    for    stock split described elsewhere in this prospectus, which were owned by 35 stockholders. As of June 6, 2011, certain affiliates of Carlyle own approximately 83.8% of our common stock.

        The following table sets forth information with respect to the beneficial ownership of our common stock as of June 6, 2011, and as adjusted to reflect the shares of our common stock offered hereby, by:

        The amounts and percentages of shares beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial ownership of securities. Under SEC rules, a person is deemed to be a "beneficial" owner of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are not deemed to be outstanding for purposes of computing any other person's percentage. Under these rules, more than one person may be deemed to be a beneficial owner of securities as to which such person has no economic interest.

        The following table assumes a one-to-one conversion of shares of Class B common stock to common stock and does not give effect to the      for       stock split described elsewhere in this prospectus. Except as otherwise indicated in these footnotes, each of the beneficial owners listed has, to our knowledge, sole voting and investment power with respect to the shares of capital stock and the

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business address of each such beneficial owner is c/o Wesco Aircraft Holdings, Inc., 27727 Avenue Scott, Valencia, CA 91355.

 
   
   
   
  Shares Beneficially
Owned After this
Offering
 
 
  Shares Beneficially
Owned Prior to this
Offering
   
  Excluding
Exercise of
Overallotment
  Including
Exercise of
Overallotment
 
 
  Shares to be
Sold in this
Offering
 
Name of Beneficial Owner
  Number   Percent   Number   Percent   Number   Percent  

TCG Holdings, L.L.C.(1)

    7,914,983     83.8 %                 %           %

Randy J. Snyder(2)

    1,571,133     16.3 %                 %           %

Hal Weinstein(3)

    97,539     1.0                 *           *  

Tommy Lee(4)

    33,810     *                 *           *  

Gregory Hann(5)

    39,618     *                 *           *  

Alex Murray(6)

    34,175     *                 *           *  

Dayne A. Baird

        *                 *           *  

Peter J. Clare

        *                 *           *  

Paul E. Fulchino(7)

    9,575     *                 *           *  

John P. Jumper(8)

    5,688     *                 *           *  

Adam J. Palmer

        *                 *           *  

Robert D. Paulson(9)

    5,680     *                 *           *  

David L. Squier(10)

    5,680     *                 *           *  
 

All executive officers and directors as a group (12 persons)

    1,802,898     18.4 %                 %           %

*
Denotes less than 1.0% of beneficial ownership.

(1)
Falcon Aerospace Holdings, LLC is the record holder of 7,914,983 shares of our common stock. Carlyle Partners IV, L.P. is the managing member of Falcon Aerospace Holdings, LLC. TC Group IV, L.P. is the sole general partner of Carlyle Partners IV, L.P. TC Group IV Managing GP, L.L.C. is the sole general partner of TC Group IV, L.P. TC Group, L.L.C. is the sole managing member of TC Group IV Managing GP, L.L.C. TCG Holdings, L.L.C. is the managing member of TC Group, L.L.C. Accordingly, Carlyle Partners IV, L.P., TC Group IV, L.P., TC Group IV Managing GP, L.L.C., TC Group, L.L.C. and TCG Holdings, L.L.C. each may be deemed to share beneficial ownership of shares of our common stock owned of record by Falcon Aerospace Holdings, LLC. TCG Holdings, L.L.C. is managed by a three person managing board, and all board action relating to the voting or disposition of these shares requires approval of a majority of the board. William E. Conway, Jr., Daniel A. D'Aniello and David M. Rubenstein are managing members of TCG Holdings, L.L.C. and, in such capacity, may be deemed to share beneficial ownership of shares of our common stock beneficially owned by TCG Holdings, L.L.C. Such individuals expressly disclaim any such beneficial ownership. The principal address and principal offices of TCG Holdings, L.L.C. is c/o The Carlyle Group, 1001 Pennsylvania Avenue, N.W., Suite 220 South, Washington, D.C. 20004-2505.

(2)
Includes 1,404,467 shares of our common stock beneficially owned by Mr. Snyder and the right to acquire up to 166,666 additional shares.

(3)
Includes 14,205 shares of our common stock beneficially owned by Mr. Weinstein and the right to acquire up to 83,334 additional shares.

(4)
Includes 8,810 shares of our common stock beneficially owned by Mr. Lee and the right to acquire up to 25,000 additional shares.

(5)
Consists of the right to acquire up to 39,618 additional shares.

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(6)
Includes 842 shares of our common stock beneficially owned by Mr. Murray and the right to acquire up to 33,333 additional shares.

(7)
Includes 9,140 shares of our common stock beneficially owned by Mr. Fulchino and the right to acquire up to 435 additional shares.

(8)
Includes 5,253 shares of our common stock beneficially owned by Mr. Jumper and the right to acquire up to 435 additional shares.

(9)
Includes 5,245 shares of our common stock beneficially owned by Mr. Paulson and the right to acquire up to 435 additional shares.

(10)
Includes 5,100 shares of our common stock beneficially owned by Mr. Squier and the right to acquire up to 580 additional shares.

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DESCRIPTION OF CAPITAL STOCK

         The following is a description of our capital stock and the material provisions of our amended and restated certificate of incorporation and amended and restated bylaws, as each is anticipated to be in effect upon the closing of this offering, and other agreements to which we and our stockholders are parties. The following is only a summary and is qualified by applicable law and by the provisions of the amended and restated certificate of incorporation and amended and restated bylaws and other agreements, copies of which are available as set forth under the caption entitled "Where You Can Find More Information."

General

        Prior to the effectiveness of our amended and restated certificate of incorporation, our authorized capital stock includes the following: (i) 21,000,000 shares of common stock, par value $0.001 per share, which shares are divided into two classes, consisting of 19,000,000 shares of Class A common stock and 2,000,000 shares of Class B common stock, and (ii) 1,000,000 shares of preferred stock, par value $0.001 per share. Upon effectiveness of our amended and restated certificate of incorporation, our authorized capital stock will consist of the following: (i) 950,000,000 shares of common stock, par value $0.001 per share, and (ii) 50,000,000 shares of preferred stock, par value $0.001 per share. The rights and privileges of holders of our common stock are subject to any series of preferred stock that we may issue in the future.

        As of June 6, 2011, 9,445,489 shares of our common stock were issued and outstanding and were owned by 35 stockholders.

Common Stock

        Holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, including the election of directors. There will be no cumulative voting in the election of directors, which means that holders of a majority of the outstanding shares of common stock will be able to elect all of the directors, and holders of less than a majority of such shares will be unable to elect any director. Under the amended and restated certificate of incorporation, subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of common stock will be entitled to receive ratably such dividends, if any, as may be declared from time to time by our board of directors out of funds legally available for dividend payments. The new senior secured credit facilities impose restrictions on our ability to declare dividends on our common stock. All outstanding shares of common stock are fully paid and non-assessable, and the shares of common stock to be issued upon completion of this offering will be fully paid and non-assessable. The holders of common stock have no preferences or rights of conversion, exchange, pre-emption or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. In the event of any liquidation, dissolution or winding-up of our affairs, holders of common stock will be entitled to share ratably in our assets that are remaining after payment or provision for payment of all of our debts and obligations and after liquidation payments to holders of outstanding shares of preferred stock, if any.

Preferred Stock

        The preferred stock, if issued, would have priority over the common stock with respect to dividends and other distributions, including the distribution of our assets upon liquidation. Unless required by law or by any stock exchange on which our common stock may be listed, our board of directors will have the authority without further stockholder authorization to issue from time to time shares of preferred stock in one or more series and to determine the designations, rights, preferences, privileges, limitations or restrictions of each series. Although we have no present plans to issue any shares of preferred stock, the issuance of shares of preferred stock, or the issuance of rights to purchase such shares, could decrease the amount of earnings and assets available for distribution to the

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holders of common stock, could adversely affect the rights and powers, including voting rights, of the common stock, and could have the effect of delaying, deterring or preventing a change in control of us or an unsolicited acquisition proposal.

Amended and Restated Stockholders Agreement

        Pursuant to the Amended and Restated Stockholders Agreement, Carlyle will continue to have certain rights to appoint directors to our board of directors. See "Certain Relationships and Related Party Transactions."

Limitations on Directors' Liability

        We expect that our amended and restated certificate of incorporation and amended and restated bylaws will contain provisions indemnifying our directors and officers to the fullest extent permitted by law. Prior to the completion of this offering, we intend to enter into indemnification agreements with each of our directors that may, in some cases, be broader than the specific indemnification provisions contained under Delaware law.

        In addition, as permitted by Delaware law, we expect that our amended and restated certificate of incorporation will provide that no director will be liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director. The effect of this provision is to restrict our rights and the rights of our stockholders in derivative suits to recover monetary damages against a director for breach of fiduciary duty as a director, except that a director will be personally liable for:

        This provision does not affect a director's liability under the federal securities laws.

        To the extent that our directors, officers and controlling persons are indemnified under the provisions contained in our amended and restated certificate of incorporation, Delaware law or contractual arrangements against liabilities arising under the Securities Act, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Provisions of Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws that May Have an Anti-Takeover Effect

        Certain provisions that we expect will be contained our amended and restated certificate of incorporation and amended and restated bylaws that are summarized below may be deemed to have an anti-takeover effect and may delay, deter or prevent a tender offer or takeover attempt that a stockholder might consider to be in its best interests, including attempts that might result in a premium being paid over the market price for the shares held by stockholders.

        Among other things, we expect that our amended and restated certificate of incorporation and amended and restated bylaws will:

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        The foregoing provisions of our amended and restated certificate of incorporation and amended and restated bylaws could discourage potential acquisition proposals and could delay or prevent a change in control. These provisions are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and in the policies formulated by our board of directors and to discourage certain types of transactions that may involve an actual or threatened change of control. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions also are intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our common stock that could result from actual or rumored takeover attempts. Such provisions also may have the effect of preventing changes in our management.

Delaware Takeover Statute

        Subject to certain exceptions, Section 203 prohibits a Delaware corporation from engaging in any "business combination" with any "interested stockholder" for a period of three years following the date that such stockholder became an interested stockholder, unless: (i) prior to such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; (ii) on consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned (a) by persons who are directors and also officers and (b) by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or (iii) on or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2 / 3 % of the outstanding voting stock that is not owned by the interested stockholder.

        In our amended and restated certificate of incorporation, we will elect not to be governed by Section 203 of the Delaware General Corporation Law, or DGCL, as permitted under and pursuant to subsection (b)(3) of Section 203.

Listing

        We will apply to list our common stock on the New York Stock Exchange under the symbol "WAIR."

Transfer Agent and Registrar

        We have appointed American Stock Transfer & Trust Company, LLC as the transfer agent and registrar for our common stock.

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SHARES ELIGIBLE FOR FUTURE SALE

        Upon the completion of this offering, we will have outstanding          shares of common stock, assuming the issuance of           shares of common stock offered by the selling stockholders in this offering and no exercise of outstanding options, and assuming that the underwriters have not exercised their overallotment option. Of these shares,            shares of common stock will be freely transferable without restriction or further registration under the Securities Act by persons other than "affiliates," as that term is defined in Rule 144 under the Securities Act. Generally, the balance of our outstanding common stock are "restricted securities" within the meaning of Rule 144 under the Securities Act, subject to the limitations and restrictions that are described below. common stock purchased by our affiliates will be "restricted securities" under Rule 144. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rules 144 or 701 promulgated under the Securities Act.

Lock-Up Agreements

        In connection with this offering, we, all of our directors and executive officers and holders of our common stock will agree with the underwriters to enter into lock-up agreements described in "Underwriting," pursuant to which          shares of our common stock outstanding after this offering will be restricted from immediate resale in accordance with the terms of such lock-up agreements.

Rule 144

        In general, under Rule 144 as in effect on the date of this prospectus, beginning 90 days after the consummation of this offering, a person (or persons whose common stock is required to be aggregated), who is an affiliate, and who has beneficially owned our common stock for at least six months is entitled to sell in any three-month period a number of shares that does not exceed the greater of:

        Sales by our affiliates under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us. An "affiliate" is a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with an issuer.

        Under Rule 144, a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the 90 days preceding a sale, and who has beneficially owned the shares proposed to be sold for at least six months (including the holding period of any prior owner other than an affiliate), would be entitled to sell those shares subject only to availability of current public information about us, and after beneficially owning such shares for at least 12 months, would be entitled to sell an unlimited number of shares without restriction. To the extent that our affiliates sell their common stock, other than pursuant to Rule 144 or a registration statement, the purchaser's holding period for the purpose of effecting a sale under Rule 144 commences on the date of transfer from the affiliate.

Rule 701

        In general, under Rule 701 as in effect on the date of this prospectus, any of our employees, directors, officers, consultants or advisors who purchased shares from us in reliance on Rule 701 in connection with a compensatory stock or option plan or other written agreement before the effective

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date of this offering, or who purchased shares from us after that date upon the exercise of options granted before that date, are eligible to resell such shares 90 days after the effective date of this offering in reliance upon Rule 144. If such person is not an affiliate, such sale may be made subject only to the manner of sale provisions of Rule 144. If such a person is an affiliate, such sale may be made under Rule 144 without compliance with the holding period requirement, but subject to the other Rule 144 restrictions described above.

S-8 Registration Statement

        In conjunction with this offering, we are filing a registration statement on Form S-8 under the Securities Act, which will register up to            shares of common stock underlying stock options or restricted stock awards or reserved for issuance under our equity incentive plans. That registration statement will become effective upon filing, and          shares of common stock covered by such registration statement are eligible for sale in the public market immediately after the effective date of such registration statement, subject to the lock-up agreements described above.

Registration Rights

        Pursuant to the Amended and Restated Stockholders Agreement, we have granted the Carlyle Stockholders and the Wesco Stockholders the right to cause us, in certain instances, at our expense, to file registration statements under the Securities Act covering resales of our common stock held by them or to piggyback on such registration statements in certain circumstances. See "Certain Relationships and Related Party Transactions." These shares will represent approximately        % of our outstanding common stock after this offering, or        % if the underwriters exercise their overallotment option in full. These shares also may be sold under Rule 144 under the Securities Act, depending on their holding period and subject to restrictions in the case of shares held by persons deemed to be our affiliates.

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MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR
NON-U.S. HOLDERS OF OUR COMMON STOCK

        The following is a summary of the material U.S. federal income tax consequences applicable to non-U.S. holders (as defined below) with respect to the acquisition, ownership and disposition of our common stock issued pursuant to this offering. This discussion is not a complete analysis of all the potential U.S. federal income tax consequences relating thereto, nor does it address any tax consequences arising under any state, local or non-U.S. tax laws or any other U.S. federal tax laws, including U.S. federal estate and gift tax laws. This discussion is based on the Internal Revenue Code of 1986, as amended, or the Code, Treasury regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the Internal Revenue Service, or IRS, all as in effect as of the date of this offering. These authorities may change, or be subject to differing interpretations, possibly with retroactive effect, resulting in U.S. federal income tax consequences different from those discussed below. No ruling has been or will be sought from the IRS with respect to the matters discussed below, and there can be no assurance that the IRS will not take a contrary position regarding the tax consequences of the acquisition, ownership or disposition of our common stock, or that any such contrary position would not be sustained by a court.

        This summary is limited to non-U.S. holders that purchase our common stock issued pursuant to this offering and that hold our common stock as a "capital asset" within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences that may be relevant to a particular non-U.S. holder in light of that holder's particular circumstances. This discussion also does not consider any specific facts or circumstances that may be relevant to non-U.S. holders subject to special rules under the U.S. federal income tax laws, including, without limitation:

         THIS DISCUSSION IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE PARTICULAR U.S. FEDERAL INCOME TAX CONSEQUENCES TO THEM OF ACQUIRING, OWNING AND DISPOSING OF OUR COMMON STOCK, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAX LAWS AND ANY OTHER U.S. FEDERAL TAX LAWS (INCLUDING THE U.S. FEDERAL ESTATE AND GIFT TAX LAWS).

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Definition of Non-U.S. Holder

        For purposes of this discussion, a non-U.S. holder is any beneficial owner of our common stock that is not a "U.S. person" or a partnership for U.S. federal income tax purposes. A U.S. person is any of the following:

        If a partnership or other entity treated as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of a partner in the partnership or member in such other entity generally will depend on the status of the partner or member, upon the activities of the partnership or such other entity, and upon certain determinations made at the partner or member level. Accordingly, partnerships and such other entities that hold our common stock and the partners in such partnerships and the members in such other entities are urged to consult their tax advisors regarding the specific U.S. federal income tax consequences to them.

Distributions on our Common Stock

        As described in the section entitled "Dividend Policy," we have not paid a dividend on our common stock in the past and do not anticipate paying dividends on our common stock in the foreseeable future. If, however, we make cash or other property distributions on our common stock, such distributions generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a return of capital and will first be applied against and reduce a holder's adjusted tax basis in the common stock, but not below zero. Any remaining amounts will be treated as gain realized on the sale or other disposition of the common stock and will be treated as described under the section entitled "—Dispositions of our Common Stock" below.

        Dividends paid to a non-U.S. holder of our common stock generally will be subject to U.S. federal withholding tax at a rate of 30% (or such lower rate specified by an applicable tax treaty) of the gross amount of the dividends. To receive the benefit of a reduced treaty rate, a non-U.S. holder must furnish a valid IRS Form W-8BEN (or applicable successor form) certifying such holder's qualification for the reduced rate. This certification must be provided to us or our paying agent prior to the payment of dividends and must be updated periodically. Non-U.S. holders that do not timely provide us or our paying agent the required certification, but that qualify for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. holders are urged to consult their tax advisors regarding their entitlement to benefits under a relevant income tax treaty.

        If a non-U.S. holder holds our common stock in connection with the conduct of a trade or business in the United States, and dividends paid on the common stock are effectively connected with such holder's U.S. trade or business (and, if required by an applicable tax treaty, are attributable to a permanent establishment maintained by the non-U.S. holder in the United States), the non-U.S. holder

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will generally be exempt from U.S. federal withholding tax. To claim the exemption, the non-U.S. holder must furnish a properly executed IRS Form W-8ECI (or applicable successor form) to us or our paying agent prior to the payment of such dividends.

        Any dividends paid on our common stock that are effectively connected with a non-U.S. holder's U.S. trade or business (and, if required by an applicable tax treaty, are attributable to a permanent establishment maintained by the non-U.S. holder in the United States) generally will be subject to U.S. federal income tax on a net income basis at the regular graduated U.S. federal income tax rates in the same manner as if such holder were a resident of the United States. A non-U.S. holder that is a corporation also may be subject to a branch profits tax equal to 30% (or such lower rate specified by an applicable tax treaty) of its effectively connected earnings and profits for the taxable year, as adjusted for certain items. Non-U.S. holders should consult any applicable income tax treaties that may provide for different rules.

Dispositions of our Common Stock

        Subject to the discussions below regarding backup withholding and foreign accounts, a non-U.S. holder generally will not be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of our common stock unless:

        Unless an applicable tax treaty provides otherwise, gain described in the first bullet point above will be subject to U.S. federal income tax on an net income basis at the regular graduated U.S. federal income tax rates in the same manner as if such holder were a resident of the United States. A non-U.S. holder that is a corporation also may be subject to a branch profits tax equal to 30% (or such lower rate specified by an applicable tax treaty) of its effectively connected earnings and profits for the taxable year, as adjusted for certain items. Non-U.S. holders should consult any applicable income tax treaties that may provide for different rules.

        Gain described in the second bullet point above will be subject to U.S. federal income tax at a flat 30% rate (or such lower rate specified by an applicable income tax treaty) but may be offset by U.S. source capital losses (even though the individual is not considered a resident of the U.S.), provided that the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.

        With respect to the third bullet point above, we believe we are not currently and do not anticipate becoming a USRPHC for United States federal income tax purposes. However, because the determination of whether we are a USRPHC depends on the fair market value of our United States real property interests relative to the fair market value of our other trade or business assets and our non-United States real property interests, there can be no assurance that we are not a USRPHC or will not become one in the future. Even if we are or were to become a USRPHC, gain arising from the sale or other taxable disposition by a non-U.S. holder of our common stock will not be subject to tax if such class of stock is "regularly traded," as defined by applicable Treasury Regulations, on an established securities market, and such non-U.S. holder owned, actually or constructively, five percent (5%) or less of such class of our stock throughout the shorter of the five-year period

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ending on the date of the sale or exchange or the non-U.S. holder's holding period for such stock. We expect our common stock to be "regularly traded" on an established securities market. If gain on the sale or other taxable disposition of our stock were subject to taxation under the third bullet point above, the non-U.S. holder would be subject to regular United States federal income tax with respect to such gain in generally the same manner as a United States person.

Information Reporting and Backup Withholding

        We must report annually to the IRS and to each non-U.S. holder the amount of dividends on our common stock paid to such holder, the name and address of the recipient, and the amount of any tax withheld with respect to those dividends. These information reporting requirements apply in certain circumstances even if no withholding was required, such as where the dividends were effectively connected with the holder's conduct of a U.S. trade or business or withholding was eliminated by an applicable tax treaty. This information also may be made available under a specific treaty or agreement with the tax authorities in the country in which the non-U.S. holder resides or is established. Backup withholding, however, generally will not apply to payments of dividends to a non-U.S. holder of our common stock provided the non-U.S. holder furnishes the required certification as to its non-U.S. status, such as by providing a valid IRS Form W-8BEN or W-8ECI, or certain other requirements are met. Notwithstanding the foregoing, backup withholding may apply if either we or our paying agent has actual knowledge, or reason to know, that the holder is a United States person that is not an exempt recipient.

        Unless a non-U.S. holder complies with certification procedures to establish that it is not a United States person, information returns may be filed with the IRS in connection with, and the non-U.S. holder may be subject to backup withholding on the proceeds from, a sale or other disposition of our common stock. The certification procedures described in the previous paragraph will satisfy these certification requirements as well.

        Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder's U.S. federal income tax liability, provided the required information is timely furnished to the IRS.

Additional Withholding Tax Relating to Foreign Accounts

        An additional withholding tax will apply to certain types of payments made after December 31, 2012 to "foreign financial institutions" (as specially defined under the applicable rules) and certain other non-U.S. entities. Specifically, a 30% withholding tax will be imposed on dividends on, or gross proceeds from the sale or other disposition of, our common stock paid to a foreign financial institution or to a foreign non-financial entity after such date, unless (i) the foreign financial institution undertakes certain diligence and reporting obligations or (ii) the foreign non-financial entity either certifies it does not have any substantial United States owners or furnishes identifying information regarding each substantial United States owner. If the payee is a foreign financial institution, it must enter into an agreement with the United States Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain United States persons or United States-owned foreign entities, annually report certain information about such accounts, and withhold 30% on payments to account holders whose actions prevent it from complying with these reporting and other requirements. Prospective investors should consult their tax advisors regarding these rules.

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UNDERWRITING

        Barclays Capital Inc. ("Barclays") and Morgan Stanley & Co. LLC ("Morgan Stanley") are acting as representatives of the underwriters and joint book-running managers of this offering. Under the terms of an underwriting agreement, which will be filed as an exhibit to the registration statement, each of the underwriters named below has severally agreed to purchase from the selling stockholders the respective number of common stock shown opposite its name below:

Underwriter
  Number of Shares  

Barclays Capital Inc. 

       

Morgan Stanley & Co. LLC

       

J.P. Morgan Securities LLC

       

Merrill Lynch, Pierce, Fenner & Smith
                      Incorporated

       

William Blair & Company, L.L.C. 

       
       
 

Total

       
       

        The underwriting agreement provides that the underwriters' obligation to purchase shares of common stock depends on the satisfaction of the conditions contained in the underwriting agreement including:

Commissions and Expenses

        The following table summarizes the underwriting discounts and commissions the selling stockholders will pay to the underwriters. These amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares. The underwriting fee is the difference between the initial price to the public and the amount the underwriters pay to the selling stockholders for the shares.

 
  No Exercise   Full Exercise  

Per share

  $     $    

Total

  $     $    

        The representatives of the underwriters have advised us that the underwriters propose to offer the shares of common stock directly to the public at the public offering price on the cover of this prospectus and to selected dealers, which may include the underwriters, at such offering price less a selling concession not in excess of $        per share. After the offering, the representatives may change the offering price and other selling terms. Sales of shares made outside of the United States may be made by affiliates of the underwriters.

        The expenses of the offering that are payable by us and the selling stockholders are estimated to be $        (excluding underwriting discounts and commissions). We have agreed to pay expenses

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incurred by the selling stockholders in connection with the offering, other than the underwriting discounts and commission.

Option to Purchase Additional Shares

        The selling stockholders have granted the underwriters an option exercisable for 30 days after the date of this prospectus to purchase, from time to time, in whole or in part, up to an aggregate of            shares at the public offering price less underwriting discounts and commissions. This option may be exercised if the underwriters sell more than            shares in connection with this offering. To the extent that this option is exercised, each underwriter will be obligated, subject to certain conditions, to purchase its pro rata portion of these additional shares based on the underwriter's underwriting commitment in the offering as indicated in the table at the beginning of this Underwriting Section.

Lock-Up Agreements

        We and all of our directors, executive officers and holders of our common stock have agreed that, subject to certain exceptions, without the prior written consent of Barclays and Morgan Stanley, we and they will not, (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of common stock beneficially owned (including, without limitation, shares of common stock that may be deemed to be beneficially owned by us or them in accordance with the rules and regulations of the SEC and shares of common stock that may be issued upon exercise of any securities convertible into or exercisable or exchangeable for common stock) or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of common stock or such other securities, in cash or otherwise during the period ending 180 days after the date of this prospectus. In addition, we have agreed not to file any registration statement with the SEC relating to the offering of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock during the 180-day restricted period.

        The 180-day restricted period described in the preceding paragraph will be extended if:

in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or occurrence of a material event, unless such extension is waived in writing by          .

        Barclays and Morgan Stanley, in their sole discretion, may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time with or without notice. When determining whether or not to release common stock and other securities from lock-up agreements, Barclays and Morgan Stanley will consider, among other factors, the holder's reasons for requesting the release, the number of shares of common stock and other securities for which the release is being requested and market conditions at the time.

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Offering Price Determination

        Prior to this offering, there has been no public market for our common stock. The initial public offering price will be negotiated between the representatives and us. In determining the initial public offering price of our common stock, the representatives will consider:

        An active trading market for the shares may not develop. It is also possible that after the offering the shares will not trade in the public market at or above the initial public offering price.

Indemnification

        We and the selling stockholders have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the underwriters may be required to make for these liabilities.

Stabilization, Short Positions and Penalty Bids

        The representatives may engage in stabilizing transactions, short sales and purchases to cover positions created by short sales, and penalty bids or purchases for the purpose of pegging, fixing or maintaining the price of the common stock, in accordance with Regulation M under the Securities Exchange Act of 1934:

    Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.

    A short position involves a sale by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase in the offering, which creates the syndicate short position. This short position may be either a covered short position or a naked short position. In a covered short position, the number of shares involved in the sales made by the underwriters in excess of the number of shares they are obligated to purchase is not greater than the number of shares that they may purchase by exercising their option to purchase additional shares. In a naked short position, the number of shares involved is greater than the number of shares in their option to purchase additional shares. The underwriters may close out any short position by either exercising their option to purchase additional shares and/or purchasing shares in the open market. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through their option to purchase additional shares. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.

    Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions.

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    Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

        These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the common stock. As a result, the price of the common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the New York Stock Exchange or otherwise and, if commenced, may be discontinued at any time.

        Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common stock. In addition, neither we nor any of the underwriters make representation that the representatives will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.

Electronic Distribution

        A prospectus in electronic format may be made available on the Internet sites or through other online services maintained by one or more of the underwriters and/or selling group members participating in this offering, or by their affiliates. In those cases, prospective investors may view offering terms online and, depending upon the particular underwriter or selling group member, prospective investors may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of shares for sale to online brokerage account holders. Any such allocation for online distributions will be made by the representatives on the same basis as other allocations.

        Other than the prospectus in electronic format, the information on any underwriter's or selling group member's web site and any information contained in any other web site maintained by an underwriter or selling group member is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter or selling group member in its capacity as underwriter or selling group member and should not be relied upon by investors.

New York Stock Exchange Listing

        We will apply to list our shares of common stock for quotation on the New York Stock Exchange under the symbol "WAIR."

Discretionary Sales

        The underwriters have informed us that they do not intend to confirm sales to discretionary accounts that exceed 5% of the total number of shares offered by them.

Stamp Taxes

        If you purchase shares of common stock offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.

Relationships

        Certain of the underwriters and/or their affiliates have engaged, and may in the future engage, in commercial and investment banking transactions with us in the ordinary course of their business, including as our arrangers, lenders and agents under the old senior secured credit facilities and the new senior secured credit facilities for which they have received, and expect to receive, customary

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compensation and expense reimbursement. For example, affiliates of Barclays Capital Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are acting as arrangers, lenders and, in the case of affiliates of Barclays Capital Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, agents, under the new senior secured credit facilities. In addition, affiliates of Barclays Capital Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. LLC acted as lenders and, in the case of Barclays Capital Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, agents, under the old senior secured credit facilities. For a description of these facilities, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity of Capital Resources—Senior Secured Credit Facilities."

Selling Restrictions

    European Economic Area

        In relation to each Member State of the European Economic Area that has implemented the Prospectus Directive (each, referred to as a "Relevant Member State") an offer to the public of any shares of our common stock may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any shares of our common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

    (a)
    to any legal entity that is a qualified investor as defined in the Prospectus Directive;

    (b)
    to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or

    (c)
    in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares of our common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.

        For the purposes of this provision, the expression an "offer to the public" in relation to any shares of our common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase any shares of our common stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State, and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.

    United Kingdom

        Each underwriter has represented and agreed that:

    (a)
    it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the shares of our common stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and

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    (b)
    it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of our common stock in, from or otherwise involving the United Kingdom.

    Notice to Prospective Investors in Switzerland

        The shares of common stock may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares of common stock or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

        Neither this document nor any other offering or marketing material relating to the offering, the issuer or the shares of common stock has been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of the shares of common stock will not be supervised by, the Swiss Financial Market Supervisory Authority, and the offer of shares of common stock has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares of common stock.

    Notice to Prospective Investors in the Dubai International Financial Centre

        This offering memorandum relates to an exempt offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority, or DFSA. This offering memorandum is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with exempt offers. The DFSA has not approved this offering memorandum nor taken steps to verify the information set forth herein and has no responsibility for the offering memorandum. The securities to which this offering memorandum relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the securities offered should conduct their own due diligence on the securities. If you do not understand the contents of this offering memorandum you should consult an authorized financial advisor.

Relationship with Solebury Capital LLC

        Pursuant to an engagement agreement, we retained Solebury Capital LLC, or Solebury, a FINRA member, to provide certain financial consulting services (which do not include underwriting services) in connection with this offering. We agreed to pay Solebury, only upon successful completion of this offering, a fee of $400,000 and, at our sole discretion, an additional potential incentive fee of $200,000. In determining whether we elect to award any or all of the incentive fee, we will consider the level of, and our satisfaction with, the services provided by Solebury throughout the initial public offering process. We also agreed to reimburse Solebury for reasonable and documented out-of-pocket expenses up to a maximum of $50,000 without our prior written consent and have provided indemnification of Solebury pursuant to the engagement agreement. Solebury's services include advice with respect to selection of underwriters for this offering, deal structuring, fee and economics recommendations, distribution strategy recommendations and preparation of presentation materials. Solebury is not acting as an underwriter and has no contact with any public or institutional investor on behalf of the Company or the underwriters. In addition, Solebury will not underwrite or purchase any of our common stock in this offering or otherwise participate in any such undertaking.

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VALIDITY OF COMMON STOCK

        The validity of the shares being sold in this offering will be passed upon for us by Latham & Watkins LLP, Washington, District of Columbia. Certain legal matters relating to this offering will be passed upon for the underwriters by Davis Polk & Wardwell LLP, New York, New York.


EXPERTS

        The financial statements as of September 30, 2009 and 2010 and for each of the three years in the period ended September 30, 2010 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

        References to the independent research report prepared by Stax, Inc. in connection with this offering have been included in this prospectus in reliance on the report, given on the authority of Stax, Inc.


WHERE YOU CAN FIND MORE INFORMATION

        We have filed with the SEC a registration statement on Form S-1, including exhibits, schedules and amendments filed with the registration statement pursuant to the Securities Act, covering the common stock being offered hereby. This prospectus does not contain all the information set forth in the registration statement and the related exhibits and schedules, portions of which have been omitted as permitted by the rules and regulations of the SEC. For further information about us and the common stock we propose to sell in this offering, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. With respect to statements contained in this prospectus regarding the contents of any contract or any other document, reference is made to the copy of the contract or other document filed as an exhibit to the registration statement.

        You may inspect a copy of the registration statement and the exhibits and schedules to the registration statement without charge at the Public Reference Room of the SEC at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can receive copies of these documents upon payment of a duplicating fee by writing to the SEC. The SEC maintains a web site at www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. You can also inspect our registration statement on this web site.

        Upon completion of this offering, we will become subject to the information and reporting requirements of the Exchange Act pursuant to Section 13 thereof. Our filings with the SEC (other than those exhibits specifically incorporated by reference into the registration statement of which this prospectus forms a part) are not incorporated by reference into this prospectus.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 
  Page  

Audited Consolidated Financial Statements:

       
 

Report of Independent Registered Public Accounting Firm

    F-2  
 

Consolidated Balance Sheets

    F-3  
 

Consolidated Statements of Income

    F-4  
 

Consolidated Statements of Stockholders' Equity and Comprehensive Income

    F-5  
 

Consolidated Statements of Cash Flows

    F-6  
 

Notes to Audited Consolidated Financial Statements

    F-7  

Unaudited Consolidated Financial Statements:

       
 

Consolidated Balance Sheets

    F-34  
 

Consolidated Statements of Income

    F-35  
 

Consolidated Statements of Cash Flows

    F-36  
 

Notes to Unaudited Consolidated Financial Statements

    F-37  

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
Wesco Aircraft Holdings, Inc. (formerly known as Wesco Holdings, Inc.)

        In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, stockholders' equity and comprehensive income, and cash flows present fairly, in all material respects, the financial position of Wesco Aircraft Holdings, Inc. (formerly known as Wesco Holdings, Inc.) and its subsidiaries (the "Company") at September 30, 2009 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2010 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP
Los Angeles, California
December 22, 2010

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Wesco Aircraft Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

September 30, 2009 and 2010

(In thousands, except share and per share data)

 
  2009   2010  

Assets

             

Current assets

             
 

Cash and cash equivalents

  $ 11,406   $ 39,463  
 

Accounts receivable, net of allowance for doubtful accounts of $5,631 and $6,236 in 2009 and 2010

    83,200     89,427  
 

Inventories

    486,876     483,442  
 

Prepaid expenses and other current assets

    9,176     6,581  
 

Deferred income taxes

    23,558     33,138  
           
   

Total current assets

    614,216     652,051  

Property and equipment, net

   
20,561
   
20,173
 

Deferred financing costs, net

    15,144     10,329  

Goodwill

    506,066     504,841  

Intangible assets, net

    95,314     89,998  

Other assets

    3,511     1,620  
           
   

Total assets

  $ 1,254,812   $ 1,279,012  
           

Liabilities and Stockholders' Equity

             

Current liabilities

             
 

Line of credit

  $ 813   $  
 

Accounts payable

    61,033     59,183  
 

Accrued expenses and other current liabilities

    14,199     20,888  
 

Income taxes payable

    5,262     5,500  
 

Long-term debt—current portion

    5,528      
 

Capital lease obligations—current portion

    1,006     1,354  
           
   

Total current liabilities

    87,841     86,925  

Long-term debt

   
682,097
   
620,243
 

Capital lease obligations

    2,171     1,789  

Deferred income taxes

    7,605     23,927  

Other liabilities

    1,158     389  
           
   

Total liabilities

    780,872     733,273  

Commitments and contingencies

             

Stockholders' equity

             
 

Preferred stock, $0.001 par value per share: 1,000,000 shares authorized; no shares issued and outstanding

         
 

Common stock, class A, $0.001 par value per share: 19,000,000 shares authorized; 9,319,450 shares issued and outstanding

    9     9  
 

Class B convertible redeemable common stock, $0.001 par value per share:
2,000,000 shares authorized; 121,083 and 121,083 shares issued and outstanding at September 30, 2009 and 2010, respectively

    1     1  
 

Additional paid-in capital

    326,746     329,256  
 

Accumulated other comprehensive loss

    (2,903 )   (7,288 )
 

Retained earnings

    150,087     223,761  
           
   

Total stockholders' equity

    473,940     545,739  
           
   

Total liabilities and stockholders' equity

  $ 1,254,812   $ 1,279,012  
           

See the accompanying notes to the consolidated financial statements.

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Wesco Aircraft Holdings, Inc. and Subsidiaries

Consolidated Statements of Income

For the Years Ended September 30, 2008, 2009 and 2010

(In thousands, except share and per share data)

 
  2008   2009   2010  

Net sales

  $ 604,343   $ 612,687   $ 656,036  

Cost of sales

    347,735     374,400     401,806  
               
   

Gross profit

    256,608     238,287     254,230  

Selling, general and administrative expenses

    105,758     103,895     99,915  
               
   

Income from operations

    150,850     134,392     154,315  

Interest expense, net

    (48,743 )   (37,707 )   (36,270 )

Other income (expense), net

    746     (376 )   (458 )
               
   

Income before provision for income taxes

    102,853     96,309     117,587  
               

Provision for income taxes

    44,251     37,862     43,913  
               
     

Net income

  $ 58,602   $ 58,447   $ 73,674  
               

Net income per share:

                   
 

Basic

  $ 6.22   $ 6.19   $ 7.32  
               
 

Diluted

  $ 6.02   $ 5.87   $ 7.28  
               

Weighted average shares outstanding:

                   
 

Basic

    9,420,433     9,440,596     10,063,237  
 

Diluted

    9,740,158     9,964,748     10,118,648  

See the accompanying notes to the consolidated financial statements.

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Wesco Aircraft Holdings, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equity and Comprehensive Income

For the Years Ended September 30, 2008, 2009 and 2010

(In thousands, except share and per share data)

 
   
   
  Class B
Convertible
Redeemable
Common Stock
   
   
   
   
   
 
 
  Class A
Common Stock
   
   
   
   
   
 
 
   
  Accumulated
Other
Comprehensive
Income (Loss)
   
   
   
 
 
  Additional
Paid-In
Capital
  Retained
Earnings
  Total
Stockholders'
Equity
  Comprehensive
Income
 
 
  Shares   Amount   Shares   Amount  

Balance, October 1, 2007

    9,319,450   $ 9     87,479   $ 1   $ 302,409   $ 325   $ 33,038   $ 335,782   $ 33,363  

Sale of common stock

            6,887         306             306        

Exercise of stock options

            17,656         655             655        

Stock-based compensation

            4,312         13,700             13,700        

Net income

                            58,602     58,602     58,602  

Other comprehensive income

                                                       
 

Foreign currency translation adjustment

                        728         728     728  
                                       

Total comprehensive income

                                                  $ 59,330  
                                                       

Balance, September 30, 2008

    9,319,450   $ 9     116,334   $ 1   $ 317,070   $ 1,053   $ 91,640   $ 409,773        

Exercise of stock options

            437         16             16        

Stock-based compensation

            4,312         10,389             10,389        

Redemption of vested stock options

                    (729 )           (729 )      

Net income

                            58,447     58,447     58,447  

Other comprehensive income

                                                       
 

Foreign currency translation adjustment, net of tax

                        (3,956 )       (3,956 )   (3,956 )
                                       

Total comprehensive income

                                                  $ 54,491  
                                                       

Balance, September 30, 2009

    9,319,450   $ 9     121,083   $ 1   $ 326,746   $ (2,903 ) $ 150,087   $ 473,940        

Stock-based compensation

                    2,510             2,510        

Net income

                            73,674     73,674     73,674  

Other comprehensive income

                                                       
 

Foreign currency translation adjustment, net of tax

                        (4,385 )       (4,385 )   (4,385 )
                                       

Total comprehensive income

                                                  $ 69,289  
                                                       

Balance, September 30, 2010

    9,319,450   $ 9     121,083   $ 1   $ 329,256   $ (7,288 ) $ 223,761   $ 545,739        
                                         

See the accompanying notes to the consolidated financial statements.

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Wesco Aircraft Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended September 30, 2008, 2009 and 2010

(In thousands)

 
  2008   2009   2010  

Cash flows from operating activities

                   

Net income

  $ 58,602   $ 58,447   $ 73,674  

Adjustments to reconcile net income to net cash provided by operating activities

                   
 

Amortization of intangible assets

    3,391     5,763     4,119  
 

Depreciation

    4,455     4,302     4,702  
 

Amortization of deferred financing costs

    3,379     3,703     4,814  
 

Bad debt and sales return reserve

    4,561     254     607  
 

Non-cash foreign currency exchange

    (600 )   364     242  
 

Non-cash stock-based compensation

    13,700     10,389     2,510  
 

Change in fair value of derivative

        4,102     2,558  
 

Deferred income tax provision

    3,836     14,024     6,741  
 

Changes in assets and liabilities

                   
   

Accounts receivable

    (11,162 )   4,429     (7,795 )
   

Income taxes receivable

    (63 )   7     (45 )
   

Inventories

    (58,749 )   (111,136 )   1,593  
   

Prepaid expenses and other assets

    (4,636 )   (959 )   4,448  
   

Accounts payable

    11,011     9,073     (1,099 )
   

Accrued expenses and other liabilities

    34     (3,446 )   3,423  
   

Income taxes payable

    (3,057 )   1,950     281  
               
     

Net cash provided by operating activities

    24,702     1,266     100,773  
               

Cash flows from investing activities

                   

Acquisition of business, net of cash acquired

    (109,029 )        

Purchases of property and equipment

    (6,769 )   (4,135 )   (3,077 )
               
     

Net cash used in investing activities

    (115,798 )   (4,135 )   (3,077 )
               

Cash flows from financing activities

                   

Net repayments under line of credit

    (2,394 )   (23 )   (796 )

Proceeds/(Repayments) of long-term debt

    100,000         (67,382 )

Financing fees

    (3,024 )        

Redemption of vested stock options

        (729 )    

Repayment of capital lease obligations

    (1,445 )   (984 )   (1,305 )

Proceeds from exercise of stock options

    977     16      
               
     

Net cash provided by (used in) financing activities

    94,114     (1,720 )   (69,483 )
               

Effect of foreign currency exchange rates on cash and cash equivalents

    118     (3 )   (156 )
               
     

Net increase (decrease) in cash and cash equivalents

    3,136     (4,592 )   28,057  

Cash and cash equivalents, beginning of period

    12,862     15,998     11,406  
               

Cash and cash equivalents, end of period

  $ 15,998   $ 11,406   $ 39,463  
               

      Supplemental disclosure of cash flow information (see Note 16)

See the accompanying notes to the consolidated financial statements.

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data)

Note 1. Organization and Business

        Wesco Aircraft Holdings, Inc. is a distributor and provider of comprehensive supply chain management services to the global aerospace industry. The Company's services range from traditional distribution to the management of supplier relationships, quality assurance, kitting, just-in-time, or JIT delivery, and point-of-use inventory management.

        In addition to the central stocking facilities, the Company uses a network of forward-stocking locations to service its customers in a JIT and/or ad hoc manner. There are over 15 stocking locations around the world with concentrations in North America and Europe. In addition to product fulfillment, the Company also provides comprehensive supply chain management services for selected customers. These services include procurement and just-in-time inventory management and delivery services.

        On September 29, 2006, 100% of the outstanding stock of Wesco Aircraft Hardware Corp., Wesco Aircraft Israel and the European entities of Flintbrook Ltd., Wesco Aircraft France and Wesco Aircraft Germany were acquired by the Company. The acquisition was completed in a leveraged transaction in which affiliates of The Carlyle Group invested approximately 85% of the total voting equity in the Company and the prior owner of the Company contributed the remaining 15% of the total voting equity invested. The prior owner's investment represented a contribution of ownership in the predecessor company to the newly formed holding company. In accordance with Accounting Standards Codification ("ASC") 805, Business Combinations , the acquired assets and liabilities have been recorded at fair value for the interests acquired by new investors and at carryover basis for the continuing investors.

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

        The accompanying consolidated financial statements include the accounts of Wesco Aircraft Hardware Corp., Wesco Aircraft Europe Limited, Flintbrook Limited, Wesco Aircraft Germany GmbH, Wesco Aircraft France SAS, Wesco Aircraft Israel Ltd, and Wesco Aircraft Italy SRL. All intercompany accounts and transactions have been eliminated.

Use of Estimates in Preparation of Financial Statements

        The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, but not limited to, receivable valuations and sales returns, inventory valuations of excess and obsolete inventories, the useful lives of long-lived assets including property, equipment and intangible assets, annual goodwill impairment assessment, income taxes and contingencies. Actual results could differ from such estimates.

Cash and Cash Equivalents

        The Company considers all highly liquid investments with original maturities from date of purchase by the Company of three months or less to be cash equivalents.

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 2. Summary of Significant Accounting Policies (Continued)

Accounts Receivable

        Accounts receivable consist of amounts owed to the Company by customers. The Company performs periodic credit evaluations of the financial condition of its customers, monitors collections and payments from customers, and generally does not require collateral. Accounts receivable are generally due within 30 to 60 days. The Company provides for the possible inability to collect accounts receivable by recording an allowance for doubtful accounts. The Company reserves for an account when it is considered to be uncollectible. The Company estimates its allowance for doubtful accounts based on historical experience, aging of accounts receivable and information regarding the creditworthiness of its customers. To date, losses have been within the range of management's expectations. If the estimated allowance for doubtful accounts subsequently proves to be insufficient, additional allowances may be required.

        The Company's allowance for doubtful accounts activity consists of the following:

 
  Balance at
Beginning of Period
  Changes to
Cost and
Expense
  Write-offs   Balance at
End of Period
 

Allowance for doubtful accounts at September 30, 2008

  $ 3,333   $ 4,500   $   $ 7,833  

Allowance for doubtful accounts at September 30, 2009

    7,833     169     (2,371 )   5,631  

Allowance for doubtful accounts at September 30, 2010

    5,631     605         6,236  

Inventories

        The Company's inventory is comprised solely of finished goods. Inventories are stated at the lower of weighted-average cost or market. In-bound freight-related costs are included as part of the cost of inventory held for resale. The Company records provisions, as appropriate, to write-down excess and obsolete inventory to estimated net realizable value. The process for evaluating excess and obsolete inventory often requires the Company to make subjective judgments and estimates concerning future sales levels, quantities and prices at which such inventories will be able to be sold in the normal course of business.

        Incorrect estimates of future sales may cause the actual results to differ from the estimates at the time such inventories are disposed or sold.

        During the years ended September 30, 2009 and 2010, the Company maintained approximately 22% and 20%, respectively, of its inventory in parts that are primarily used in Boeing 787 aircraft. To date, Boeing has experienced a number of delays in completion of this aircraft. As such, there is a risk that the Company will not be able to realize some portion of this investment.

Property and Equipment

        Property and equipment are stated at cost, less accumulated amortization and depreciation, computed using the straight-line method over the estimated useful life of each asset. Leasehold improvements are amortized over the lesser of the remaining lease term or the estimated useful life of

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 2. Summary of Significant Accounting Policies (Continued)


the assets. Expenditures for repair and maintenance costs are expensed as incurred, and expenditures for major renewals and improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the accounts and any gain or loss is reflected in the Company's consolidated statements of operations. The useful lives and lease terms for depreciable assets are as follows:

Leasehold improvements   3 - 15 years
Machinery and equipment   5 - 7 years
Furniture and fixtures   7 years
Vehicles   5 years
Computer & Software   3 - 5 years

Impairment of Long Lived Assets

        The Company assesses potential impairments of its long-lived assets in accordance with the provisions of ASC 360, Property, Plant, and Equipment . An impairment review is performed whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Factors considered by the Company include, but are not limited to: significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of use of the acquired assets or the strategy for the overall business; and significant negative industry or economic trends. The Company has determined that its asset group for impairment testing is comprised of the assets and liabilities of each of its reporting units as this is the lowest level of identifiable cash flows. The Company has identified customer relationships as the primary asset because it is the principle asset from which the reporting units derive their cash flow generating capacity and has the longest remaining useful life. The recoverability is assessed by comparing the carrying value of the assets group to the undiscounted cash flows expected to be generated by these assets. Impairment losses are measured as the amount by which the carrying values of the primary assets exceed their fair values. To date, the Company has not recognized an impairment charge related to the write-down of long-lived assets.

Deferred Financing Costs

        Deferred financing costs are amortized using the effective interest method over the term of the related credit arrangement and are included in interest expense in the consolidated statement of operations. Amortization of deferred financing costs was $3,379, $3,703 and $4,814, respectively, for the years ended September 30, 2008, 2009 and 2010. At September 30, 2009 and September 30, 2010, accumulated amortization of deferred financing cost amounted to $10,695 and $15,509, respectively.

Goodwill and Indefinite-Lived Intangible Assets

        Goodwill represents the excess of the purchase price of the acquired businesses over the fair value of the assets acquired and liabilities assumed resulting from the acquisition. In accordance with the provisions of ASC 350, Intangibles—Goodwill and Other , goodwill and indefinitely lived intangible assets acquired in a purchase business combination are not amortized, but instead tested for impairment at least annually or more frequently should an event occur or circumstances indicate that the carrying amount may be impaired. Such events or circumstances may be a significant change in business climate,

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 2. Summary of Significant Accounting Policies (Continued)


economic and industry trends, legal factors, negative operating performance indicators, significant competition, changes in strategy or disposition of a reporting unit or a portion there of. Goodwill impairment testing is performed at the reporting unit level on July 1 of each year.

        Goodwill impairment testing is a two-step test. The first step identifies potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value exceeds its carrying amount, goodwill is not considered impaired and the second step of the test is unnecessary. If the carrying amount of a reporting unit's goodwill exceeds its fair value, the second step measures the impairment loss, if any. The second step compares the implied fair value of goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. If the carrying amount of goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

        Application of the goodwill impairment test requires judgment, including the identification of reporting units assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated using a combination of market earnings multiples and discounted cash flow methodologies. This requires significant judgments including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth of the Company's business, the useful life over which cash flows will occur and determination of the Company's weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment for each reporting unit.

        Intangible assets with indefinite useful lives are not amortized but tested annually on July 1 st for impairment or more often if events or circumstances change that would create a triggering event. The Company has one indefinite-lived intangible asset, its trademark. The valuation of the trademark was derived from an income approach by which the relief from royalty method was applied valuing the savings as cash flow. The relief from royalty method requires assumptions to be made concerning forecasted net sales, a discount rate, and a royalty rate. The underlying concept of the relief from a royalty method is that the value of the trademark can be estimated by determining the cost savings the Company achieves by not having to license the trademark. Changes in projections or estimates, a deterioration of operating results and the related cash flow effect or a significant increase in the discount rate or decrease is the royalty rate could decrease the estimated fair value and result in impairments.

        During the year ended September 30, 2009 and September 30, 2010, the decrease in goodwill was due to foreign currency translation effect of $1,178 and $1,225, respectively.

Lease Receivable

        Lease receivable comprises direct-financing lease and maintenance arrangements for tools leased to various customers. These agreements typically have terms of five years and are generally collateralized by a security interest in the underlying assets. The current portion of lease receivables is approximately $2,047 and $1,631 at September 30, 2009 and 2010, respectively, and recorded in prepaid expenses and other current assets. The non-current portion is approximately $3,076 and $1,187 at

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 2. Summary of Significant Accounting Policies (Continued)


September 30, 2009 and 2010, respectively, and is recorded in other assets in the consolidated balance sheets.

Fair Value of Financial Instruments

        The Company's financial instruments consist of cash and cash equivalents, accounts receivable and payable, accrued and other current liabilities and line of credit. The carrying amounts of these instruments approximate fair value because of their short-term maturities. The fair value of the long-term debt instruments are determined using current applicable rates for similar instruments as of the balance sheet date. The carrying amounts and fair value of the debt instruments as of September 30, 2010 were as follows:

 
  Carrying Value   Fair Value  

$550,000 term loan

  $ 477,243   $ 467,064  

$150,000 term loan

  $ 143,000   $ 139,924  

Comprehensive Income

        ASC 220, Comprehensive Income , establishes guidelines for the reporting and display of comprehensive income and its components in financial statements. Comprehensive income generally represents all changes in stockholders' equity, except those resulting from investments by or distributions to stockholders. The Company's comprehensive income includes foreign currency translation adjustments and is included in the consolidated statements of stockholders' equity and comprehensive income.

Revenue Recognition

        The Company recognizes hardware and service revenue when (i) persuasive evidence of an arrangement exists, (ii) title transfers to the customer, (iii) the sales price charged is fixed or determinable and (iv) collection is reasonably assured.

        In connection with the sales of its products, the Company often provides certain supply chain management programs. These services are provided exclusively in connection with the sales of products, and as such, the price of such services is generally included in the price of the products delivered to the customer. The Company does not account for these services as a separate element, as the services do not have stand-alone value and cannot be separated from the product element of the arrangement. Additionally, the Company does not present service revenues apart from product revenues, as the service fees represent less than 5% of the Company's consolidated net sales. There are no significant post-delivery obligations associated with these services.

        The Company also enters into sales rebates and profit sharing arrangements. Such customer incentives are accounted for as a reduction to gross sales and recorded based upon estimates at the time products are sold. These estimates are based upon historical experience for similar programs and products. The Company reviews such rebates and profit sharing arrangements on an ongoing basis and accruals are adjusted, if necessary, as additional information becomes available.

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 2. Summary of Significant Accounting Policies (Continued)

        Management provides allowances for credit losses and returns based on historic experience and adjusts such allowances as considered necessary. To date, such allowances have been within the range of management's expectations.

        In connection with the Company's JIT supply chain management programs, the Company at times assumes customer inventory on a consignment basis. This consigned inventory remains the property of the customer but is managed and distributed by the Company. The Company earns a fixed fee per unit on each shipment of the consigned inventory; such amounts represent less than 1% of consolidated revenues.

        The Company leases certain equipment under its tool leasing program. Such arrangements represent direct-financing leases under which the Company recognizes revenue over the lease term using consistent rates of return. Since the revenue earned under these leasing arrangements represents less than 1% of the Company's consolidated revenues, the sales earned from such arrangements are included in net sales within the consolidated statements of income and are not presented separately as financing income.

Shipping and Handling Costs

        The Company records revenue for shipping and handling billed to its customers. Shipping and handling revenues were approximately $2,080, $1,418 and $1,031 for the years ended September 30, 2008, 2009 and 2010, respectively.

        Shipping and handling costs are included in cost of sales. Total shipping and handling costs were approximately $3,752, $4,033 and $4,009 for the years ended September 30, 2008, 2009 and 2010, respectively.

Income Taxes

        The Company accounts for income taxes in accordance with ASC 740, Income Taxes . ASC 740 requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established, when necessary, to reduce net deferred tax assets to the amount expected to be realized. The Company's foreign subsidiaries are taxed in local jurisdictions at local statutory rates. The Company intends to reinvest all earnings of foreign subsidiaries.

Concentration of Credit Risk and Significant Vendors

        The Company maintains its cash and cash equivalents in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risk from cash and cash equivalents.

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 2. Summary of Significant Accounting Policies (Continued)

        The Company purchases its products on credit terms from vendors located throughout North America and Europe. For the years ended September 30, 2008, 2009 and 2010, the Company made approximately 12%, 13% and 22%, respectively, of its purchases from Precision Castparts Corporation and the amounts payable to this vendor was approximately 10% and 17% of accounts payable at September 30, 2009 and 2010, respectively. Additionally, for the years ended September 30, 2008, 2009 and 2010, the Company made approximately 18%, 19% and 20% respectively, of its purchases from Alcoa Fastening Systems and the amounts payable to this vendor were approximately 12% and 18% of amounts payable at September 30, 2009 and 2010, respectively. The majority of the products the Company sells are available through multiple channels and, therefore, the Company does not consider that its risk related to any vendor relationship is material.

        For the years ending September 30, 2008, 2009 and 2010, the Company derived approximately 10%, 11% and 15%, respectively, of its recorded sales from The Boeing Company and the accounts receivable balance associated with this customer was approximately 6% and 11% at September 30, 2009 and 2010, respectively.

Foreign Currency Translation

        The financial statements of the foreign subsidiaries are translated into U.S. Dollars in accordance with ASC 830, Foreign Currency Matters . The financial statements of foreign subsidiaries and affiliates where the local currency is the functional currency are translated into U.S. Dollars using exchange rates in effect at the year-end for assets and liabilities and average exchange rates during the year for results of operations. The adjustment resulting from translating the financial statements of such foreign subsidiaries is reflected as a separate component of stockholders' equity. Foreign currency transaction gains and losses are reported as other income (expense), net in the consolidated statements of income. For the years ended September 30, 2008, 2009 and 2010, foreign currency transaction gains and (losses) were approximately $610, $(486) and $(651), respectively.

Stock-Based Compensation

        The Company accounts for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation . ASC 718 requires all stock-based awards to employees and directors to be recognized as stock-based compensation expense based upon their fair values on the date of grant. In March 2005, the Securities Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 107, Share-Based Payment , which provides guidance regarding the interaction of ASC 718 and certain SEC rules and regulations. The Company has applied the provision of SAB No. 107 in its adoption of ASC 718.

        ASC 718 requires companies to estimate the fair value of stock-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense during the requisite service periods. The Company has estimated the fair value for each award as of the date of grant using the Black-Scholes option pricing model. The Black-Scholes model considers, among other factors, the expected life of the award and the expected volatility of the Company's stock price. The Company recognizes the stock-based compensation expense using the graded vesting method over the requisite service periods, which is generally a vesting term of 5 years. Stock options typically have a term of 10 years. The stock options

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 2. Summary of Significant Accounting Policies (Continued)


granted had an exercise price equal to the estimated fair value of the Company's common stock on the grant date.

Net Income Per Share

        Basic net income per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. At September 30, 2008, 2009 and 2010, 412,394, 595,051 and 219,107 shares, respectively, of restricted stock and stock options issued to employees were unvested and, therefore, excluded from the calculation of basic earnings per share for each of the fiscal years ended on those dates. Diluted net income per share includes the dilutive effect of both outstanding stock options and restricted shares, calculated using the treasury stock method. Assumed proceeds from the in-the-money options include the windfall tax benefits, net of shortfalls, calculated under the "as-if" method as prescribed by ASC 718.

 
  September 30,  
 
  2008   2009   2010  
 
  (In thousands, except share and
per share data)

 

Net income

  $ 58,602   $ 58,447   $ 73,674  
               

Basic weighted average shares outstanding

    9,420,433     9,440,596     10,063,237  

Dilutive effect of stock options and restricted stock awards/units

    319,725     524,152     55,411  
               

Diluted weighted average shares outstanding

    9,740,158     9,964,748     10,118,648  
               

Basic net income per share

  $ 6.22   $ 6.19   $ 7.32  
               

Diluted net income per share

  $ 6.02   $ 5.87   $ 7.28  
               

        Shares of common stock equivalents of 18,489, 76,188 and 61,325 for fiscal 2008, 2009 and 2010, respectively, were excluded from the diluted calculation due to their anti-dilutive effect.

Note 3. Recent Accounting Pronouncements

        Changes to accounting principles generally accepted in the United States of America ("U.S. GAAP") are established by the Financial Accounting Standards Board ("FASB") in the form of Accounting Standards Updates ("ASUs") to the FASB's ASC.

        The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company's consolidated financial position and results of operations.

        In October 2009, the FASB issued guidance on revenue arrangements with multiple deliverables effective for the Company's 2012 fiscal year, although early adoption is permitted. The guidance revises the criteria for separating, measuring and allocating arrangement consideration to each deliverable in a multiple element arrangement. The guidance requires companies to allocate revenue using the relative selling price of each deliverable, which must be estimated if the Company does not have a history of

F-14


Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 3. Recent Accounting Pronouncements (Continued)


selling the deliverable on a stand-alone basis or third-party evidence of selling price. The Company does not believe that the adoption of this guidance will significantly change the timing in which revenue is recorded as the pricing of its service components are included in the per unit price of the products delivered to the customer that is solely contingent on the number of units sold. As a result, the revenue earned on the service element does not become fixed or determinable until delivery of the product has taken place.

        In June 2009, the FASB issued guidance to revise the approach to determine when a variable interest entity ("VIE") should be consolidated. The new consolidation model for VIEs considers whether the Company has the power to direct the activities that most significantly impact the VIE's economic performance and shares in the significant risks and rewards of the entity. The guidance on VIEs requires companies to continually reassess VIEs to determine if consolidation is appropriate and provide additional disclosures. The guidance is effective for the Company's 2011 fiscal year. The Company is assessing the potential effect of this guidance will have on its financial statements.

        In January 2010, the FASB issued guidance that revised two disclosure requirements concerning fair value measurements and clarifies two others. It requires separate presentation of significant transfers into and out of Levels 1 and 2 of the fair value hierarchy and disclosure of the reasons for such transfers. It will also require the presentation of purchases, sales, issuances and settlements within Level 3 on a gross basis rather than a net basis. The guidance also clarifies that disclosures should be disaggregated by class of asset or liability and that disclosures about inputs and valuation techniques should be provided for both recurring and non-recurring fair value measurements. These new disclosure requirements will become effective for the Company's financial statements for the period ended September 30, 2011, except for the requirement concerning gross presentation of Level 3 activity, which will become effective for fiscal years beginning after December 15, 2010. Since this guidance is only related to financial statement disclosures, there will be no impact to the Company's financial results as a result of the adoption of this guidance.

Note 4. Related Party Transactions

        The Company entered into a management agreement with The Carlyle Group to provide certain financial, strategic advisory and consultancy services. Under this management agreement, the Company is obligated to pay The Carlyle Group, or a designee thereof, an annual management fee of $1,000 plus fees and expenses associated with company-related meetings. The Company incurred expense of approximately $1,202, $1,008 and $1,070 for the years ended September 30, 2008, 2009 and 2010, respectively, related to this management agreement. These amounts were paid to The Carlyle Group during the years ended September 30, 2008, 2009 and 2010.

        The Company leases several office and warehouse facilities under operating lease agreements from entities controlled by the Company's CEO. Rent expense on these facilities was approximately $1,688, $1,689 and $1,709 for the years ended September 30, 2008, 2009 and 2010, respectively (see Note 14).

        On June 30, 2008, the Company's CEO purchased $50,000 of the total debt outstanding. For the years ended September 30, 2008, 2009 and 2010, total interest paid to the minority stockholder related to the debt was approximately $647, $1,635 and $1,222, respectively.

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 5. Property and Equipment, net

        Property and equipment, net, consist of the following:

 
  2009   2010  

Leasehold improvements

  $ 9,516   $ 9,775  

Machinery and equipment

    9,148     11,403  

Vehicles

    695     713  

Computer and software

    7,528     9,485  

Furniture and fixtures

    2,782     2,453  

Construction in progress

    175      
           

    29,844     33,829  

Less: accumulated depreciation and amortization

    (9,283 )   (13,656 )
           
 

Property and equipment, net

  $ 20,561   $ 20,173  
           

        At September 30, 2009 and 2010, property and equipment included assets of approximately $3,927 and $5,196, respectively, acquired under capital lease arrangements. Accumulated amortization of assets acquired under capital leases was approximately $1,080 and $2,237 as of September 30, 2009 and 2010, respectively.

        Depreciation and amortization expense for property and equipment was approximately $4,455, $4,302 and $4,702 during the years ended September 30, 2008, 2009 and 2010, respectively (including amortization expense of approximately $1,337, $2,158 and $1,157 on assets acquired under capital leases for 2008, 2009 and 2010, respectively).

Note 6. Intangible Assets, net

        As of September 30, 2009 and 2010, the gross amounts and accumulated amortization of intangible assets is as follows:

 
  2009   2010  
 
  Gross
Amount
  Accumulated
Amortization
  Gross
Amount
  Accumulated
Amortization
 

Customer relationships (12 to 20 year life)

  $ 65,962   $ (9,599 ) $ 64,560   $ (12,832 )

Trademarks (5 years to indefinite life)

    39,332     (1,500 )   39,332     (1,500 )

Backlog (2 year life)

    1,150     (719 )   1,150     (1,150 )

Non-compete agreements (4 year life)

    1,000     (312 )   1,000     (562 )
                   
 

Total intangible assets

  $ 107,444   $ (12,130 ) $ 106,042   $ (16,044 )
                   

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 6. Intangible Assets, net (Continued)

        Estimated future amortization expense at September 30, 2010 is as follows:

2011

  $ 3,763  

2012

    3,701  

2013

    3,513  

2014

    3,513  

2015

    3,513  

Thereafter

    35,285  
       

  $ 53,288  
       

        In addition to its amortizing intangibles, the Company assigned an indefinite life to the Wesco Aircraft trademark. As of September 30, 2010, the trademark had a carrying value of $37,832. Amortization expense included in the accompanying statements of operations for the years ended September 30, 2008, 2009 and 2010 was $3,391, $5,763 and $4,119, respectively.

Note 7. Accrued Expenses and Other Current Liabilities

        Accrued expenses and other current liabilities consist of the following:

 
  2009   2010  

Accrued compensation and related expenses

  $ 4,610   $ 8,392  

Accrual for commissions

    933     956  

Accrued professional fees

    626     778  

Fair value of the interest rate swap

    4,102     6,660  

Unearned revenue

    867     633  

Accrued customer rebates

    1,631     2,146  

Accrued taxes (property, sales and use)

    582     954  

Accrued interest

    216     76  

Other accruals

    632     293  
           
 

Accrued expenses and other current liabilities

  $ 14,199   $ 20,888  
           

Note 8. Derivative Financial Instruments

        The Company entered into an interest rate swap arrangement in order to manage its net exposure to interest rate changes on the Company's long-term debt. Interest rate swap contracts involve the exchange of floating rate interest payment obligations for fixed interest rate payments without the exchange of the underlying principal amounts. The Company accounts for this arrangement pursuant to the provisions of ASC 815, Derivatives and Hedging . ASC 815 establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at fair value and that any changes in fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The Company's interest rate swap arrangement is not designated as a hedge pursuant to ASC 815 and, accordingly, the Company reflects the change in fair value of the interest rate swap in the consolidated statements of operations as part of interest expense.

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 8. Derivative Financial Instruments (Continued)

        These arrangements also contain an element of risk in that the counterparties may be unable to meet the terms of such arrangements. In the event the parties required to deliver commitments are unable to fulfill their obligations, the Company could potentially incur significant additional costs by replacing the positions at then current market rates. The Company manages its risk of exposure by limiting counterparties to those banks and institutions deemed appropriate by management. The Company considers its own risk of non-performance to be limited. Upon the maturity of its previous interest rate swaps, the Company entered into two interest rate swaps arrangements, which expire in February and June 2012. Each interest rate swap converts the interest rate on approximately $200,000 (notional amount) of its outstanding debt from variable rates to a fixed interest rate. The swap agreements have fixed the LIBOR component of the term debt to interest rates of 1.77% and 1.96%.

        The following table includes the notional amounts and fair value of derivative financial instruments as of September 30, 2009 and September 30, 2010:

 
  September 30, 2009   September 30, 2010  
 
  Notional
Amount
  Fair Value   Notional
Amount
  Fair Value  

Swap contracts

  $ 400,000   $ (4,102 ) $ 400,000   $ (6,660 )

        During the years ended September 30, 2008, 2009 and 2010, the Company recorded losses in the amount of $0, $4,102 and $2,558, respectively, as a result of changes in fair value of derivative financial instruments. These losses are recorded as a component of interest expense.

Note 9. Fair Value of Financial Instruments

        Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To determine fair value, the Company primarily utilizes reported market transactions and discounted cash flow analyses. On October 1, 2008, the Company adopted the FASB's new fair value model that establishes a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy prioritizes the inputs to valuation techniques into three broad levels whereby the highest priority is given to Level 1 inputs and the lowest to Level 3 inputs. The three broad categories are:

Level 1:   Quoted prices in active markets for identical assets or liabilities.

Level 2:

 

Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.

Level 3:

 

Unobservable inputs for the asset or liability.

        The Company makes use of observable market-based inputs to calculate fair value, in which case the measurements are classified within Level 2. If quoted or observable market prices are not available,

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 9. Fair Value of Financial Instruments (Continued)


fair value is based upon internally developed models that use, where possible, current market-based parameters such as interest rates, yield curves and currency rates. These measurements are classified within Level 3.

        Fair value measurements are classified according to the lowest level input or value-driver that is significant to the valuation. A measurement may therefore be classified within Level 3 even though there may be significant inputs that are readily observable.

        The guidance on fair value measurements expanded the definition of fair value to include the consideration of nonperformance risk. Nonperformance risk refers to the risk that an obligation (either by a counterparty or us) will not be fulfilled. For financial assets traded in an active market (Level 1), the nonperformance risk is included in the market price. For certain other financial assets and liabilities (Level 2 and 3), the Company's fair value calculations have been adjusted accordingly.

        Where available, the Company utilizes quoted market prices or observable inputs rather than unobservable inputs to determine fair value.

        The valuation techniques used and key assumptions made to estimate the fair value of financial instruments measured at fair value are:

Derivative Financial Instruments

        Exchange-traded derivative financial instruments are valued based on quoted market prices and classified within Level 1 of the valuation hierarchy. Derivative financial instruments that are traded on an index are valued based on direct or indirect prices and classified within Level 2 of the valuation hierarchy. If quoted market prices or other observable inputs are not available, fair value is based on unobservable inputs and classified within Level 3 of the fair value hierarchy.

        The following tables set forth assets and liabilities measured at fair value as of September 30, 2009 and 2010, categorized by input level within the fair value hierarchy:

 
  Fair Value Measurements Using  
 
  Quoted Prices
in Active
Markets
  Significant
Other
Observable
Inputs
  Significant
Unobservable
Inputs
 
 
  Level 1   Level 2   Level 3  

September 30, 2009

                   

Financial instruments measured at fair value on a recurring basis

                   
 

Derivative financial instruments

      $ (4,102 )    

 

 
  Level 1   Level 2   Level 3  

September 30, 2010

                   

Financial instruments measured at fair value on a recurring basis

                   
 

Derivative financial instruments

      $ (6,660 )    

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 9. Fair Value of Financial Instruments (Continued)

        The fair value of our derivative financial instruments was estimated using the net present value of a series of cash flows on both the cap and floor components of the interest rate collars. These cash flows were based on yield curves that take into account the contractual terms of the derivatives, including the period to maturity and market-based parameters such as interest rates and volatility. The Company incorporates nonperformance risk by adjusting the present value of each liability position utilizing an estimation of its credit risk.

Note 10. Long-Term Debt

        Long-term debt consists of the following at:

 
  September 30,  
 
  2009   2010  

$550,000 term loan, bearing interest based on Alternate Base Rate ("ABR") (defined as Prime Rate plus the applicable margin rate of 1.25%) or Eurodollar (defined as London Inter-Bank Offer Rate ("LIBOR") rates plus the applicable margin rate of 2.25%), at the option of the Company. The term loan is payable quarterly equal to 0.25% of the principal amount of $550,000 with the final payment due on September 29, 2013. Interest rate was 2.51% at September 30, 2010. 

  $ 537,625   $ 477,243  

$150,000 term loan, bearing interest based on ABR (defined as Prime Rate plus the applicable margin rate of 4.75%) or Eurodollar rate (defined as LIBOR rates plus an applicable margin rate of 5.75%), at the option of the Company. The entire balance is due on March 28, 2014. Interest rate was 6.01% at September 30, 2010. 

   
150,000
   
143,000
 
           

    687,625     620,243  

Less: current portion

    (5,528 )    
           
 

Long-term debt

  $ 682,097   $ 620,243  
           

        Aggregate maturities of long-term debt as of September 30, 2010 are as follows:

Years Ended September 30,

       

2011

  $  

2012

     

2013

    477,243  

2014

    143,000  
       

  $ 620,243  
       

        During year ended September 30, 2010, the Company made prepayments totaling approximately $61,854, exclusive of contractually scheduled payments, on its $550,000 and $150,000 term loans. In accordance with the loan agreement, $61,854 was applied to the Company's regular quarterly payments of $1,382 in 2011, 2012 and 2013, with the excess applied to the Company's balloon payment. As of September 30, 2010, the Company had prepaid all required quarterly payments.

F-20


Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 10. Long-Term Debt (Continued)

        As part of the loan agreement, the Company had a $75,000 revolving line of credit that expires on September 28, 2012. The applicable margin for the revolving facility is determined based on the ratio of the Company's EBITDA, as defined in the loan agreement, for the most recently ended four fiscal quarters and ranges between 0.75% and 1.50% for the ABR Loans and range between 1.75% and 2.50% for the Eurodollar Loans. There was no outstanding borrowing under this line of credit as of September 30, 2010 or at any point during fiscal year 2010. Annual commitment fees for this line of credit approximate $281.

        In October 2008, the administrative and collateral agent under the Company's revolving line of credit, Lehman Commercial Paper Inc. ("LCPI"), filed for bankruptcy. LCPI is a lender under the Company's revolving credit facility with a commitment of approximately $20,000. As a result of LCPI's actions, the Company's availability to access these funds is at risk. The Company does not expect that LCPI's potential inability to fund this commitment would have a material adverse impact on its liquidity.

        The Company's subsidiary, Wesco Aircraft Europe Limited, has available a £10,000 ($15,800 based on the September 30, 2010 exchange rate) line of credit that automatically renews annually on October 1. The line of credit bears interest based on the base rate plus an applicable margin of 1.15%. The net outstanding borrowing under this line of credit was £511 ($813) and zero as of September 30, 2009 and 2010, respectively.

        Under the terms and definitions of the credit agreements, the Company is required to maintain a net debt-to-EBITDA ratio not to exceed 4.5, an EBITDA-to-net interest expense ratio greater than 2.25, and capital expenditures not to exceed $10,000 per year. The credit agreement also restricts the Company from incurring certain additional indebtedness, payment of dividends and sale of substantial assets, and limits certain investments. The Company was in compliance with these covenants at September 30, 2010.

        Borrowings under these credit facilities are collateralized by all of the assets of the Company.

Note 11. Income Taxes

        Income before provision for income taxes for the years ended September 30, 2008, 2009 and 2010 included the following:

 
  2008   2009   2010  

U.S. income

  $ 88,978   $ 81,446   $ 108,846  

Foreign income

    13,875     14,863     8,741  
               
 

Total

  $ 102,853   $ 96,309   $ 117,587  
               

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 11. Income Taxes (Continued)

        The components of the Company's income tax provision for the years ended September 30, 2008, 2009 and 2010 are as follows:

 
  2008   2009   2010  

Current provision

                   

Federal

  $ 27,262   $ 12,228   $ 28,692  

State and local

    5,440     4,808     4,724  

Foreign

    7,700     6,789     3,755  
               
   

Subtotal

    40,402     23,825     37,171  
               

Deferred provision (benefit)

                   

Federal

    3,177     12,313     5,415  

State and local

    670     1,776     1,336  

Foreign

    2     (52 )   (9 )
               
   

Subtotal

    3,849     14,037     6,742  
               
 

Provision for income taxes

  $ 44,251   $ 37,862   $ 43,913  
               

        Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

        The Company's deferred income tax assets consist of the following at September 30, 2009 and 2010:

 
  2009   2010  

Deferred tax assets

             

Inventories

  $ 9,759   $ 17,701  

Reserves and other accruals

    3,876     4,654  

Compensation accruals

    9,923     10,783  
           
 

Total deferred tax assets

    23,558     33,138  

Deferred tax liabilities, net

             

Property and equipment

    (2,704 )   (3,442 )

Goodwill and intangible assets

    (9,637 )   (26,230 )

Stock options

    4,460     5,219  

Deferred financing costs

    276     526  
           
 

Total deferred tax liabilities, net

    (7,605 )   (23,927 )
           
 

Net deferred tax assets

  $ 15,953   $ 9,211  
           

F-22


Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 11. Income Taxes (Continued)

        The following deferred tax balances are included in the consolidated balance sheets as of September 30, 2009 and 2010:

 
  2009   2010  

Current deferred tax assets

  $ 23,558   $ 33,138  

Non-current deferred tax liabilities

    (7,605 )   (23,927 )
           
 

Net deferred tax assets

  $ 15,953   $ 9,211  
           

        The Company believes its net deferred tax assets are more likely than not to be realized based on historical and projected taxable income levels.

        The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and various non-U.S. jurisdictions. The earliest tax year still subject to examination by a significant taxing jurisdiction is September 30, 2006.

        The undistributed earnings of the Company's foreign subsidiaries, which amount to $29,384, are considered to be indefinitely reinvested. Accordingly, no provision for federal or state and local taxes or foreign withholding taxes has been provided on such undistributed earnings.

        The Company adopted the provision of Accounting for Uncertainty in Income Taxes during the year ended September 30, 2008. As a result of adoption, the Company did not identify any material positions that would not meet the more likely than not recognition threshold. As of September 30, 2009 and September 30, 2010, there are no uncertain tax positions.

        A reconciliation of the Company's provision for income taxes from applying the domestic federal statutory tax rate of 35% to actual income tax expense is as follows for the years ended September 30, 2008, 2009 and 2010:

 
  2008   2009   2010  

Provision for income taxes using the domestic federal statutory rate

  $ 36,043     35.00 % $ 33,543     35.00 % $ 41,155     35.00 %

State taxes, net of tax benefit

    3,972     3.90     4,279     4.47     3,989     3.39  

Nondeductible items

    1,218     1.20     1,365     1.42     1,309     1.11  

Other

    3,563     3.50     26     0.03     (704 )   (0.60 )

Foreign income tax not taxed at the Federal rate

    1,455     1.40     1,405     1.47     572     0.45  

Foreign tax credit

    (2,000 )   (1.90 )   (2,756 )   (2.88 )   (2,408 )   (2.05 )
                           

Actual provision for income taxes

  $ 44,251     43.10 % $ 37,862     39.51 % $ 43,913     37.30 %
                           

Note 12. Stockholders' Equity

        The various classes of stock differ primarily with respect to the voting and conversion rights. Only common stock—Class A shares have voting rights. Class B convertible redeemable common stock automatically converts to Class A common stock on a one-for-one basis immediately prior to a merger or consolidation of the Company in which the holders of the Class A common stock cease to hold

F-23


Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 12. Stockholders' Equity (Continued)


more than 50% of the voting securities of the Company outstanding immediately prior to such transaction or upon the sale of substantially all the assets of the Company.

Note 13. Stock-Based and Other Compensation Arrangements

        The Company's Equity Incentive Plan (the "Plan") provides for the issuance of stock options, restricted stock awards, and restricted stock units to certain employees, directors, and consultants to purchase shares of the Company's Class B convertible redeemable common stock. These awards are subject to call rights by the Company upon the occurrence of certain events, including employee separation. Awards that are called by the Company are valued at fair market value, as determined by the Company's Board of Directors. The aggregate number of shares that can be issued under this plan is 1,700,000 shares.

        Additionally, the Company adopted a Stock Purchase Plan that provides an opportunity for key employees, directors and consultants to purchase shares of Class B convertible redeemable common stock. The aggregate number of shares that can be issued under this plan is 150,000 shares. Shares purchased under the plan are purchased at fair value on the date of purchase. As of September 30, 2010, 33,827 shares have been issued.

Stock Options

        The Company's stock options typically vest over 5 years on the basis of continuous employment and financial performance of the Company, as further defined below. Of the total options granted, 25% are time-based options and 75% represent performance-based options. Vested shares are exercisable at any time until the earlier of a change in control or approximately 10 years from the date of the option grant. Certain vesting restrictions may apply in the year of change of control. The stock options granted had an exercise price equal to the estimated fair value of the Company's common stock on the grant date.

Continuous Employment Conditions

        At September 30, 2010, the Company has outstanding 212,158 time-based stock options under the Plan, which will vest on the basis of continuous employment with the Company. Most of the time-based options vest in 20% increments over a period of 5 years. In case of a liquidity event, all the time-vesting options shall become fully vested and exercisable prior to the effective date of the first liquidity event. A liquidity event includes a sale, transfer or disposition of the equity securities of the Company held by all of the principal stockholders such that following such a transaction the total number of equity shares held by all of the principal stockholders is less than 30% of the total number of shares held at the effective date of acquisition of the Company, or a sale, transfer or other disposition of substantially all of the assets of the Company.

Performance Conditions

        At September 30, 2010, the Company had outstanding 628,209 performance-based stock options (the "performance options") under the Plan to employees and directors. Most performance options vest in 20% increments over 5 years and become exercisable on the last day of each fiscal year, or

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 13. Stock-Based and Other Compensation Arrangements (Continued)


within 120 days after, if the following conditions are met: (i) if Bonus EBITDA for the applicable year equals or exceeds the financial results target for the applicable year, then 10% of the performance options shall become vested and exercisable; and (ii) if Bonus Cash Flow for the applicable year equals or exceeds the Bonus Cash Flow target for the applicable year, then the remaining 10% of the performance options shall become vested and exercisable.

        If the Bonus EBITDA for the applicable year is less than the target set for the year but at least 90% of the Bonus EBITDA target through the end of such applicable year, then that portion of the performance options shall become exercisable on the last day of the fiscal year following the missed target year (the "Bonus EBITDA cumulative catch up year") or within 120 days thereafter if: (i) Bonus EBITDA equals or exceeds the Bonus EBITDA target for the cumulative catch up year and (ii) the cumulative Bonus EBITDA equals or exceeds the cumulative Bonus EBITDA target for the cumulative catch up year.

        If the Bonus Cash Flow for the applicable year is less than the Bonus Cash Flow target for the year but at least 90% of the Bonus Cash Flow target through the end of such applicable year, then that portion of the performance options shall become exercisable on the last day of the fiscal year following the Bonus Cash Flow missed year (the "Bonus Cash Flow cumulative catch up year") or within 120 days thereafter if: (i) Bonus Cash Flow equals or exceeds the Bonus Cash Flow target for the Bonus Cash Flow cumulative catch up year and (ii) the cumulative Bonus Cash Flow equals or exceeds the cumulative Cash Flow target for the Bonus Cash Flow cumulative catch up year.

        In case of a liquidity event, the following shall automatically become vested and exercisable in full prior to the effective date of such liquidity event: performance options that have not yet, as of such liquidity event, become eligible for yearly performance-based vesting, if and only if the cumulative Bonus EBITDA and the cumulative Bonus Cash Flow for the fiscal year in which liquidity event occurs equals or exceeds the cumulative Bonus EBITDA target and cumulative Bonus Cash Flow target for the fiscal year in which such liquidity event occurs.

        The Board of Directors of the Company has the sole discretion to accelerate the vesting of any portion of the time or performance-based options, which otherwise does not vest pursuant to the Plan provisions.

        During the year ended September 30, 2009, the Company's Bonus Cash Flows did not meet the performance condition targets necessary to entitle such awards to vest. The Bonus cash flow performance target was not waived by the Board of Directors which precluded the remaining performance based options to vest during fiscal year 2009. These unvested awards are subject to cumulative catch up provisions that will enable such awards to vest if the Company's cash flows during fiscal years 2010 and 2011 meet defined thresholds. The Company has determined that it is probable that this performance condition will be achieved and has not reduced the compensation expense recorded in the current year even though the vesting requirement was not met. During fiscal year 2010 the Company was deemed to have met the cumulative catch up provisions, which allowed such awards to vest.

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 13. Stock-Based and Other Compensation Arrangements (Continued)

        During the year ended September 30, 2010, the Company did not meet the 2010 EBITDA target that was established for performance option vesting; however, the compensation committee determined that the failure to achieve the EBITDA target did not result from a lack of performance but rather from a change in overall market conditions that were beyond the control of the Company. Accordingly, the compensation committee allowed the EBITDA portion of the 2010 performance options to vest, effective as of September 30, 2010. The Company determined that this change constituted a stock option modification; however, since the awards were probable of vesting prior to the modification and did not affect any other terms of the awards other than accelerating vesting, no additional compensation expense was incurred.

        The following table sets forth the summary of options activity under the plan for:

 
  Outstanding Options  
 
  Number of
Shares
  Weighted
Average
Exercise
Price
  Weighted
Average
Remaining
Contractual
Life
(in years)
  Aggregate
Intrinsic
Value(1)
 

September 30, 2008

    904,523   $ 37.52     8.1   $ 7,756,985  
                   

Granted

    65,574   $ 64.96              

Exercised

    (437 )   37.12              

Forfeited options

    (116,386 )   37.20              
                       

September 30, 2009

    853,274   $ 39.77     7.3   $ 3,665,100  
                   

Granted

    7,557   $ 56.64              

Forfeited options

    (20,464 )   43.92              
                       

September 30, 2010

    840,367   $ 39.41     6.3   $ 13,229,671  
                   

(1)
Aggregate intrinsic value is calculated on the difference between our closing stock price at year end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised all their options on the fiscal year end date.

        For the years ended September 30, 2008, 2009 and 2010, the Company recorded $5,795 and $2,404 and $2,310, respectively, of stock-based compensation expense related to these options that is included within selling, general and administrative expenses. At September 30, 2010, the unrecognized stock-based compensation related to these options was approximately $1,182 and is expected to be recognized through September 30, 2014.

Restricted Stock Awards and Units

        During the year ending September 30, 2006, the Company issued, 57,845 Restricted Stock Awards ("RSAs") with a total fair value of $2,147 that were granted to certain key employees. RSAs represent a share of Class B convertible redeemable common stock. At September 30, 2007, these RSAs were fully vested.

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 13. Stock-Based and Other Compensation Arrangements (Continued)

        Concurrent with Carlyle's acquisition of Wesco, 622,704 Restricted Stock Units ("RSUs") with a total fair value of $23,115 were granted to certain employees. RSUs represent the right to receive a share of restricted Class B convertible redeemable common stock. RSUs are subject to a 3-year continuous employment vesting starting September 30, 2006 through September 30, 2009. All 622,704 RSUs vested on September 30, 2009. During the years ended September 30, 2008, 2009 and 2010, the Company recorded $7,705, $7,705 and $0, respectively, of stock-based compensation expense related to the vested portion of these RSUs. As of September 30, 2010, the shares of common stock underlying the RSUs have not been issued to the employees; such shares will be issued on the earlier of September 28, 2012 or the occurrence of a change in control. Accordingly, the underlying 622,704 shares of common stock have not been included in the Consolidated Statements of Stockholders' Equity and Comprehensive Income or Consolidated Balance Sheets as issued and outstanding. Such shares have been included in the basic weighted average shares outstanding as of September 30, 2009 based on their vesting.

        During the years ended September 30, 2008, 2009 and 2010, the Company granted 4,312, 4,312 and 3,532, respectively, of Class B convertible redeemable shares to its directors and recorded stock-based compensation expense of approximately $200, $280 and $200 respectively. The RSAs and RSUs do not contain any redemption provisions that are not within the Company's control. Accordingly, these equity awards have been classified within stockholders' equity.

Stock-Based Compensation

        The Company accounts for stock-based compensation in accordance with ASC 718. The Company currently uses the Black-Scholes option pricing model to determine the fair value of the stock options. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the Company's stock price as well as assumptions regarding complex and subjective variables. These variables include the expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends.

        The Company estimated expected volatility based on historical data of comparable public companies. The expected term, which represents the period of time that options granted are expected to be outstanding, is estimated based on guidelines provided in SAB No. 110 and represents the average of the vesting tranches and contractual terms. The risk-free rate assumed in valuing the options is based on the U.S. Treasury rate in effect at the time of grant for the expected term of the option. The Company does not anticipate paying any cash dividends in the foreseeable future and, therefore, used an expected dividend yield of zero in the option pricing model. Compensation expense is recognized only for those options expected to vest with forfeitures estimated based on the Company's historical experience and future expectations. Stock-based compensation awards are amortized on a graded vesting method over the requisite service periods of the awards, which are generally the vesting periods.

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Table of Contents


Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 13. Stock-Based and Other Compensation Arrangements (Continued)

        The weighted average assumptions used to value the option grants are as follows:

 
  2008   2009   2010  

Expected life (in years)

    6.48     5.83     6.46  

Volatility

    50.81 %   52.65 %   50.17 %

Risk free interest rate

    3.51 %   2.04 %   3.17 %

Dividend yield

             

        The weighted average fair value per option at the grant date for options issued during fiscal 2008, 2009 and 2010 was $22.45, $15.97 and $13.37, respectively.

Note 14. Commitments and Contingencies

Operating Leases

        The Company leases office and warehouse facilities (certain of which are from related parties), and warehouse equipment under various non-cancelable operating leases that expire at various dates through December 31, 2020. Certain leases contain escalation clauses based on the Consumer Price Index. The Company is also committed under the terms of certain of these operating lease agreements to pay property taxes, insurance, utilities and maintenance costs.

        Future minimum rental payments as of September 30, 2010 are as follows:

 
  Third
Party
  Related
Party
  Total  

Year Ending September 30,

                   

2011

  $ 1,920   $ 1,709   $ 3,629  

2012

    1,630     1,709     3,339  

2013

    1,266     1,709     2,975  

2014

    664     1,709     2,373  

2015

    313     1,709     2,022  

Thereafter

    14     7,152     7,166  
               

  $ 5,807   $ 15,697   $ 21,504  
               

        Total rent expense for the years ended September 30, 2008, 2009 and 2010 was $3,201, $3,891 and $3,863, respectively.

Capital Lease Commitments

        The Company leases certain equipment under capital lease agreements that require minimum monthly payments that expire at various dates through November 2012.

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 14. Commitments and Contingencies (Continued)

        Future minimum lease payments as of September 30, 2010 are as follows:

2011

  $ 1,577  

2012

    1,401  

2013

    275  

2014

    79  

2015

    20  
       

    3,352  

Less: interest

    (209 )
       
 

Total

  $ 3,143  
       

Purchase Orders

        As of September 30, 2010, the Company has open inventory purchase orders in the amount of $196,371.

Litigation

        The Company is involved in various legal matters that arise in the normal course of its business. Management, after consulting with outside legal counsel, believes that the ultimate outcome of such matters will not have a material adverse effect on the Company's financial position, results of operations or cash flows. There can be no assurance, however, that such actions will not be material or adversely affect the Company's business, financial position, and results of operations or cash flows.

Note 15. Employee Benefit Plan

        The Company maintains a 401(k) defined contribution plan and a retirement saving plan for the benefit of its eligible employees. All full-time employees who have completed at least six months of service and are at least 21 years of age are eligible to participate in the plans. Eligible employees may elect to contribute up to 60% of their eligible compensation. Contributions by the Company were $637, $687 and $725 during the years ending September 30, 2008, 2009 and 2010, respectively.

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 16. Supplemental Cash Flow Information

 
  2008   2009   2010  

Cash payments for:

                   

Interest paid

  $ 43,359   $ 28,371   $ 23,350  
               

Income taxes paid

  $ 43,469   $ 22,028   $ 38,335  
               

Schedule of non-cash investing and financing activities:

                   

Property and equipment acquired pursuant to capital leases

  $ 310   $ 3,624   $ 1,270  
               

Property and equipment disposed of pursuant to termination of capital leases

  $   $ (1,266 ) $  
               

Liabilities assumed in connection with acquisition

  $ 9,513   $   $  
               

Note 17. Quarterly Financial Data (unaudited)

        Summarized unaudited quarterly financial data for quarters ended December 31, 2008 through September 30, 2010 is as follows:

Quarter Ended:
  December 31, 2008   March 31, 2009   June 30, 2009   September 30, 2009  

Net sales

  $ 153,386   $ 157,906   $ 150,715   $ 150,680  

Gross profit

    62,696     64,955     56,878     53,758  

Income from operations

    35,811     37,928     32,799     27,854  

Net income

    15,237     18,365     13,624     11,221  

Basic net income per share(1)

  $ 1.61   $ 1.95   $ 1.44   $ 1.19  

Diluted net income per share(1)

  $ 1.54   $ 1.85   $ 1.37   $ 1.12  

 

Quarter Ended:
  December 31, 2009   March 31, 2010   June 30, 2010   September 30, 2010  

Net sales

  $ 146,806   $ 164,105   $ 171,116   $ 174,009  

Gross profit

    54,643     63,197     68,240     68,150  

Income from operations

    29,885     38,629     43,272     42,529  

Net income

    14,071     18,114     21,457     20,032  

Basic net income per share(1)

  $ 1.40   $ 1.80   $ 2.13   $ 1.99  

Diluted net income per share(1)

  $ 1.40   $ 1.80   $ 2.13   $ 1.95  

(1)
Net income per share calculations for each quarter are based on the weighted average diluted shares outstanding for that quarter and may not total to the full year amount.

Note 18. Segment Reporting

        The Company is organized based on geographical location. The Company's reportable segments are comprised of North America and the Rest of the World.

        The Company evaluates segment performance based on segment operating earnings or loss. Each segment reports its results of operations and makes requests for capital expenditures and acquisition funding to the Company's chief operating decision-maker ("CODM"). The Company's Chief Executive

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 18. Segment Reporting (Continued)


Officer ("CEO") serves as CODM. Each operating segment has separate management teams and infrastructures dedicated to providing a full range of products and services to their customers.

        The following table presents net sales and other financial information by business segment:

 
  Fiscal Year Ended September 30, 2008  
 
  North
America
  Rest of the
World
  Intercompany
Elimination
  Consolidated  

Net sales

  $ 551,135   $ 112,623   $ (59,415 ) $ 604,343  

Gross profit

    221,898     42,143     (7,433 )   256,608  

Income from operations

    137,091     15,429     (1,670 )   150,850  

Interest expense, net

    (48,118 )   (625 )   (— )   (48,743 )

Provision for income taxes

    39,273     4,978         44,251  

Total assets

    1,106,850     87,963     (21,193 )   1,173,620  

Goodwill

    498,200     7,866         506,066  

Capital expenditures

    5,785     984         6,769  

Depreciation and amortization

    6,284     1,562         7,846  

 

 
  Fiscal Year Ended September 30, 2009  
 
  North
America
  Rest of
the World
  Intercompany
Elimination
  Consolidated  

Net sales

  $ 557,874   $ 102,796   $ (47,983 ) $ 612,687  

Gross profit

    204,296     39,733     (5,742 )   238,287  

Income from operations

    118,289     15,762     341     134,392  

Interest expense, net

    (37,328 )   (379 )   (— )   (37,707 )

Provision for income taxes

    33,179     4,683         37,862  

Total assets

    1,178,558     92,645     (16,391 )   1,254,812  

Goodwill

    498,199     7,867         506,066  

Capital expenditures

    3,701     434         4,135  

Depreciation and amortization

    8,948     1,117         10,065  

 

 
  Fiscal Year Ended September 30, 2010  
 
  North
America
  Rest of
the World
  Intercompany
Elimination
  Consolidated  

Net sales

  $ 603,809   $ 95,342   $ (43,115 ) $ 656,036  

Gross profit

    226,497     34,167     (6,434 )   254,230  

Income from operations

    144,823     10,002     (510 )   154,315  

Interest expense, net

    (35,505 )   (765 )   (— )   (36,270 )

Provision for income taxes

    41,314     2,599         43,913  

Total assets

    1,225,195     97,624     (43,807 )   1,279,012  

Goodwill

    498,199     6,642         504,841  

Capital expenditures

    2,867     210         3,077  

Depreciation and amortization

    7,861     960         8,821  

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 18. Segment Reporting (Continued)

Geographic Information

        The Company operated principally in three geographic areas, North America, Europe and emerging markets, such as Asia, Pacific Rim and the Middle East.

        Net sales by geographic area, for the fiscal years ended September 30, 2008, 2009 and 2010 were as follows:

 
  Fiscal Year Ended September 30,  
 
  2008   2009   2010  
 
  Sales   % of
Sales
  Sales   % of
Sales
  Sales   % of
Sales
 

North America

  $ 499,873     82.7 % $ 519,840     84.8 % $ 569,099     86.7 %

Europe

    103,435     17.1     92,211     15.1     86,376     13.2  

Asia, Pacific Rim, Middle East and other

    1,035     0.2     636     0.1     561     0.1  
                           

  $ 604,343     100.0 % $ 612,687     100.0 % $ 656,036     100.0 %
                           

        The Company determines the geographic area based on where the sale was originated from. Export sales from North America to customers in foreign countries amounted to $93, $103 and $84 for the years ended September 30, 2008, 2009 and 2010, respectively.

        Long-lived assets by geographic area, for the fiscal years ended September 30, 2008, 2009 and 2010 were as follows:

 
  Fiscal Year Ended September 30,  
 
  2008   2009   2010  

North America

  $ 15,900   $ 18,315   $ 18,338  

Europe

    2,800     2,246     1,835  

Asia, Pacific Rim, Middle East and other

             
               

  $ 18,700   $ 20,561   $ 20,173  
               

Note 19. Subsequent Events (unaudited)

        The Company has performed an evaluation of subsequent events through June 6, 2011, which is the date the financial statements were available to be issued.

        During January 2011, the Company's CEO sold $44,384 of the Company's total outstanding debt. Subsequent to the sale, the Company's CEO has no ownership interest in the Company's debt.

        On April 7, 2011, the Company completed a refinancing of its existing debt facilities for the purpose of extending the maturity dates under the term loans, increasing its borrowing capacity under the revolver and paying related fees and expenses. The Company did not increase their outstanding indebtedness as a result of the refinancing. The new senior secured credit facilities consist of a (i) $150,000 revolving credit facility, (ii) $265,000 term loan A facility and (iii) $350,000 in term loan B facility.

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

Note 19. Subsequent Events (unaudited) (Continued)

        Borrowings under the new revolving facility and new term loan A bear interest at the Eurocurrency rate plus the applicable margin or the ABR plus the applicable margin. Borrowings under the new term loan B facility bear interest at a rate equal to (A) the greater of (x) the Eurocurrency rate and (y) 1.25% or (B) the greater of (x) the ABR and (y) 1.25% plus, in each case, the applicable margin.

        The new revolving facility and new term loan A facility each mature on April 7, 2016 and the new term loan B facility matures on April 7, 2017. The new senior secured credit facilities require maintenance of a net debt-to-EBITDA ratio and an EBITDA-to-net cash interest expense ratio.

        As a result of the refinancing, the Company will be recording a loss on extinguishment of debt in the amount of $7,129, consisting of write-offs of unamortized debt issuance costs and third party fees of $6,542 and $587, respectively. The loss on extinguishment will be recorded as a component of interest expense, net in the consolidated statement of income during the nine months ended June 30, 2011. Additionally, $1,864 of unamortized debt issuance costs will remain capitalized and new creditor fees associated with the April 7, 2011 refinancing in the amount of $12,546 will be capitalized. These fees will be amortized over the term of the debt using the effective interest rate method.

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)

 
  September 30,
2010
  March 31,
2011
 

Assets

             

Current assets

             
 

Cash and cash equivalents

  $ 39,463   $ 45,670  
 

Accounts receivable, net of allowance for doubtful accounts of $6,236 at September 30, 2010 and $3,977 at March 31, 2011

    89,427     104,626  
 

Inventories

    483,442     485,935  
 

Prepaid expenses and other current assets

    6,581     9,521  
 

Deferred income taxes

    33,138     30,810  
           
   

Total current assets

    652,051     676,562  

Property and equipment, net

   
20,173
   
21,723
 

Deferred financing costs, net

    10,329     8,404  

Goodwill

    504,841     504,935  

Intangible assets, net

    89,998     88,235  

Other assets

    1,620     427  
           
   

Total assets

  $ 1,279,012   $ 1,300,286  
           

Liabilities and Stockholders' Equity

             

Current liabilities

             
 

Accounts payable

  $ 59,183   $ 54,734  
 

Accrued expenses and other current liabilities

    20,888     17,532  
 

Income taxes payable

    5,500     1,539  
 

Capital lease obligations—current portion

    1,354     2,078  
           
   

Total current liabilities

    86,925     75,883  

Long-term debt

   
620,243
   
606,243
 

Capital lease obligations

    1,789     1,725  

Deferred income taxes

    23,927     25,845  

Other liabilities

    389      
           
   

Total liabilities

    733,273     709,696  

Commitments and contingencies

             

Stockholders' equity

             
 

Preferred stock, $0.001 par value per share: 1,000,000 shares authorized; no shares issued and outstanding

         
 

Common stock, class A, $0.001 par value per share: 19,000,000 shares authorized; 9,319,450 shares issued and outstanding as of September 30, 2010 and March 31, 2011

    9     9  
 

Class B convertible redeemable common stock, $0.001 par value per share: 2,000,000 shares authorized; 121,083 and 126,039 shares issued and outstanding as of September 30, 2010 and March 31, 2011, respectively

    1     1  
 

Additional paid-in captial

    329,256     330,166  
 

Accumulated other comprehensive loss

    (7,288 )   (6,955 )
 

Retained earnings

    223,761     267,369  
           
   

Total stockholders' equity

    545,739     590,590  
           
   

Total liabilities and stockholders' equity

  $ 1,279,012   $ 1,300,286  
           

See the accompanying notes to the consolidated financial statements.

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Consolidated Statements of Income

(In thousands, except share and per share data)

(Unaudited)

 
  Six Months Ended  
 
  March 31,
2010
  March 31,
2011
 

Net sales

  $ 310,911   $ 349,543  

Cost of sales

    193,072     215,418  
           
   

Gross profit

    117,839     134,125  

Selling, general and administrative expenses

    49,325     49,881  
           
   

Income from operations

    68,514     84,244  

Interest expense, net

    (18,214 )   (12,586 )

Other income (expense), net

    1,056     (177 )
           
   

Income before provision for income taxes

    51,356     71,481  

Provision for income taxes

    19,171     27,873  
           
     

Net income

  $ 32,185   $ 43,608  
           

Net income per share:

             
 

Basic

  $ 3.20   $ 4.33  
           
 

Diluted

  $ 3.20   $ 4.24  
           

Weighted average shares outstanding:

             
 

Basic

    10,063,237     10,065,678  
 

Diluted

    10,063,473     10,292,912  

See the accompanying notes to the consolidated financial statements.

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 
  Six Months Ended  
 
  March 31,
2010
  March 31,
2011
 

Cash flows from operating activities

             

Net income

  $ 32,185   $ 43,608  

Adjustments to reconcile net income to net cash provided by operating activities

             
 

Amortization of intangible assets

    2,136     1,848  
 

Depreciation

    2,325     2,781  
 

Amortization of deferred financing costs

    1,852     1,925  
 

Bad debt and sales returns reserve

    562     (40 )
 

Non-cash foreign currency exchange

    (634 )   14  
 

Non-cash stock-based compensation

    1,281     910  
 

Change in fair value of derivative

    1,738     (2,887 )
 

Deferred income tax provision

    2,930     4,249  
 

Changes in assets and liabilities

             
   

Accounts receivable

    30     (14,803 )
   

Income taxes receivable

    (14 )   (1,671 )
   

Inventories

    350     (2,597 )
   

Prepaid expenses and other current assets

    2,355     (166 )
   

Accounts payable

    (18,917 )   (4,728 )
   

Accrued expenses and other liabilities

    1,033     (924 )
   

Income taxes payable

    1,905     (3,862 )
           
     

Net cash provided by operating activities

    31,117     23,657  
           

Cash flows from investing activities

             

Purchases of property and equipment

    (1,325 )   (2,761 )
           
     

Net cash used in investing activities

    (1,325 )   (2,761 )
           

Cash flows from financing activities

             

Net repayments under line of credit

    (816 )    

Repayments of long-term debt

    (15,382 )   (14,000 )

Repayment of capital lease obligations

    (273 )   (875 )
           
     

Net cash used in financing activities

    (16,471 )   (14,875 )
           

Effect of foreign currency exchange rates on cash and cash equivalents

    (671 )   186  
           
     

Net increase in cash and cash equivalents

    12,650     6,207  

Cash and cash equivalents, beginning of period

    11,406     39,463  
           

Cash and cash equivalents, end of period

  $ 24,056   $ 45,670  
           

See the accompanying notes to the consolidated financial statements.

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data)

(Unaudited)

Note 1. Basis of Presentation and Significant Accounting Policies

        The accompanying consolidated financial statements include the accounts of Wesco Aircraft Holdings, Inc. (referred to herein as the "Company" or in the first person notations "we," "us" and "our") and its wholly owned subsidiaries prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The financial statements presented herein have not been audited by an independent registered public accounting firm, but include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for fair statement of the financial condition, results of operations and cash flows for the period. However, these results are not necessarily indicative of results for any other interim period or for the full fiscal year. The preparation of financial statements in conformity with GAAP requires us to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent liabilities. Actual amounts could differ from these estimates.

        Certain information and footnote disclosures normally included in financial statements in accordance with GAAP have been omitted pursuant to the rules of the Securities and Exchange Commission ("SEC"). The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in this offering.

Note 2. Recent Accounting Pronouncements

        Changes to accounting principles generally accepted in the United States of America ("U.S. GAAP") are established by the Financial Accounting Standards Board ("FASB") in the form of Accounting Standards Updates ("ASUs") to the FASB's Accounting Standards Codification ("ASC").

        The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position and results of operations.

        In October 2009, the FASB issued guidance on revenue arrangements with multiple deliverables effective for the Company's 2012 fiscal year, although early adoption is permitted. The guidance revises the criteria for separating, measuring, and allocating arrangement consideration to each deliverable in a multiple element arrangement. The guidance requires companies to allocate revenue using the relative selling price of each deliverable, which must be estimated if the Company does not have a history of selling the deliverable on a stand-alone basis or third-party evidence of selling price. The Company does not believe that the adoption of this guidance will significantly change the timing in which revenue is recorded as the pricing of its service components are included in the per unit price of the products delivered to the customer, which is solely contingent on the number of units sold. As a result, the revenue earned on the service element does not become fixed or determinable until delivery of the product has taken place.

        In June 2009, the FASB issued guidance to revise the approach to determine when a variable interest entity ("VIE") should be consolidated. The new consolidation model for VIEs considers, whether the Company has the power to direct the activities that most significantly impact the VIEs' economic performance and shares in the significant risks and rewards of the entity. The guidance on

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

(Unaudited)

Note 2. Recent Accounting Pronouncements (Continued)


VIEs requires companies to continually reassess VIEs to determine if consolidation is appropriate and provide additional disclosures. The Company adopted the provisions of this VIE guidance at the beginning of fiscal year 2011, and the adoption did not have a material impact on the Company's financial statements.

        In January 2010, the FASB issued guidance revised two disclosure requirements concerning fair value measurements and clarifies two others. It requires separate presentation of significant transfers into and out of Levels 1 and 2 of the fair value hierarchy and disclosure of the reasons for such transfers. It will also require the presentation of purchases, sales, issuances and settlements within Level 3 on a gross basis rather than a net basis. The guidance also clarifies that disclosures should be disaggregated by class of asset or liability and that disclosures about inputs and valuation techniques should be provided for both recurring and non-recurring fair value measurements. These new disclosure requirements will become effective for the Company's financial statements for the period ended September 30, 2011, except for the requirement concerning gross presentation of Level 3 activity, which will become effective for fiscal years beginning after December 15, 2010. Since the Company doesn't currently have any Level 3 fair value measurements, the adoption of this standard did not have an impact on the consolidated financial statements.

Note 3. Fair Value of Financial Instruments

        The Company's financial instruments consist of cash and cash equivalents, accounts receivable and payable, accrued and other current liabilities, and line of credit. The carrying amounts of these instruments approximate fair value because of their short-term maturities. The fair value of the long-term debt instruments are determined using current applicable rates for similar instruments as of the balance sheet date. The carrying amounts and fair value of the debt instruments as of March 31, 2011 were as follows:

 
  Carrying Value   Fair Value  

$550,000 term loan

  $ 477,243   $ 477,241  

$150,000 term loan

  $ 129,000   $ 129,000  

Note 4. Derivative Financial Instruments

        The Company enters into an interest rate swap arrangement in order to manage its net exposure to interest rate changes on the Company's long-term debt. Interest rate swap contracts involve the exchange of floating rate interest payment obligations for fixed interest rate payments without the exchange of the underlying principle amounts. The Company accounts for this arrangement pursuant to the provisions of ASC 815, Derivatives and Hedging . ASC 815 establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at fair value and that any changes in fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The Company's interest rate swap arrangement is not designated as a hedge pursuant to ASC 815 and, accordingly, the Company reflects the change in fair value of the interest rate swap in the consolidated statements of operations as part of interest expense.

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

(Unaudited)

Note 4. Derivative Financial Instruments (Continued)

        These arrangements also contain an element of risk in that the counterparties may be unable to meet the terms of such arrangements. In the event the parties to deliver commitments are unable to fulfill their obligations, the Company could potentially incur significant additional costs by replacing the positions at then current market rates. The Company manages its risk of exposure by limiting counterparties to those banks and institutions deemed appropriate by management. Upon the maturity of its previous interest rate swaps, the Company entered into two interest rate swaps arrangements that expire in February and June 2012. Each interest rate swap converts the interest rate on approximately $200,000 (notional amount) of its outstanding debt from variable rates to a fixed interest rate. The swap agreements have fixed the LIBOR component of the term debt to 1.77% and 1.96%.

        Exchange-traded derivative financial instruments are valued based on quoted market prices and classified within Level 1 of the valuation hierarchy. Derivative financial instruments that are traded on an index are valued based on direct or indirect prices and classified within Level 2 of the valuation hierarchy. If quoted market prices or other observable inputs are not available, fair value is based on unobservable inputs, including assumptions of market activity and general market conditions, and classified within Level 3 of the valuation hierarchy.

        The following table includes the notional amounts and fair value of derivative financial instruments as of September 30, 2010 and March 31, 2011:

 
   
  September 30, 2010   March 31, 2011  
 
  Balance Sheet
Location
  Notional
Amount
  Fair
Value
  Notional
Amount
  Fair
Value
 

Swap Contracts

  Accrued Expenses   $ 400,000   $ (6,660 ) $ 400,000   $ (3,773 )

        During the six months ended March 31, 2010, the Company recorded losses in the amount of $1,738 as a result of changes in fair value of derivative financial instruments. During the six months ended March 31, 2011, the Company recorded earnings in the amount of $2,887 as a result of changes in fair value of derivative financial instruments. These changes are recorded as a component of interest expense.

        The Company classifies assets and liabilities in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table sets forth assets and liabilities

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

(Unaudited)

Note 4. Derivative Financial Instruments (Continued)


measured at fair value as of September 30, 2010 and March 31, 2011, categorized by input level within the fair value hierarchy:

 
  Fair Value Measurements Using  
 
  Quoted Prices
in Active
Markets
  Significant
Other
Observable
Inputs
  Significant
Unobservable
Inputs
 
 
  Level 1   Level 2   Level 3  

September 30, 2010

                   

Financial instruments measured at fair value on a recurring basis

                   
 

Derivative financial instruments

      $ (6,660 )    

 

 
  Level 1   Level 2   Level 3  

March 31, 2011

                   

Financial instruments measured at fair value on a recurring basis

                   
 

Derivative financial instruments

      $ (3,773 )    

        The fair value of our derivative financial instruments is estimated using the net present value of a series of cash flows on both the cap and floor components of the interest rate collars. These cash flows are based on yield curves that take into account the contractual terms of the derivatives, including the period to maturity and market-based parameters such as interest rates and volatility. We incorporated nonperformance risk by adjusting the present value of each liability position utilizing an estimation of our credit risk.

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

(Unaudited)

Note 5. Long-Term Debt

        Long-term debt consists of the following at:

 
  September 30,
2010
  March 31,
2011
 

$550,000 term loan, bearing interest based on Alternate Base Rate ("ABR") (defined as Prime Rate plus the applicable margin rate of 1.25%) or Eurodollar (defined as London Inter-Bank Offer Rate ("LIBOR") rates plus the applicable margin rate of 2.25%), at the option of the Company. The term loan is payable quarterly equal to 0.25% of the principal amount of $550,000 with the final payment due on September 29, 2013. Interest rate was 2.50% at March 31, 2011. 

  $ 477,243   $ 477,243  

$150,000 term loan, bearing interest based on ABR (defined as Prime Rate plus the applicable margin rate of 4.75%) or Eurodollar (defined as London Inter-Bank Offer Rate ("LIBOR") rates plus the applicable margin rate of 5.75%), at the option of the Company. The entire balance is due March 28, 2014. Interest rate was 6.00% at March 31, 2011. 

   
143,000
   
129,000
 
           

    620,243     606,243  
 

Less: current portion

         
           
   

Long-term debt

  $ 620,243   $ 606,243  
           

        During the six months ended March 31, 2011, the Company made prepayments totaling approximately $14,000 on its $150,000 term loan. In accordance with the loan agreement, $14,000 was applied to the Company's balloon payment. As of March 31, 2011, the Company has prepaid all required quarterly payments.

        As part of the loan agreement, the Company had a $75,000 revolving line of credit that expires on September 28, 2012. The applicable margin for the revolving facility is determined based on the ratio of the Company's EBITDA, as defined in the loan agreement, for the most recently ended four fiscal quarters and ranges between 0.75% and 1.50% for the ABR Loans and range between 1.75% and 2.50% for the Eurodollar Loans. There was no outstanding borrowing under this line of credit as of March 31, 2011 or at any point during fiscal 2011. Annual commitment fees for this line of credit approximate $281.

        In October 2008, the administrative and collateral agent under the Company's revolving line of credit, Lehman Commercial Paper Inc. ("LCPI"), filed for bankruptcy. LCPI is a lender under the Company's revolving credit facility with a commitment of approximately $20,000. As a result of LCPI's actions, the Company's availability to access these funds is at risk. The Company does not expect that LCPI's potential inability to fund this commitment would have a material adverse impact on its liquidity.

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

(Unaudited)

Note 5. Long-Term Debt (Continued)

        The Company's subsidiary, Wesco Aircraft Europe Limited, has available a £10,000 ($16,000 based on the March 31, 2011 exchange rate) line of credit, subject to certain cash balance requirements as defined in the line of credit agreement, that automatically renews annually on October 1. The line of credit bears interest based on the bank based rate plus an applicable margin of 1.15%. The net outstanding borrowing under this line of credit was £0 ($0) as of September 30, 2010 and March 31, 2011.

        Under the terms and definitions of the First Lien Credit Agreement as of March 31, 2011, the Company is required to maintain a net debt-to-EBITDA ratio not to exceed 4.0, an EBITDA-to-net interest expense ratio greater than 2.50, and capital expenditures not to exceed $10,000 per year. The credit agreement also restricts the Company from incurring certain additional indebtedness, payment of dividends, sale of substantial assets, and limits certain investments. The Company was in compliance with these covenants at March 31, 2011.

        Borrowings under these credit facilities are collateralized by substantially all of the assets of the Company.

Note 6. Comprehensive Income

        Comprehensive income consists of the following:

 
  Six Months Ended
March 31,
 
 
  2010   2011  

Net income

  $ 32,185   $ 43,608  

Foreign exchange translation adjustment

    (4,990 )   333  
           

Total comprehensive income

  $ 27,195   $ 43,941  
           

Note 7. Net Income Per Share

        Basic net income per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income per share includes the dilutive effect of both outstanding stock options and restricted shares, calculated using the treasury stock method. Assumed proceeds from in-the-money options include windfall tax

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

(Unaudited)

Note 7. Net Income Per Share (Continued)


benefits, net of shortfalls, calculated under the "as-if" method as prescribed by ASC 718, Compensation—Stock Option Compensation .

 
  Six Months Ended
March 31, 2010
  Six Months Ended
March 31, 2011
 
 
  (In thousands, except share and
per share data)

 

Net income

  $ 32,185   $ 43,608  
           

Basic weighted average shares outstanding

    10,063,237     10,065,678  

Dilutive effect of stock options and restricted stock awards/units

    236     227,234  
           

Dilutive weighted average shares outstanding

    10,063,473     10,292,912  
           

Basic net income per share

  $ 3.20   $ 4.33  
           

Diluted net income per share

  $ 3.20   $ 4.24  
           

        There were no shares of common stock equivalents for the six months ended March 31, 2010 and March 31, 2011, respectively, which were not included in the diluted calculation due to their anti-dilutive effect.

Note 8. Segment Reporting

        The Company is organized based on the geographical location. The Company's reportable segments are comprised of the North America and Rest of the World.

        The Company evaluates segment performance based on segment operating earnings or loss. Each segment reports its results of operations and makes requests for capital expenditures and acquisition funding to the Company's chief operating decision-maker ("CODM"). The Company's Chief Executive Officer ("CEO") serves as CODM. Each operating segment has separate management teams and infrastructures dedicated to providing a full range of products and services to their customers.

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

(Unaudited)

Note 8. Segment Reporting (Continued)

        The following table presents net sales and operating income by business segment:

 
  Six Months Ended March 31, 2010  
 
  North
America
  Rest of
the World
  Intercompany
Elimination
  Consolidated  

Net sales

  $ 283,285   $ 47,259   $ (19,633 ) $ 310,911  

Gross profit

    103,788     17,265     (3,214 )   117,839  

Income from operations

    63,648     5,133     (267 )   68,514  

Interest expense, net

    (17,788 )   (426 )   (— )   (18,214 )

Provision for income taxes

    17,652     1,519         19,171  

Total assets

    1,216,082     93,852     (43,844 )   1,266,090  

Goodwill

    498,200     6,332         504,532  

Capital expenditures

    1,295     30         1,325  

Depreciation and amortization

    3,945     516         4,461  

 

 
  Six Months Ended March 31, 2011  
 
  North
America
  Rest of
the World
  Intercompany
Elimination
  Consolidated  

Net sales

  $ 318,808   $ 57,527   $ (26,792 ) $ 349,543  

Gross profit

    117,725     19,523     (3,123 )   134,125  

Income from operations

    78,133     5,805     306     84,244  

Interest expense, net

    (12,216 )   (370 )   (— )   (12,586 )

Provision for income taxes

    26,276     1,597         27,873  

Total assets

    1,240,977     107,472     (48,163 )   1,300,286  

Goodwill

    498,200     6,735         504,935  

Capital expenditures

    2,547     214         2,761  

Depreciation and amortization

    4,141     488         4,629  

Geographic Information

        The Company operated principally in three geographic areas, the North America, Europe and emerging markets, such as Asia, Pacific Rim and the Middle East.

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

(Unaudited)

Note 8. Segment Reporting (Continued)

        Net sales by geographic area, for the six months ended March 31, 2010 and March 31, 2011 were as follows:

 
  Six Months Ended March 31,  
 
  2010   2011  
 
  Sales   % of
Sales
  Sales   % of
Sales
 

North America

  $ 267,831     86.1 % $ 296,754     84.9 %

Europe

    42,805     13.8     52,452     15.0  

Asia, Pacific Rim, Middle East and other

    275     0.1     337     0.1  
                   
 

Total net sales

  $ 310,911     100.0 % $ 349,543     100.0 %
                   

        The Company determines the geographic area based on where the sale was originated from. Export sales from North America to customers in foreign countries amounted to $38 and $49 for the six months ended March 31, 2010 and 2011, respectively.

Note 9. Supplemental Cash Flow Information

 
  Six Months Ended  
 
  March 31,
2010
  March 31,
2011
 

Schedule of non-cash investing activities

             

Property and equipment acquired pursuant to capital leases

 
$

1,219
 
$

1,536
 
           

Note 10. Subsequent Events

        The Company has performed an evaluation of subsequent events through June 6, 2011, which is the date the financial statements were available to be issued.

        On April 7, 2011, the Company completed a refinancing of its existing debt facilities for the purpose of extending the maturity dates under the term loans, increasing its borrowing capacity under the revolver and paying related fees and expenses. The new senior secured credit facilities consist of a (i) $150,000 revolving credit facility, (ii) $265,000 term loan A facility and (iii) $350,000 term loan B facility.

        Borrowings under the new revolving facility and new term loan A bear interest at the Eurocurrency rate plus the applicable margin or the ABR plus the applicable margin. Borrowings under the new term loan B facility bear interest at a rate equal to (A) the greater of (x) the Eurocurrency rate and (y) 1.25% or (B) the greater of (x) the ABR and (y) 1.25% plus, in each case, the applicable margin.

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Wesco Aircraft Holdings, Inc. & Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(In thousands, except share and per share data)

(Unaudited)

Note 10. Subsequent Events (Continued)

        The new revolving facility and new term loan A facility each mature on April 7, 2016 and the new term loan B facility matures on April 7, 2017. The new senior secured credit facilities require maintenance of a net debt-to-EBITDA ratio and an EBITDA-to-net cash interest expense ratio.

        As a result of the refinancing, the Company will be recording a loss on extinguishment of debt in the amount of $7,129, consisting of write-offs of unamortized debt issuance costs and third party fees of $6,542 and $587, respectively. The loss on extinguishment will be recorded as a component of interest expense, net in the consolidated statement of income during the nine months ended June 30, 2011. Additionally, $1,864 of unamortized debt issuance costs will remain capitalized and new creditor fees associated with the April 7, 2011 refinancing in the amount of $12,546 will be capitalized. These fees will be amortized over the term of the debt using the effective interest rate method.

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GRAPHIC


Table of Contents

         Through and including                        , 2011 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

                    Shares

LOGO

Wesco Aircraft Holdings, Inc.

Common Stock



PROSPECTUS



Barclays Capital   Morgan Stanley
BofA Merrill Lynch   J.P. Morgan   William Blair & Company

                        , 2011


Table of Contents


PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.    Other Expenses of Issuance and Distribution.

        The actual and estimated expenses in connection with this offering, all of which will be borne by us, are as follows:

SEC Registration Fee

  $ 34,830  

FINRA Filing Fee

    30,500  

Printing Expense

    *  

Legal Fees

    *  

Accounting Fees

    *  

Blue Sky Fees

    *  

New York Stock Exchange Listing Fees

    *  

Transfer Agent Fee

    *  

Miscellaneous

    *  
       

Total

  $    
       

*
To be filed by amendment.

Item 14.    Indemnification of Directors and Officers

        Reference is made to Section 102(b)(7) of the Delaware General Corporation Law, or the DGCL, which enables a corporation in its original certificate of incorporation or an amendment thereto to eliminate or limit the personal liability of a director for violations of the director's fiduciary duty, except (1) for any breach of the director's duty of loyalty to the corporation or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) pursuant to Section 174 of the DGCL, which provides for liability of directors for unlawful payments of dividends of unlawful stock purchase or redemptions or (4) for any transaction from which a director derived an improper personal benefit.

        Reference is also made to Section 145 of the DGCL, which provides that a corporation may indemnify any person, including an officer or director, who was or is, or is threatened to be made, party to any threatened, pending or completed legal action, suit or proceeding, whether civil, criminal, administrative or investigative, other than an action by or in the right of such corporation, by reason of the fact that such person is or was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such officer, director, employee or agent acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the Company's best interest and, for criminal proceedings, had no reasonable cause to believe that his conduct was unlawful. A Delaware corporation may indemnify any officer or director in an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without judicial approval if the officer or director is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses that such officer or director actually and reasonably incurred in connection therewith.

        We expect that our amended and restated certificate of incorporation to be filed as Exhibit 3.1 to this registration statement will provide that our directors will not be personally liable to the Company

II-1


Table of Contents


or its stockholders for monetary damages resulting from breach of their fiduciary duties. However, nothing contained in such provision will eliminate or limit the liability of directors (1) for any breach of the director's duty of loyalty to us or our stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (3) under Section 174 of the DGCL or (4) for any transaction from which the director derived an improper personal benefit.

        Our amended and restated bylaws provides for indemnification of the officers and directors to the full extent permitted by applicable law.

        In addition, we intend to enter into agreements to indemnify our directors and executive officers containing provisions, which are in some respects broader than the specific indemnification provisions contained in the DGCL. The indemnification agreements may require us, among other things, to indemnify our directors against certain liabilities that may arise by reason of their status or service as directors and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified.

        The proposed form of Underwriting Agreement filed as Exhibit 1.1 to this Registration Statement provides for indemnification by the underwriters of the registrant and its officers and directors for certain liabilities arising under the Securities Act, or otherwise.

Item 15.    Recent Sales of Unregistered Securities.

        Since March 31, 2008, we have granted to our directors, officers and employees options to purchase an aggregate of 171,547 shares of our common stock with per share exercise prices ranging from $46.40 to $70.00 under our amended and restated equity incentive plan, which we refer to as the existing equity incentive plan.

        Since March 31, 2008, we have issued to our directors, officers and employees an aggregate of 17,948 shares of our common stock at an exercise price of $37.12 pursuant to exercises of options granted under our existing equity incentive plan.

        Since March 31, 2008, we have issued to certain of our officers an aggregate of 5,387 shares of our common stock for aggregate consideration of $249,956.80 pursuant to our stock purchase plan.

        Since March 31, 2008, we have issued to certain of our directors an aggregate of 15,012 restricted stock awards in lieu of payment of an aggregate of $927,344.30 in fees for their service as directors pursuant to our existing equity incentive plan.

        Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act or Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b) of the Securities Acts as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of securities in each of these transactions represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates and instruments issued in such transactions.

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Table of Contents

Item 16.    Exhibits and Financial Statement Schedules.

    (a)
    Exhibits

EXHIBIT
NO.
  DESCRIPTION OF EXHIBIT
  1.1   Form of Underwriting Agreement.

 

3.1

 

Form of Amended and Restated Certificate of Incorporation of Wesco Aircraft Holdings, Inc.

 

3.2

 

Form of Amended and Restated Bylaws of Wesco Aircraft Holdings, Inc.

 

4.1

 

Form of Stock Certificate.

 

5.1

**

Opinion of Latham & Watkins LLP.

 

10.1

 

Credit Agreement, by and among Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.), Wesco Aircraft Hardware Corp., Barclays Bank PLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc., Sumitomo Mitsui Banking Corporation, Royal Bank of Canada, Bank of America, N.A. and the lenders party thereto, dated as of April 7, 2011.

 

10.2

**

Guarantee and Collateral Agreement, by and among Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.), Wesco Aircraft Hardware Corp., Barclays Bank PLC and the subsidiary guarantors party thereto, dated as of April 7, 2011.

 

10.3

**

Amended and Restated Equity Incentive Plan of Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.)

 

10.4

**

Management Annual Incentive Plan of Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.)

 

10.5

**

Employment Agreement between Wesco Aircraft Hardware Corp. and Randy Snyder, dated as of July 23, 2006.

 

10.6

**

Amendment to the Employment Agreement between Wesco Aircraft Hardware Corp. and Randy Snyder, dated as of December 31, 2008.

 

10.7

**

Employment Agreement between Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.) and Gregory Hann, dated as of January 22, 2009.

 

10.8

**

Employment Agreement between Wesco Aircraft Hardware Corp. and Hal Weinstein, dated as of June 15, 2007.

 

10.9

**

Amendment to the Employment Agreement between Wesco Aircraft Hardware Corp. and Hal Weinstein, dated as of December 31, 2008.

 

10.10

**

Form of Incentive Stock Option Agreement under Amended and Restated Equity Incentive Plan of Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.)

 

10.11

**

Form of Non-qualified Stock Option Agreement for Independent Directors under Amended and Restated Equity Incentive Plan of Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.)

 

10.12

**

Form of Amended and Restated Restricted Stock Unit Agreement under Amended and Restated Equity Incentive Plan of Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.)

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Table of Contents

EXHIBIT
NO.
  DESCRIPTION OF EXHIBIT
  10.13 ** Form of Restricted Stock Agreement for Independent Directors under Amended and Restated Equity Incentive Plan of Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.)

 

10.14

 

Form of Amended and Restated Management Agreement between Wesco Aircraft Holdings, Inc. and Carlyle Investment Management, L.L.C.

 

10.15

**

Lease Agreement between Wesco Aircraft France, SAS and WAFR, LLC, dated as of August 1, 2005.

 

10.16

**

Lease Agreement between Wesco Aircraft Hardware Corp. and Avenue Scott, LLC, dated as of October 1, 2004.

 

10.17

**

Lease Agreement between Wesco Aircraft Hardware Corp. and WATX Properties, LLC, dated as of January 1, 2004.

 

10.18

**

Lease Agreement between Wesco Aircraft Europe Ltd. and Snyder Family Living Trust, dated as of January 1, 2006.

 

10.19

**

Engagement Agreement by and between Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.) and Solebury Capital LLC, dated as of January 20, 2011.

 

10.20

 

Amended and Restated Stockholders Agreement.

 

10.21

**

Service Agreement between Wesco Aircraft Europe, Ltd and Alexander Murray, dated as of March 24, 2011.

 

10.22

*

Wesco Aircraft Holdings, Inc. Incentive Plan.

 

10.23

*

Wesco Aircraft Holdings, Inc. 2011 Equity Incentive Award Plan.

 

10.24

*

Form of 2011 Equity Incentive Award Plan Restricted Stock Agreement.

 

10.25

*

Form of 2011 Equity Incentive Award Plan Restricted Stock Unit Agreement.

 

10.26

*

Form of 2011 Equity Incentive Award Plan Stock Option Agreement.

 

10.27

 

Form of Wesco Aircraft Holdings, Inc. Indemnification Agreement.

 

21.1

**

List of Subsidiaries.

 

23.1

**

Consent of Latham & Watkins LLP (included in Exhibit 5.1).

 

23.2

 

Consent of Independent Registered Public Accounting Firm.

 

23.3

**

Consent of Stax Inc.

 

24.1

**

Powers of Attorney (included in the signature pages).

*
To be filed by amendment.

**
Previously filed.
    (b)
    Financial Statement Schedules

        Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements or notes thereto.

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Item 17.    Undertakings

        The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer, or controlling person of us in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, we will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

        We hereby undertake that:

    (i)
    for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

    (ii)
    for purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Amendment No. 2 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Valencia, state of California, on June 6, 2011.

    WESCO AIRCRAFT HOLDINGS, INC.

 

 

By:

 

/s/ RANDY J. SNYDER

Randy J. Snyder
Chairman of the Board of Directors, President
and Chief Executive Officer

        Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 2 to the Registration Statement has been signed by the following persons in the capacities and as of the dates indicated.

SIGNATURE
 
TITLE
 
DATE

 

 

 

 

 
/s/ RANDY J. SNYDER

  Randy J. Snyder
Chairman of the Board of Directors,
President and Chief Executive Officer
  June 6, 2011

/s/ GREGORY A. HANN


 

Gregory A. Hann
Executive Vice President and Chief
Financial Officer

 

June 6, 2011

*


 

J. Shawn Trogdon
Global Controller

 

June 6, 2011

*


 

Dayne A. Baird
Director

 

June 6, 2011

*


 

Peter J. Clare
Director

 

June 6, 2011

*


 

Paul E. Fulchino
Director

 

June 6, 2011

*


 

John Jumper
Director

 

June 6, 2011

II-6


Table of Contents

SIGNATURE
 
TITLE
 
DATE

 

 

 

 

 
*

  Adam J. Palmer
Director
  June 6, 2011

*


 

Robert D. Paulson
Director

 

June 6, 2011

*


 

David L. Squier
Director

 

June 6, 2011


* By:

 

/s/ RANDY J. SNYDER

Randy J. Snyder
Attorney-in-Fact

 

 

II-7


Table of Contents


EXHIBIT INDEX

EXHIBIT
NO.
  DESCRIPTION OF EXHIBIT
  1.1   Form of Underwriting Agreement.

 

3.1

 

Form of Amended and Restated Certificate of Incorporation of Wesco Aircraft Holdings, Inc.

 

3.2

 

Form of Amended and Restated Bylaws of Wesco Aircraft Holdings, Inc.

 

4.1

 

Form of Stock Certificate.

 

5.1

**

Opinion of Latham & Watkins LLP.

 

10.1

 

Credit Agreement, by and among Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.), Wesco Aircraft Hardware Corp., Barclays Bank PLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc., Sumitomo Mitsui Banking Corporation, Royal Bank of Canada, Bank of America, N.A. and the lenders party thereto, dated as of April 7, 2011.

 

10.2

**

Guarantee and Collateral Agreement, by and among Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.), Wesco Aircraft Hardware Corp., Barclays Bank PLC and the subsidiary guarantors party thereto, dated as of April 7, 2011.

 

10.3

**

Amended and Restated Equity Incentive Plan of Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.)

 

10.4

**

Management Annual Incentive Plan of Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.)

 

10.5

**

Employment Agreement between Wesco Aircraft Hardware Corp. and Randy Snyder, dated as of July 23, 2006.

 

10.6

**

Amendment to the Employment Agreement between Wesco Aircraft Hardware Corp. and Randy Snyder, dated as of December 31, 2008.

 

10.7

**

Employment Agreement between Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.) and Gregory Hann, dated as of January 22, 2009.

 

10.8

**

Employment Agreement between Wesco Aircraft Hardware Corp. and Hal Weinstein, dated as of June 15, 2007.

 

10.9

**

Amendment to the Employment Agreement between Wesco Aircraft Hardware Corp. and Hal Weinstein, dated as of December 31, 2008.

 

10.10

**

Form of Incentive Stock Option Agreement under Amended and Restated Equity Incentive Plan of Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.)

 

10.11

**

Form of Non-qualified Stock Option Agreement for Independent Directors under Amended and Restated Equity Incentive Plan of Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.)

 

10.12

**

Form of Amended and Restated Restricted Stock Unit Agreement under Amended and Restated Equity Incentive Plan of Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.)

 

10.13

**

Form of Restricted Stock Agreement for Independent Directors under Amended and Restated Equity Incentive Plan of Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.)

 

10.14

 

Form of Amended and Restated Management Agreement between Wesco Aircraft Holdings, Inc. and Carlyle Investment Management, L.L.C.

Table of Contents

EXHIBIT
NO.
  DESCRIPTION OF EXHIBIT
  10.15 ** Lease Agreement between Wesco Aircraft France, SAS and WAFR, LLC, dated as of August 1, 2005.

 

10.16

**

Lease Agreement between Wesco Aircraft Hardware Corp. and Avenue Scott, LLC, dated as of October 1, 2004.

 

10.17

**

Lease Agreement between Wesco Aircraft Hardware Corp. and WATX Properties, LLC, dated as of January 1, 2004.

 

10.18

**

Lease Agreement between Wesco Aircraft Europe Ltd. and Snyder Family Living Trust, dated as of January 1, 2006.

 

10.19

**

Engagement Agreement by and between Wesco Aircraft Holdings, Inc. (formerly Wesco Holdings, Inc.) and Solebury Capital LLC, dated as of January 20, 2011.

 

10.20

 

Amended and Restated Stockholders Agreement.

 

10.21

**

Service Agreement between Wesco Aircraft Europe, Ltd and Alexander Murray, dated as of March 24, 2011.

 

10.22

*

Wesco Aircraft Holdings, Inc. Incentive Plan.

 

10.23

*

Wesco Aircraft Holdings, Inc. 2011 Equity Incentive Award Plan.

 

10.24

*

Form of 2011 Equity Incentive Award Plan Restricted Stock Agreement.

 

10.25

*

Form of 2011 Equity Incentive Award Plan Restricted Stock Unit Agreement.

 

10.26

*

Form of 2011 Equity Incentive Award Plan Stock Option Agreement.

 

10.27

 

Form of Wesco Aircraft Holdings, Inc. Indemnification Agreement.

 

21.1

**

List of Subsidiaries.

 

23.1

**

Consent of Latham & Watkins LLP (included in Exhibit 5.1).

 

23.2

 

Consent of Independent Registered Public Accounting Firm.

 

23.3

**

Consent of Stax Inc.

 

24.1

**

Powers of Attorney (included in the signature pages).

*
To be filed by amendment.

**
Previously filed.



Exhibit 1.1

 

[ · ] Shares

 

WESCO AIRCRAFT HOLDINGS, INC.

 

COMMON STOCK, PAR VALUE $0.001 PER SHARE

 

FORM OF UNDERWRITING AGREEMENT

 

[ · ], 2011

 



 

[ · ], 2011

 

Barclays Capital Inc.

Morgan Stanley & Co. LLC

 

c/o

Barclays Capital Inc.

 

745 Seventh Avenue

 

New York, New York 10019

 

 

c/o

Morgan Stanley & Co. LLC

 

1585 Broadway

 

New York, New York 10036

 

Ladies and Gentlemen:

 

Falcon Aerospace Holdings, LLC (the “ Carlyle Selling Stockholder ”), Randy J. Snyder and certain stockholders affiliated with Mr. Snyder named in Schedule I hereto (collectively, the “ Snyder Selling Stockholders ”) and certain other stockholders of Wesco Aircraft Holdings, Inc., a Delaware corporation (the “ Company ”), named in Schedule I hereto (the “ Other Selling Stockholders ,” and together with the Carlyle Selling Stockholders and the Snyder Selling Stockholders, the “ Selling Stockholders ”) hereby severally agree to sell to the several underwriters named in Schedule II hereto (the “ Underwriters ”), an aggregate of [ · ] shares of the common stock, par value $0.001 per share, of the Company (the “ Firm Shares ”), with each Selling Stockholder selling the amount set forth opposite its name in Schedule I hereto.

 

The Selling Stockholders also agree to sell to the several Underwriters not more than an additional [ · ] shares of the Company’s common stock, par value $0.001 per share (the “ Additional Shares ”) if and to the extent that you, as managers of the offering, shall have determined to exercise, on behalf of the Underwriters, the right to purchase such shares of common stock granted to the Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares are hereinafter collectively referred to as the “ Shares .” The shares of common stock, par value $0.001 per share, of the Company are hereinafter referred to as the “ Common Stock .”  The Company has filed with the Securities and Exchange Commission (the “ Commission ”) a registration statement on Form S-1 (File No. 333-173381), including a prospectus, relating to the Shares. The registration statement as amended at the time it becomes effective, including the information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended (the “ Securities Act ”), is hereinafter referred to as the “ Registration Statement ”; the final prospectus in the form first filed with the Commission pursuant to Rule 424(b) under the Securities Act is hereinafter referred to as the “ Prospectus .” If the Company has filed an abbreviated registration statement to register additional

 



 

shares of Common Stock pursuant to Rule 462(b) under the Securities Act (the “ Rule 462 Registration Statement ”), then any reference herein to the term “ Registration Statement ” shall be deemed to include such Rule 462 Registration Statement.

 

For purposes of this Agreement, “ free writing prospectus ” has the meaning set forth in Rule 405 under the Securities Act; “ preliminary prospectus ” means each preliminary prospectus included in the Registration Statement prior to the time it becomes effective or filed with the Commission pursuant to Rule 424(b) under the Securities Act; “ broadly available road show ” means a “bona fide electronic road show” as defined in Rule 433(h)(5) under the Securities Act that has been made available without restriction to any person; “ Time of Sale Prospectus ” means the preliminary prospectus included in the Registration Statement immediately prior to the Time of Sale (as defined below) together with the pricing information and free writing prospectuses, if any, in each case identified in Schedule III hereto; and “ Time of Sale ” means [ · ] [a.m.][p.m.] (New York time) on the date of this Agreement or, if the Time of Sale Prospectus is amended or supplemented by the Company subsequent to the Time of Sale and prior to the Closing Date (as defined in Section 5), such time and date the Underwriters first re-confirm the sale of the Shares.

 

1.                Representations and Warranties of the Company. The Company represents and warrants to and agrees with each of the Underwriters that:

 

(a)           The Registration Statement has been declared effective by the Commission; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before, or to the Company’s knowledge, threatened by the Commission.

 

(b)          (i) The Registration Statement, when it became effective, did not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Registration Statement complies and the Prospectus and the Registration Statement, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder, (iii) the Time of Sale Prospectus as of the Time of Sale did not and, at the Closing Date (as defined in Section 5), the Time of Sale Prospectus, as then amended or supplemented by the Company, if applicable, will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (iv) each broadly available road show, if any, when considered together with the Time of Sale Prospectus, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the

 

A-2



 

statements therein, in the light of the circumstances under which they were made, not misleading and (v) the Prospectus as of its date and as of the Closing Date, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements in or omissions from the Registration Statement, the Time of Sale Prospectus or the Prospectus based upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives specifically for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 11(c) hereof.

 

(c)           The Company is not an “ineligible issuer” as defined in Rule 405 under the Securities Act in connection with the offering of the Shares as contemplated by the Registration Statement pursuant to Rules 164 and 433 under the Securities Act. Any free writing prospectus that the Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with the Commission in accordance with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Each free writing prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that was prepared by or on behalf of or used or referred to by the Company complies or will comply in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Except for the free writing prospectuses, if any, identified in Schedule III hereto, and electronic road shows, if any, each furnished to you before first use, the Company has not prepared, used or referred to, and will not, without your prior consent, prepare, use or refer to, any free writing prospectus.

 

(d)          The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its organization, has the corporate power and authority to own its property and to conduct its business as described in the Time of Sale Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the condition (financial or otherwise), business, properties or results of operations of the Company and its subsidiaries taken as a whole (a “ Material Adverse Effect ”) or a material adverse effect on the ability of the Company and its subsidiaries, taken as a whole,

 

A-3



 

to perform its obligations under this Agreement or to consummate the transactions contemplated by the Time of Sale Prospectus.

 

(e)           Each subsidiary of the Company has been duly incorporated, is validly existing in good standing under the laws of the jurisdiction of its organization, has the corporate power and authority to own its property and to conduct its business as described in the Time of Sale Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect or a material adverse effect on the ability of the Company and its subsidiaries, taken as a whole, to perform its obligations under this Agreement or to consummate the transactions contemplated by the Time of Sale Prospectus; all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly by the Company or a wholly owned subsidiary of the Company, free and clear of all liens, encumbrances, equities or claims, except as disclosed in the Time of Sale Prospectus.

 

(f)             This Agreement has been duly authorized, executed and delivered by the Company.

 

(g)          The authorized capital stock of the Company conforms as to legal matters to the description thereof contained in each of the Time of Sale Prospectus and the Prospectus.

 

(h)          The shares of issued and outstanding capital stock, including the Shares to be purchased by the Underwriters from the Selling Stockholders, have been duly authorized and are validly issued, fully paid and non-assessable, and the issuance of such Shares was not be subject to any preemptive or similar rights.

 

(i)              The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement will not violate or breach: (i) any provision of applicable law; (ii) the certificate of incorporation or by-laws of the Company, as amended and restated as of the date hereof; (iii) any agreement or other instrument binding upon the Company or any of its subsidiaries; or (iv) any applicable judgment, order or decree of any federal, state, local, international or foreign governmental authority, or any court, administrative or regulatory agency or commission or other governmental authority (each a “ Governmental Entity ”), having jurisdiction over the Company or any of its subsidiaries, except with respect to clauses (i), (iii) and (iv), for any such violation or breach which would not have a Material Adverse Effect. No consent, approval, authorization or order of, or

 

A-4



 

qualification with, any such Governmental Entity is required for the performance by the Company of its obligations under this Agreement, except for (i) such consents, approvals, authorizations, registrations or qualifications as may be required under securities or Blue Sky laws of the various states or foreign countries or the rules and regulations of the Financial Industry Regulatory Authority (“ FINRA ”) in connection with the sale of the Shares by the Selling Stockholders, (ii) such consents, approvals, authorizations, orders, registrations, qualifications, waivers, amendments or termination as will have been obtained or made as of the Time of Sale and (iii) where the failure to obtain or make any such consent, approval, authorization, order, registration or qualification would not have a Material Adverse Effect.

 

(j)              There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Time of Sale Prospectus.

 

(k)           There are no legal or governmental proceedings pending or, to the knowledge of the Company, threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject, other than proceedings disclosed in the Time of Sale Prospectus or proceedings that would not have a Material Adverse Effect and would not have a material adverse effect on the power or ability of the Company and its subsidiaries, taken as a whole, to perform its obligations under this Agreement or to consummate the transactions contemplated by the Time of Sale Prospectus.

 

(l)              Each preliminary prospectus filed as part of the registration statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Securities Act, complied when so filed in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder.

 

(m)        The Company is not, and after giving effect to the offering and sale of the Shares will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

 

(n)          The Company and its subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“ Environmental Laws ”), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in

 

A-5



 

compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a Material Adverse Effect on the Company and its subsidiaries, taken as a whole.

 

(o)          There are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company, or to require the Company to include such securities with the Shares registered pursuant to the Registration Statement, in each case, other than as disclosed in the Time of Sale Prospectus.

 

(p)          Neither the Company, any of its subsidiaries nor any director or executive officer thereof, nor to the knowledge of the Company, any affiliates of the Company or any of its subsidiaries, nor, to the Company’s knowledge, any employee, agent or representative of the Company or of any of its subsidiaries, has made any unlawful offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any “government official” (including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office) to influence official action or secure an improper advantage; and, to the Company’s knowledge after due inquiry, the Company and its subsidiaries and controlled affiliates have conducted their businesses in compliance with applicable anti-corruption laws, including the Foreign Corrupt Practices Act of 1977, as amended, and have instituted and maintain and will continue to maintain policies and procedures designed to promote and achieve compliance with such laws.

 

(q)          The operations of the Company and its subsidiaries are and have been conducted at all times in material compliance with all applicable financial recordkeeping and reporting requirements, including those of the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and, to the Company’s knowledge after due inquiry, the applicable anti-money laundering statutes of jurisdictions where the Company and its subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “ Anti-Money Laundering Laws ”), and no action, suit or proceeding by or before any court or

 

A-6



 

governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

 

(r)             (i) The Company represents that neither the Company nor any of its subsidiaries, nor any director or executive officer thereof, nor, to the Company’s knowledge, any employee, any agent, affiliate or representative of the Company or any of its subsidiaries, is an individual or entity (“ Person ”) that is, or is owned or controlled by a Person that is (A) the subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control (“ OFAC ”), the United Nations Security Council (“UNSC”), the European Union (“EU”), Her Majesty’s Treasury (“HMT”), or other relevant sanctions authority (collectively, “ Sanctions ”) or (B) located, organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, North Korea, Libya, Sudan and Syria) except to the extent permitted by OFAC. (ii) The Company represents and covenants that for the past five years, it and its subsidiaries have not knowingly engaged in, are not now knowingly engaged in, and will not knowingly engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.

 

(s)           Subsequent to the respective dates as of which information is given in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus, (i) the Company and its subsidiaries have not incurred any material liability or obligation, direct or contingent, nor entered into any material transaction; (ii) the Company has not purchased any of its outstanding capital stock, nor declared, paid or otherwise made any dividend or distribution of any kind on its capital stock other than ordinary and customary dividends; and (iii) there has not been any material change in the capital stock, short-term debt or long-term debt of the Company and its subsidiaries, except in each case as described in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus, respectively.

 

(t)             The Company and its subsidiaries do not own any real property and the Company and its subsidiaries have good title to all personal property owned by them, in each case, that is material to the business of the Company and its subsidiaries taken as a whole, in each case free and clear of all liens, encumbrances and defects except such as are described in the Time of Sale Prospectus or such liens, encumbrances and defects that would not have a Material Adverse Effect; and, except as disclosed in the Time of Sale Prospectus, any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as

 

A-7



 

would not have a Material Adverse Effect and subject to the effects of bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer, reorganization and moratorium laws, and other similar laws relating to or affecting creditor’s rights and general equitable principles (whether considered in a proceeding in equity or at law).

 

(u)          The Company and its subsidiaries own or possess adequate rights to use all patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names currently employed by them in connection with the business now operated by them except where lack of ownership or possession of such rights would not have a Material Adverse Effect. Neither the Company nor any of its subsidiaries has received any notice of infringement of or conflict with asserted rights of others with respect to any of the foregoing, which, if the subject of an unfavorable decision, ruling or finding, would have a Material Adverse Effect.

 

(v)          No material labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is imminent except where such dispute would not have a Material Adverse Effect; and the Company is not aware of any existing, threatened or imminent labor disturbance by the employees of any of its principal suppliers, manufacturers, contractors, subcontractors or customers that would have a Material Adverse Effect.

 

(w)        The Company and each of its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as the Company believes in good faith to be prudent and customary in the businesses in which they are engaged; neither the Company nor any of its subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business except where such failure to renew or obtain similar coverage would not have a Material Adverse Effect.

 

(x)            The Company and its subsidiaries possess all certificates, authorizations, and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their businesses except where failure to obtain such certificates, authorizations, and permits would not reasonable be expected to have a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization, or permit which, if the subject of an unfavorable decision, ruling or finding, would have a Material Adverse Effect.

 

A-8



 

(y)          The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles in the United States (“ U.S. GAAP ”) and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as described in the Time of Sale Prospectus, since the end of the Company’s most recent audited fiscal year, there has been (i) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (ii) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting (including any corrective actions with regard to significant deficiencies and material weaknesses).

 

(z)            (i) The Company and its consolidated subsidiaries have established and maintain “disclosure controls and procedures” (as such term is defined in Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)), (ii) such disclosure controls and procedures are designed to ensure that the information required to be disclosed about the Company and its subsidiaries in the reports the Company will file or submit under the Exchange Act is accumulated and communicated to management of the Company, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure to be made and (iii) such disclosure controls and procedures are effective to a reasonable level of assurance to perform the functions for which they were established.

 

(aa)     Except as described in the Registration Statement, the Company has not sold, issued or distributed any of its equity securities or any other securities convertible into or exercisable or exchangeable for its equity securities during the six-month period preceding the date hereof, including any sales pursuant to Rule 144A under, or Regulation D or S of, the Securities Act, other than shares issued pursuant to employee benefit plans, qualified stock option plans or other employee compensation plans or pursuant to outstanding options, rights or warrants.

 

(bb)   The Company and each of its subsidiaries have filed all federal, state, local and foreign tax returns required to be filed through the date of this Agreement or have requested extensions thereof (except where the failure to file would not have a Material Adverse Effect) and have paid all taxes required to be paid thereon (except for cases in which the failure

 

A-9


 

to file or pay would not have a Material Adverse Effect, or, except as currently being contested in good faith and for which reserves required by U.S. GAAP have been created in the financial statements of the Company), and no tax deficiency has been determined adversely to the Company or any of its subsidiaries which has had, nor does the Company or any of its subsidiaries have any notice or knowledge of any tax deficiency which if determined adversely to the Company or its subsidiaries would have a Material Adverse Effect.

 

(cc)     The statistical and market-related data included under the captions “Prospectus Summary,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business” in the most recent preliminary prospectus included in the Time of Sale Prospectus are based on or derived from sources that the Company believes to be reliable and accurate in all material respects or represent the Company’s good faith estimates that are made on the basis of data derived from such sources.

 

(dd)   The statements made in the Time of Sale Prospectus under the captions “Risk Factors,” “Business,” “Description of Capital Stock,” “Certain Relationships and Related Party Transactions” and “Shares Eligible for Future Sale” insofar as they purport to constitute summaries of the terms of statutes, rules or regulations, legal or governmental proceedings or contracts and other documents, constitute accurate summaries of the terms of such statutes, rules and regulations, legal and governmental proceedings and contracts and other documents in all material respects.

 

(ee)     Each pension, profit sharing, welfare plan and other plan which is subject to the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”) for which the Company or any member of its “ Controlled Group ” (defined as any organization which is a member of a controlled group of corporations within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended (the “ Code ”)) would have any liability (each a “ Plan ”) has been maintained in compliance with its terms and with the requirements of all applicable statutes, rules and regulations including ERISA and the Code; and none of the Company or any subsidiary has incurred any liability for any prohibited transaction or accumulated funding deficiency or any complete or partial withdrawal liability with respect to any Plan; except in each case, as would not have a Material Adverse Effect.

 

(ff)         PricewaterhouseCoopers LLP, who have certified certain financial statements of the Company and its consolidated subsidiaries included in the Time of Sale Prospectus, whose report appears in the Time of Sale Prospectus and who have delivered the initial letter referred to in

 

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Section 6(h) hereof, are independent public accountants as required by the Securities Act and the rules and regulations thereof.

 

(gg)   Since the date of the most recent balance sheet of the Company and its consolidated subsidiaries reviewed or audited by PricewaterhouseCoopers LLP and the audit committee of the board of directors of the Company, the Company has not been advised of (i) any significant deficiencies in the design or operation of internal controls that could reasonably be expected to materially adversely affect the ability of the Company and each of its subsidiaries to record, process, summarize and report financial data, or any material weaknesses in internal controls or (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the internal controls of the Company and each of its subsidiaries.

 

(hh)   The Company has not taken and will not take, directly or indirectly, any action designed to or that has constituted or that could reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares.

 

(ii)           The Shares have been approved for listing, subject to official notice of issuance and evidence of satisfactory distribution, on the New York Stock Exchange.

 

(jj)           The historical financial statements (including the related notes and supporting schedules) included in the Time of Sale Prospectus comply as to form in all material respects with the requirements of Regulation S-X under the Securities Act and present fairly in all material respects the financial condition, results of operations and cash flows of the Company and its subsidiaries on a consolidated basis at the dates and for the periods indicated and have been prepared in conformity with U.S. GAAP applied on a consistent basis throughout the periods involved.

 

(kk)     Other than in connection with this Agreement and the Company’s engagement letter with Solebury Capital LLC, dated as of January 20, 2011, there is no investment banker, financial advisor, broker, finder or other intermediary which has been retained by, or is authorized to act on behalf of, the Company or any its subsidiaries which might be entitled to any fee or commission from the transactions contemplated hereby.

 

(ll)           Except as disclosed in the Time of Sale Prospectus, as of the date of this Agreement, neither the Company nor any of its subsidiaries is party to any contract containing covenants that would limit in any material respect the ability of the Company or any of its

 

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subsidiaries to (i) engage in any line of business or (ii) compete with any person in any market or line of business.

 

(mm)                       To the knowledge of the Company, there is no outstanding allegation of improper or illegal activities arising from any government audit or non-audit review, including without limitation, by the Defense Contract Audit Agency, of the Company or any of its subsidiaries or work performed by the Company or any of its subsidiaries that would have a Material Adverse Effect. To the knowledge of the Company, there are no pending civil or criminal penalties or administrative sanctions arising from a government audit or non-audit review of the Company or any of its subsidiaries or work performed by the Company or any of its subsidiaries, including, but not limited to, termination of contracts, forfeiture of profits, suspension of payments, fines, or suspension or debarment from doing business with any the United States Government or any agency thereof that would have a Material Adverse Effect.

 

2.                              Representations and Warranties of the Selling Stockholders .  Each Selling Stockholder represents and warrants to and agrees with each of the Underwriters (except to the extent the applicability of any representation and warranty is limited to the Snyder Selling Stockholders and/or the Other Selling Stockholders, in which case such representation and warranty shall be limited to the Snyder Selling Stockholders and/or the Other Selling Stockholders, as applicable) that:

 

(a)           This Agreement has been duly authorized, executed and delivered by or on behalf of such Selling Stockholder.

 

(b)          (i) The execution and delivery by such Selling Stockholder of, and the performance by such Selling Stockholder of its obligations under, this Agreement will not violate any provision of applicable law, or the certificate of incorporation or by-laws of such Selling Stockholder (if such Selling Stockholder is an entity), or any agreement or other instrument binding upon such Selling Stockholder or any judgment, order or decree of any governmental body, agency or court having jurisdiction over such Selling Stockholder, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by such Selling Stockholder of its obligations under this Agreement, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares.

 

(ii) The execution and delivery by such Snyder Selling Stockholder and such Other Selling Stockholder of, and the performance by such Snyder Selling Stockholder and such Other Selling Stockholder of its obligations under, the Custody Agreement signed by such Snyder Selling Stockholder and such Other Selling Stockholder and American

 

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Stock Transfer & Trust Company, LLC, as Custodian, relating to the deposit of the Shares to be sold by such Snyder Selling Stockholder and such Other Selling Stockholder (the “ Custody Agreement ”) will not violate any provision of applicable law, or the certificate of incorporation or by-laws of such Snyder Selling Stockholder or such Other Selling Stockholder (if such Snyder Selling Stockholder or such Other Selling Stockholder is an entity), or any agreement or other instrument binding upon such Snyder Selling Stockholder or such Other Selling Stockholder or any judgment, order or decree of any governmental body, agency or court having jurisdiction over such Snyder Selling Stockholder or such Other Selling Stockholder, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by such Snyder Selling Stockholder or such Other Selling Stockholder of its obligations under the Custody Agreement, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares.

 

(ii) The execution and delivery by such Other Selling Stockholder of, and the performance by such Other Selling Stockholder of its obligations under, the Power of Attorney appointing certain individuals as such Other Selling Stockholder’s attorneys-in-fact to the extent set forth therein, relating to the transactions contemplated hereby and by the Registration Statement (the “ Power of Attorney ”) will not violate any provision of applicable law, or the certificate of incorporation or by-laws of such Other Selling Stockholder (if such Other Selling Stockholder is an entity), or any agreement or other instrument binding upon such Other Selling Stockholder or any judgment, order or decree of any governmental body, agency or court having jurisdiction over such Other Selling Stockholder, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by such Other Selling Stockholder of its obligations under the Power of Attorney of such Other Selling Stockholder, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares.

 

(c)           Such Selling Stockholder has, and on the Closing Date will have, valid title to, or a valid “security entitlement” within the meaning of Section 8-501 of the New York Uniform Commercial Code (the “ UCC ”) in respect of, the Shares to be sold by such Selling Stockholder free and clear of all security interests, claims, liens, equities or other encumbrances and the legal right and power, and all authorization and approval required by law, to enter into this Agreement, the Custody Agreement, if applicable, and the Power of Attorney, if applicable, and to sell, transfer and deliver the Shares to be sold by such Selling Stockholder or a security entitlement in respect of such Shares.

 

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(d)          (i) In the case of each Snyder Selling Stockholder and each Other Selling Stockholder, the Custody Agreement has been duly authorized (if such Snyder Selling Stockholder or such Other Selling Stockholder is an entity), executed and delivered by such Snyder Selling Stockholder and such Other Selling Stockholder and is a valid and binding agreement of such Snyder Selling Stockholder and such Other Selling Stockholder.

 

(ii)  In the case of each Other Selling Stockholder, the Power of Attorney has been duly authorized (if such Other Selling Stockholder is an entity), executed and delivered by such Other Selling Stockholder and is a valid and binding agreement of such Other Selling Stockholder.

 

(e)           Upon payment for the Shares to be sold by such Selling Stockholder pursuant to this Agreement, delivery of such Shares, as directed by the Underwriters, to Cede & Co. (“ Cede ”) or such other nominee as may be designated by the Depository Trust Company (“ DTC ”), registration of such Shares in the name of Cede or such other nominee and the crediting of such Shares on the books of DTC to securities accounts of the Underwriters (assuming that neither DTC nor any such Underwriter has notice of any adverse claim (within the meaning of Section 8-105 of the UCC to such Shares), (A) DTC shall be a “protected purchaser” of such Shares within the meaning of Section 8-303 of the UCC, (B) under Section 8-501 of the UCC, the Underwriters will acquire a valid security entitlement in respect of such Shares and (C) no action based on any “adverse claim”, within the meaning of Section 8-102 of the UCC, to such Shares may be asserted against the Underwriters with respect to such security entitlement; for purposes of this representation, such Selling Stockholder may assume that when such payment, delivery and crediting occur, (x) such Shares will have been registered in the name of Cede or another nominee designated by DTC, in each case on the Company’s share registry in accordance with its certificate of incorporation, bylaws and applicable law, (y) DTC will be registered as a “clearing corporation” within the meaning of Section 8-102 of the UCC and (z) appropriate entries to the accounts of the several Underwriters on the records of DTC will have been made pursuant to the UCC.

 

(f)             [Reserved.]

 

(g)          (i) The Registration Statement, when it became effective, did not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Time of Sale Prospectus does not, at the Time of Sale and at the Closing Date (as defined in Section 5), will not, contain any untrue statement of a material fact or omit to state a material

 

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fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (iii) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the representations and warranties set forth in this paragraph 2(g) are limited to statements or omissions made in reliance upon information relating to such Selling Stockholder furnished to the Company in writing by such Selling Stockholder expressly for use in the Registration Statement, the Time of Sale Prospectus, the Prospectus or any amendments or supplements thereto.

 

(h)          The sale of the Shares by the Selling Stockholder does not violate any of the Company’s internal policies regarding the sale of stock by its affiliates.

 

(i)              Neither the Selling Stockholder nor any person acting on behalf of the Selling Stockholder (other than the Company and the Underwriters) has used or referred to any free writing prospectus relating to the Shares.

 

(j)              Neither the Selling Stockholder nor any person acting on behalf of the Selling Stockholder (other than, if applicable, the Company and the Underwriters) has taken and will not take, directly or indirectly, any action designed to or that has constituted or that could reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares.

 

3.                              Agreements to Sell and Purchase. Each Selling Stockholder, severally and not jointly, hereby agrees to sell to the several Underwriters, and each Underwriter, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to purchase from each Selling Stockholder, at $             a share (the “ Purchase Price ”), that proportion of the number of Firm Shares set forth in Schedule I hereto opposite the name of such Selling Stockholder which the number of Firm Shares set forth in Schedule II hereto opposite the name of such Underwriter bears to the total number of Firm Shares (subject to such adjustments to eliminate fractional shares as you may determine).

 

On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, each Selling Stockholder, severally and not jointly, agree to sell to the Underwriters the Additional Shares, and the Underwriters shall have the right to purchase, severally and not jointly, Additional Shares up to          at the Purchase Price. You may exercise this right on behalf of the Underwriters in whole or from time to time in part by giving written notice to the Company (with a courtesy copy of such notice delivered to

 

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Latham & Watkins LLP) not later than 30 days after the date of this Agreement. Any exercise notice shall specify the number of Additional Shares to be purchased by the Underwriters and the date on which such shares are to be purchased. Each purchase date must be at least two business days after the written notice is given unless notice is given prior to the closing date for the Firm Shares and may not be earlier than the closing date for the Firm Shares nor later than ten business days after the date of such notice. Additional Shares may be purchased as provided in Section 5 hereof solely for the purpose of covering over-allotments made in connection with the offering of the Firm Shares. On each day, if any, that Additional Shares are to be purchased (an “ Option Closing Date ”), each Underwriter agrees, severally and not jointly, to purchase the number of Additional Shares (subject to such adjustments to eliminate fractional shares as you may determine) that bears the same proportion to the total number of Additional Shares to be purchased on such Option Closing Date as the number of Firm Shares set forth in Schedule II hereto opposite the name of such Underwriter bears to the total number of Firm Shares.  Additional Shares will be purchased from the Selling Stockholders in a pro rata fashion based on the proportion of Firm Shares set forth in Schedule I hereto opposite the name of such Selling Stockholder to the total number of Firm Shares (subject to such adjustments to eliminate fractional shares as you may determine).

 

The Company and the Selling Stockholders hereby agree that, without the prior written consent of Barclays Capital and Morgan Stanley & Co. LLC (“ Morgan Stanley”) on behalf of the Underwriters which consent shall not be unreasonably withheld, they will not, during the period ending 180 days after the date of the Prospectus (the “ 180-day restricted period ”), (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock beneficially owned (as such term is used in Rule 13d-3 of the Exchange Act) or any other securities so owned convertible into or exercisable or exchangeable for Common Stock or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise or (3) file any registration statement with the Commission relating to the offering of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock.

 

The restrictions contained in the preceding paragraph shall not apply to (a) the Shares to be sold hereunder; (b) the issuance by the Company of shares of Common Stock upon the conversion or exchange of convertible or exchangeable securities or exercise of options or warrants outstanding as of the date of this Agreement; (c) issuances pursuant to the Company’s and its subsidiaries’ employee stock incentive or other benefit plans existing on the date of this Agreement, and in each case of (b) and (c), as disclosed in the Registration

 

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Statement; (d) the issuance by the Company of shares of Common Stock in connection with the acquisition by the Company of the securities, business, property or other assets of another person or entity, or pursuant to any employee benefit plans assumed by the Company in connection with any such acquisition, provided that such issuance shall not exceed 5% of the outstanding shares of Common Stock outstanding, on a fully-diluted basis, immediately prior to the consummation of the offering of the Firm Shares; (e) transactions by a Selling Stockholder relating to shares of Common Stock or other securities acquired in open market transactions after the completion of the public offering of the Shares, provided that no filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made during the restricted period in connection with subsequent sales of Common Stock or other securities acquired in such open market transactions; (f) the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of Common Stock; provided that such plan does not provide for the transfer of shares of Common Stock during the 180-day restricted period and no filing or other public announcement shall be required or shall be voluntarily made during the 180-day restricted period (as the same may be extended) by a Selling Stockholder or the Company as a result of the establishment of any such plan; (g) transfers by a Selling Stockholder of shares of Common Stock or any security convertible into Common Stock by bona fide gift, will or intestacy; (h) distributions by a Selling Stockholder of shares of Common Stock or any security convertible into Common Stock to general or limited partners, members or stockholders of the Selling Stockholder and partnerships or limited liability companies for the benefit of the immediate family of the Selling Stockholder and the partners and members of which are only the Selling Stockholder and the immediate family of the Selling Stockholder; (i) distributions by the Selling Stockholder of shares of Common Stock or any security convertible into Common Stock to any trust for the direct or indirect benefit of the Selling Stockholder or the immediate family of the Selling Stockholder; or (j) dispositions by the Selling Stockholder of shares of Common Stock to the Company (A) to satisfy tax withholding obligations in connection with the exercise of options to purchase Common Stock or (B) in connection with the rights of the Company to cause the Selling Stockholder to sell shares of Common Stock in effect on the date of this Agreement; provided that in the case of any transaction, transfer or distribution pursuant to clause (g), (h) or (i), (1) each recipient, donee, distributee, trustee or transferee shall sign and deliver a lock-up letter substantially in the form attached hereto as Exhibit A and (2) no filing under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of shares of Common Stock, shall be required or shall be voluntarily made during the restricted period (other than a Form 5 required to be filed within the 45 calendar days following September 30, 2011 and filed during such 45 calendar day period or thereafter).  Each Selling Stockholder consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of any Shares held by such Selling Stockholder except in compliance with the foregoing restrictions.

 

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Notwithstanding the foregoing, if (1) during the last 17 days of the 180-day restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs; or (2) prior to the expiration of the 180-day restricted period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the 180-day restricted period, the restrictions imposed by this agreement shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event unless such extension is waived in writing by Barclays Capital and Morgan Stanley on behalf of the Underwriters. The Company shall promptly notify Barclays Capital and Morgan Stanley of any earnings release, material news or material event that may give rise to an extension of the 180-day restricted period.

 

4.                              Terms of Public Offering. The Company and the Selling Stockholders are advised by you that the Underwriters propose to make a public offering of their respective portions of the Shares as soon after the Registration Statement and this Agreement have become effective as in your judgment is advisable. The Selling Stockholders are further advised by you that the Shares are to be offered to the public initially at $[ · ] a share (the “ Public Offering Price ”) and to certain dealers selected by you at a price that represents a concession not in excess of $[ · ] a share under the Public Offering Price, and that any Underwriter may allow, and such dealers may reallow, a concession, not in excess of $[ · ] a share, to any Underwriter or to certain other dealers.

 

5.                              Payment and Delivery. Payment for the Firm Shares to be sold by each Selling Stockholder shall be made to such Selling Stockholder in Federal funds immediately available in New York City against delivery of such Firm Shares for the respective accounts of the several Underwriters through the facilities of the Depositary Trust Company (“ DTC ”) at 10:00 a.m., New York City time, on [ · ], 2011, or at such other time on the same or such other date, not later than [ · ], 2011, as shall be designated by you in writing. The time and date of such payment are hereinafter referred to as the “ Closing Date .”

 

Payment for any Additional Shares shall be made to each Selling Stockholder in Federal funds immediately available in New York City against delivery of such Additional Shares for the respective accounts of the several Underwriters [through the facilities of DTC] at 10:00 a.m., New York City time, on the date specified in the corresponding notice described in Section 3 or at such other time on the same or on such other date, in any event not later than [ · ], 2011, as shall be designated by you in writing.

 

The Firm Shares and Additional Shares shall be registered in such names and in such denominations as you shall request in writing not later than two full business days prior to the Closing Date or the applicable Option Closing Date, as the case may be. The Firm Shares and Additional Shares shall be delivered to you on the Closing Date or an Option Closing Date, as the case may be, for the respective accounts of the several Underwriters.

 

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6.                              Conditions to the Underwriters’ Obligations. The obligations of the Selling Stockholders to sell the Shares to the Underwriters and the several obligations of the Underwriters to purchase and pay for the Shares on the Closing Date are subject to the condition that the Registration Statement shall have become effective not later than [ · ] [a.]/[p.][m.] (New York City time) on the date hereof.

 

The several obligations of the Underwriters are subject to the following further conditions:

 

(a)                                   Subsequent to the execution and delivery of this Agreement and prior to the Closing Date,

 

(i)              there shall not have occurred any downgrading, nor shall any public notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any of the indebtedness of the Company or any of its subsidiaries by any “nationally recognized statistical rating organization,” as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; and

 

(ii)           there shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Time of Sale Prospectus as of the date of this Agreement that, in your judgment, is material and adverse and makes it, in your judgment, impracticable to market the Shares on the terms and in the manner contemplated in the Time of Sale Prospectus.

 

(b)                                  The Underwriters shall have received on the Closing Date a certificate, dated the Closing Date and signed by an executive officer of the Company, to the effect set forth in Section 6(a)(i) above and to the effect that the representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date and that the Company has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date.

 

The officer signing and delivering such certificate may rely upon the best of his or her knowledge as to proceedings threatened.

 

(c)                                   The Underwriters shall have received on the Closing Date a certificate, dated the Closing Date and signed by each of the Carlyle Selling Stockholders, the Snyder Selling Stockholders and by one or more

 

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attorneys in fact on behalf of each of the Other Selling Stockholders, to the effect that the representations and warranties of such Selling Stockholder are true and correct as of the Closing Date and that such Selling Stockholder has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date.

 

(d)    The Underwriters shall have received on the Closing Date a certificate, dated the Closing Date and signed by each of the Carlyle Selling Stockholders, the Snyder Selling Stockholders and by one or more attorneys in fact on behalf of each of the Other Selling Stockholders, stating that such Selling Stockholder has carefully examined the Registration Statement, the Time of Sale Prospectus and the Prospectus, and, to its knowledge, (A) (i) the Registration Statement, as of the date it became effective, (ii) the Time of Sale Prospectus, as of the Time of Sale, and (iii) the Prospectus, as of its date and on the Closing Date, did not and do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein (except in the case of the Registration Statement, in the light of the circumstances under which they were made) not misleading and (B) since the date the Registration Statement became effective, no event has occurred that should have been set forth in a supplement or amendment to the Registration Statement, the Prospectus or any free writing prospectus that has not been so set forth.

 

The certificate may be limited to statements or omissions made in reliance upon information relating to such Selling Stockholder furnished to the Company in writing by such Selling Stockholder expressly for use in the Registration Statement, the Time of Sale Prospectus, the Prospectus or any amendments or supplements thereto.

 

(e)    The Underwriters shall have received on the Closing Date and each applicable Option Closing Date an opinion and negative assurance letter of Latham & Watkins LLP, outside counsel for the Company and the Carlyle Selling Stockholder, dated the Closing Date or the applicable Option Closing Date, as the case may be, in form and substance reasonably satisfactory to the Underwriters.

 

(f)     The Underwriters shall have received on the Closing Date and each applicable Option Closing Date an opinion of the General Counsel of the Company, dated the Closing Date or the applicable Option Closing Date, as the case may be, in form and substance reasonably satisfactory to the Underwriters.

 

(g)    The Underwriters shall have received on the Closing Date and each applicable Option Closing Date an opinion of counsel for each of the Snyder Selling Stockholders and the Other Selling Stockholders, dated

 

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the Closing Date or the applicable Option Closing Date, as the case may be, in form and substance reasonably satisfactory to the Underwriters.

 

(h)    The Underwriters shall have received on the Closing Date and each applicable Option Closing Date an opinion of Davis Polk & Wardwell LLP, counsel for the Underwriters, dated the Closing Date or the applicable Option Closing Date, as the case may be, with respect to such matters as the Underwriters may reasonably request.

 

(i)     The Underwriters shall have received, on each of the date hereof and the Closing Date and on each Option Closing Date, a letter dated the date hereof or the Closing Date or the applicable Option Closing Date, as the case may be, in form and substance satisfactory to the Underwriters, from PricewaterhouseCoopers LLP, independent public accountants, containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement, the Time of Sale Prospectus and the Prospectus; provided that the letter delivered on the Closing Date shall use a “cut-off date” not earlier than the date hereof.

 

(j)     The “lock-up” agreements, each substantially in the form of Exhibit A hereto, between you and all stockholders, officers and directors of the Company relating to sales and certain other dispositions of shares of Common Stock or certain other securities, delivered to you on or before the date hereof, shall be in full force and effect on the Closing Date.

 

(k)    The Shares to be delivered on the Closing Date or the applicable Option Closing Date shall have been approved for listing on the New York Stock Exchange, subject to official notice of issuance.

 

(l)     No order suspending the effectiveness of the Registration Statement shall be in effect, and no proceeding for such purpose pursuant to Section 8A under the Securities Act shall be pending before or, to the Company’s knowledge after due inquiry, threatened by the Commission; the Prospectus and each free writing prospectus required to be filed by the Company by Rule 433 under the Securities Act shall have been timely filed with the Commission under the Securities Act (in the case of a free writing prospectus to the extent required by Rule 433 under the Securities Act) and in accordance with Section 7(c) hereof; and all requests by the Commission for additional information shall have been complied with to the reasonable satisfaction of Barclays Capital and Morgan Stanley.

 

(m)   The representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date and that the Company has complied with all of the agreements and

 

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satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date.

 

The several obligations of the Underwriters to purchase Additional Shares hereunder are subject to the delivery to you on the applicable Option Closing Date of such documents as you may reasonably request with respect to the good standing of the Company, the due authorization and issuance of the Additional Shares to be sold on such Option Closing Date and other matters related to the issuance of such Additional Shares.

 

7.           Covenants of the Company. The Company covenants with each Underwriter as follows:

 

(a)    To furnish to you, without charge, six copies of the Registration Statement (including exhibits thereto) and for delivery to each other Underwriter a conformed copy of the Registration Statement (without exhibits thereto) and to furnish to you in New York City, without charge, prior to 10:00 a.m. New York City time on the business day next succeeding the date of this Agreement and during the period mentioned in Section 7(e) or 7(f) below, as many copies of the Time of Sale Prospectus, the Prospectus and any supplements and amendments thereto or to the Registration Statement as you may reasonably request.

 

(b)    Before amending or supplementing the Registration Statement, the Time of Sale Prospectus or the Prospectus, to furnish to you a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which you reasonably object, and to file with the Commission within the applicable period specified in Rule 424(b) under the Securities Act any prospectus required to be filed pursuant to such Rule.

 

(c)    To furnish to you a copy of each proposed free writing prospectus to be prepared by or on behalf of, used by, or referred to by the Company and not to use or refer to any proposed free writing prospectus to which you reasonably object.

 

(d)    Not to take any action that would result in an Underwriter or the Company being required to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of the Underwriter that the Underwriter otherwise would not have been required to file thereunder.

 

(e)    If the Time of Sale Prospectus is being used to solicit offers to buy the Shares at a time when the Prospectus is not yet available to prospective purchasers and any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Time of Sale Prospectus in order to make the statements therein, in the light of the

 

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circumstances, not misleading, or if any event shall occur or condition exist as a result of which the Time of Sale Prospectus conflicts with the information contained in the Registration Statement then on file, or if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Time of Sale Prospectus to comply with the Securities Act or the Exchange Act (as applicable) and, in each case, the rules and regulations promulgated thereunder, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to any dealer upon request, either amendments or supplements to the Time of Sale Prospectus so that the statements in the Time of Sale Prospectus as so amended or supplemented will not, in the light of the circumstances when the Time of Sale Prospectus is delivered to a prospective purchaser, be misleading or so that the Time of Sale Prospectus, as amended or supplemented, will no longer conflict with the Registration Statement, or so that the Time of Sale Prospectus, as amended or supplemented, will comply with the Securities Act or the Exchange Act (as applicable) and, in each case, the rules and regulations promulgated thereunder.

 

(f)     If, during such period after the first date of the public offering of the Shares as in the opinion of counsel for the Underwriters the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is delivered to a purchaser, not misleading, or if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Prospectus to comply with the Securities Act or the Exchange Act (as applicable) and, in each case, the rules and regulations promulgated thereunder, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses you will furnish to the Company) to which Shares may have been sold by you on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with the Securities Act or the Exchange Act (as applicable) and, in each case, the rules and regulations promulgated thereunder.

 

(g)    To endeavor to qualify the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as you shall reasonably request.

 

A-23



 

(h)    To make generally available to the Company’s security holders and to you as soon as practicable an earning statement (which need not be audited) covering a period of at least twelve months beginning with the first fiscal quarter of the Company occurring after the date of this Agreement which shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder.

 

(i)     If the Representatives, in their sole discretion, agree to release or waive the restrictions set forth in the lock-up letter substantially in the form attached hereto as Exhibit A for an officer or director of the Company and provide the Company with notice of the impending release or waiver at least three business days before the effective date of the release or waiver, the Company agrees to announce the impending release or waiver by a press release substantially in the form of Exhibit B hereto through a major new service at least two business days before the effective date of the release or waiver.

 

8.           Covenants of the Selling Stockholders .  Each Selling Stockholder, severally and not jointly, covenants with each Underwriter as follows:

 

Each Selling Stockholder will deliver to each Underwriter (or its agent), prior to or at the Closing Date, a properly completed and executed Internal Revenue Service (“ IRS ”) Form W-9 or an IRS Form W-8, as appropriate, together with all required attachments to such form.

 

9.           Expenses. Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, the Company agrees to pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including: (i) the fees, disbursements and expenses of the Company’s counsel and the Company’s accountants and counsel for the Selling Stockholders in connection with the registration and delivery of the Shares under the Securities Act and all other costs of, and the Company’s fees or expenses in connection with, the preparation and filing of the Registration Statement, any preliminary prospectus, the Time of Sale Prospectus, the Prospectus, any free writing prospectus prepared by or on behalf of or, used by, the Company and amendments and supplements to any of the foregoing, including all printing costs associated therewith, and the mailing and delivering of copies thereof to the Underwriters and dealers, in the quantities hereinabove specified, (ii) all costs and expenses related to the transfer and delivery of the Shares to the Underwriters, including any transfer or other taxes payable thereon, (iii) the cost of printing or producing any Blue Sky or Legal Investment memorandum in connection with the offer and sale of the Shares under state securities laws and all expenses in connection with the qualification of the Shares for offer and sale under state securities laws as provided in Section 7(g) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky or Legal Investment memorandum not to exceed $25,000, (iv) all filing fees and the

 

A-24



 

reasonable fees and disbursements of counsel to the Underwriters incurred in connection with the review and qualification of the offering of the Shares by FINRA in an amount not to exceed $35,000, (v) all fees and expenses in connection with the preparation and filing of the registration statement on Form 8-A relating to the Common Stock and all costs and expenses incident to listing the Shares on the New York Stock Exchange, (vi) the cost of printing certificates representing the Shares, (vii) the costs and charges of any transfer agent, registrar or depositary, (viii) the costs and expenses of the Company relating to investor presentations on any “road show” undertaken in connection with the marketing of the offering of the Shares, including, without limitation, expenses associated with the preparation or dissemination of any electronic road show, expenses associated with the production of road show slides and graphics (other than fees and expenses incurred by the Underwriters), fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives and officers of the Company (other than representatives of the Underwriters) and any such consultants, and half the cost of any aircraft chartered in connection with the road show by the Company or the Underwriters with the prior written approval of the Company, with the other half of such cost to be paid by the Underwriters, (ix) the document production charges and expenses associated with printing this Agreement and (x) all other costs and expenses incident to the performance of the obligations of the Company hereunder for which provision is not otherwise made in this Section. It is understood, however, that except as provided in this Section, Section 11 entitled “Indemnity and Contribution,” and Section 12 entitled “Termination” below, the Underwriters will pay all of their costs and expenses, including fees and disbursements of their counsel, stock transfer taxes payable on resale of any of the Shares by them and any advertising expenses connected with any offers they may make.

 

The provisions of this Section shall not supersede or otherwise affect any agreement that the Company and Selling Stockholders may otherwise have for the allocation of such expenses among themselves.

 

10.         Covenants of the Underwriters. Each Underwriter severally covenants with the Company not to take any action that would result in the Company being required to file with the Commission under Rule 433(d) a free writing prospectus prepared by or on behalf of or used or referred to by such Underwriter that otherwise would not be required to be filed by the Company thereunder, but for the action of the Underwriter.

 

11.         Indemnity and Contribution. (a) The Company agrees to indemnify and hold harmless each Underwriter, each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, and each affiliate of any Underwriter within the meaning of Rule 405 under the Securities Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any

 

A-25



 

such action or claim) caused by (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, any preliminary prospectus, the Time of Sale Prospectus, any issuer free writing prospectus as defined in Rule 433(h) under the Securities Act (taken together with the Time of Sale Prospectus), any Company information that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act (taken together with the Time of Sale Prospectus), or the Prospectus or any amendment or supplement thereto, (ii) with respect to the Registration Statement or any amendment or supplement thereto, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) with respect to any preliminary prospectus, the Time of Sale Prospectus, any issuer free writing prospectus as defined in Rule 433(h) (taken together with the Time of Sale Prospectus), any Company information that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act (take together with the Time of Sale Prospectus), the Prospectus or any amendment or supplement thereto, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they were made not misleading, in each case except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives specifically for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 11(c) hereof.

 

(b)    Each Selling Stockholder, severally and not jointly, agrees to indemnify and hold harmless each Underwriter, each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, and each affiliate of any Underwriter within the meaning of Rule 405 under the Securities Act to the extent and in the manner set forth in clauses (a)(i), (ii) and (iii) above in connection with the offering of the Shares by the Selling Stockholder; provided, however , that each Selling Stockholder shall be liable only the extent that such untrue statement or alleged untrue statement or omission or alleged omission has been made in the Registration Statement, the Time of Sale Prospectus, the Prospectus or any amendment or supplement thereto in reliance upon or in conformity with information relating to such Selling Stockholder furnished to the Company in writing by such Selling Stockholder expressly for use in the Registration Statement, the Time of Sale Prospectus, the Prospectus or any amendments or supplements thereto. The liability of each Selling Stockholder under the indemnity agreement contained in this paragraph shall be limited to an amount equal to the aggregate Public Offering Price of the Shares sold by such Selling Stockholder under this Agreement.

 

A-26



 

(c)       Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, the Selling Stockholders, the directors of the Company, the officers of the Company who sign the Registration Statement and each person, if any, who controls the Company or any Selling Stockholder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, any preliminary prospectus, the Time of Sale Prospectus, any issuer free writing prospectus as defined in Rule 433(h) under the Securities Act (taken together with the Time of Sale Prospectus), any Company information that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act (taken together with the Time of Sale Prospectus), or the Prospectus or any amended or thereto (ii) with respect to the Registration Statement or any amendment or supplement thereto, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) with respect to any preliminary prospectus, the Time of Sale Prospectus, any issuer free writing prospectus as defined in Rule 433(h) (taken together with the Time of Sale Prospectus), any Company information that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act (take together with the Time of Sale Prospectus), the Prospectus or any amendment or supplement thereto, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they were made not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representatives specifically for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the following information in the Prospectus furnished on behalf of any Underwriter: [(i) the concession figure appearing in the [first] sentence of the [fourth] paragraph under the caption “Underwriting,” (ii) the information in the [eighteenth] paragraph under the caption “Underwriting” relating to sales to discretionary accounts and (iii) the information contained in the [twelfth, thirteenth and fourteenth] paragraphs under the caption “Underwriting” relating to stabilization transactions.]

 

A-27



 

(d)    In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to Section 11(a), 11(b) or 11(c), such person (the “ indemnified party ”) shall promptly notify the person against whom such indemnity may be sought (the “ indemnifying party ”) in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (i) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Underwriters and all persons, if any, who control any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act or who are affiliates of any Underwriter within the meaning of Rule 405 under the Securities Act, (ii) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Company, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either such Section and (iii) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Selling Stockholders and all persons, if any, who control any Selling Stockholder within the meaning of either such Section. In the case of any such separate firm for the Underwriters and such control persons of any Underwriters, such firm shall be designated in writing by Barclays Capital and Morgan Stanley. In the case of any such separate firm for the Company, and such directors, officers and control persons of the Company, such firm shall be designated in writing by the Company.  In the case of any such separate firm for the Selling Stockholders and such control persons of any Selling Stockholders, such firm shall be designated in writing by the persons named as attorneys-in-fact for the Selling Stockholders under the Powers of Attorney. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment.

 

A-28



 

Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement (i) includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.

 

(e)    To the extent the indemnification provided for in Section 11(a), 11(b) or 11(c) is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party or parties on the other hand from the offering of the Shares or (ii) if the allocation provided by clause 11(e)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 11(e)(i) above but also the relative fault of the indemnifying party or parties on the one hand and of the indemnified party or parties on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Selling Stockholders on the one hand and the Underwriters on the other hand in connection with the offering of the Shares shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Shares (before deducting expenses) received by the Selling Stockholders and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate Public Offering Price of the Shares. The relative fault of the Company or the Selling Stockholders on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a

 

A-29


 

material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Selling Stockholders, or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Underwriters’ respective obligations to contribute pursuant to this Section 11 are several in proportion to the respective number of Shares they have purchased hereunder, and not joint. The liability of each Selling Stockholder under the contribution agreement contained in this paragraph shall be limited to an amount equal to the aggregate Public Offering Price of the Shares sold by such Selling Stockholder under this Agreement.

 

(f)    The Selling Stockholders and the Underwriters agree that it would not be just or equitable if contribution pursuant to Section 11 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 11(e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in Section 11(e) shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 11, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 11 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.

 

(g)   The indemnity and contribution provisions contained in this Section 11 and the representations, warranties and other statements of the Company and the Selling Stockholders contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter, any person controlling any Underwriter or any affiliate of any Underwriter, any Selling Stockholder or person controlling the Selling Stockholder, or the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Shares.

 

A-30



 

12.        Termination. The Underwriters may terminate this Agreement by notice given by you to the Company, if after the execution and delivery of this Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on, or by, as the case may be, any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Market, the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade or other relevant exchanges, (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter market, (iii) a material disruption in securities settlement, payment or clearance services in the United States or other relevant jurisdictions shall have occurred, (iv) any moratorium on commercial banking activities shall have been declared by Federal or New York State authorities or (v) there shall have occurred any outbreak or escalation of hostilities, or any change in financial markets, or any calamity or crisis that, in your judgment, is material and adverse and which, singly or together with any other event specified in this clause (v), makes it, in your judgment, impracticable or inadvisable to proceed with the offer, sale or delivery of the Shares on the terms and in the manner contemplated in the Time of Sale Prospectus or the Prospectus.

 

13.        Effectiveness; Defaulting Underwriters. This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.

 

If, on the Closing Date or an Option Closing Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase Shares that it has or they have agreed to purchase hereunder on such date, and the aggregate number of Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of the Shares to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the number of Firm Shares set forth opposite their respective names in Schedule II hereto bears to the aggregate number of Firm Shares set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as you may specify, to purchase the Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the number of Shares that any Underwriter has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 13 by an amount in excess of one-ninth of such number of Shares without the written consent of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Firm Shares to be purchased on such date, and arrangements satisfactory to you, the Company and the Selling Stockholders for the purchase of such Firm Shares are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter, the Company, or the Selling Stockholders. In any such case either you, the Company or the Selling Stockholders shall have the right to postpone the Closing Date, but in no event for

 

A-31



 

longer than seven days, in order that the required changes, if any, in the Registration Statement, in the Time of Sale Prospectus, in the Prospectus or in any other documents or arrangements may be effected. If, on an Option Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Additional Shares and the aggregate number of Additional Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Additional Shares to be purchased on such Option Closing Date, the non-defaulting Underwriters shall have the option to (i) terminate their obligation hereunder to purchase the Additional Shares to be sold on such Option Closing Date or (ii) purchase not less than the number of Additional Shares that such non-defaulting Underwriters would have been obligated to purchase in the absence of such default. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.

 

If this Agreement shall be terminated by the Underwriters, or any of them, because of any failure or refusal on the part of the Company or the Selling Stockholders to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason any the Company or the Selling Stockholders shall be unable to perform its obligations under this Agreement, the Company and the Selling Stockholders will reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the fees and disbursements of their counsel) reasonably incurred by such Underwriters in connection with this Agreement or the offering contemplated hereunder.

 

14.        Entire Agreement. (a) This Agreement, together with any contemporaneous written agreements and any prior written agreements (to the extent not superseded by this Agreement) that relate to the offering of the Shares, represents the entire agreement between the Company and the Selling Stockholders, on the one hand, and the Underwriters, on the other, with respect to the preparation of any preliminary prospectus, the Time of Sale Prospectus, the Prospectus, the conduct of the offering, and the purchase and sale of the Shares.

 

(b)   The Company and each Selling Stockholder acknowledges that in connection with the offering of the Shares: (i) the Underwriters have acted at arms length, are not agents of, and owe no fiduciary duties to, the Company, any Selling Stockholder or any other person, (ii) the Underwriters owe the Company and the Selling Stockholders only those duties and obligations set forth in this Agreement and prior written agreements (to the extent not superseded by this Agreement), if any, and (iii) the Underwriters may have interests that differ from those of the Company and the Selling Stockholders. The Company and each Selling Stockholder waives to the full extent permitted by applicable law any claims it may have against the Underwriters arising from an alleged breach of fiduciary duty in connection with the offering of the Shares.

 

A-32



 

15.        Counterparts. This Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

16.        Applicable Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.

 

17.        Headings. The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement.

 

18.        Notices. All communications hereunder shall be in writing and effective only upon receipt and if to the Underwriters shall be delivered, mailed or sent to you in care of Barclays Capital Inc., 745 Seventh Avenue, New York, New York 10019, Attention: Syndicate Registration (Fax:  (646) 834-8133), with a copy, in the case of any notice pursuant to Section 11, to the Director of Litigation, Office of the General Counsel, Barclays Capital Inc., 745 Seventh Avenue, New York, New York 10019; and in the case of Morgan Stanley & Co. LLC, 1585 Broadway, New York, New York 10036, Attention: Equity Syndicate Desk, with a copy to the Legal Department; and if to the Company shall be delivered, mailed or sent to 27727 Avenue Scott, Valencia, California, 91355, Attention: Chief Financial Officer and with copies to 27727 Avenue Scott, Valencia, California, 91355, Attention: General Counsel and Latham & Watkins LLP, 555 Eleventh Street, NW, Suite 1000, Washington, DC 20004, Attention: Rachel Sheridan.

 

A-33



 

 

Very truly yours,

 

 

 

 

 

Wesco Aircraft Holdings, Inc.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

By:

 

 

 

Name:

 

 

 

 

By:

 

 

 

Name:

 

A-34



 

Accepted as of the date hereof

 

 

 

Barclays Capital Inc.

 

Morgan Stanley & Co. LLC

 

 

 

Acting severally on behalf of themselves and

 

the several Underwriters named in

 

Schedule II hereto

 

 

 

 

By:

Barclays Capital Inc.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

By:

Morgan Stanley & Co. LLC

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

A-35



 

SCHEDULE I

 

Selling Stockholder

 

Number of Firm Shares
To Be Sold

 

 

 

 

 

[NAMES OF SELLING STOCKHOLDERS]

 

 

 

 

 

 

 

Total:

 

 

 

 

I-1


 

 

SCHEDULE II

 

Underwriter

 

Number of Firm Shares
To Be Purchased

 

Barclays Capital Inc.

 

 

 

Morgan Stanley & Co. LLC

 

 

 

J.P. Morgan Securities LLC

 

 

 

Merrill Lynch, Pierce, Fenner & Smith
Incorporated

 

 

 

William Blair and Company, L.L.C.

 

 

 

Credit Suisse Securities (USA) LLC

 

 

 

Deutsche Bank Securities Inc.

 

 

 

Total:

 

 

 

 

II-1



 

SCHEDULE III

 

1.

 

Preliminary Prospectus issued [date]

 

 

 

2.

 

[Any free writing prospectuses filed by the Company under Rule 433(d) of the Securities Act to be identified]

 

 

 

3.

 

[Any free writing prospectus containing a description of terms that does not reflect final terms, if the Time of Sale Prospectus does not include a pricing sheet, to be indentified]

 

 

 

4.

 

[Any orally communicated pricing information to be included on Schedule III if a pricing term sheet is not used (price per share/number of shares)]

 

III-1



 

EXHIBIT A

 

[FORM OF LOCK-UP LETTER]

 

, 2011

 

 

Barclays Capital Inc.

Morgan Stanley & Co. LLC

 

c/o                                Barclays Capital Inc.
745 Seventh Avenue
New York, New York 10019

 

c/o                                Morgan Stanley & Co. LLC
1585 Broadway
New York, New York 10036

 

The undersigned understands that Barclays Capital Inc. and Morgan Stanley & Co. LLC, as representatives (the “ Representatives ”) of the several underwriters (together with the Representatives, the “ Underwriters ”), propose to enter into an Underwriting Agreement (the “ Underwriting Agreement ”) with Wesco Aircraft Holdings, Inc., a Delaware corporation (the “ Company ”), and the selling stockholders named therein (the “ Selling Stockholders ”), providing for the public offering (the “ Public Offering ”) by the Underwriters, of shares (the “ Shares ”) of the common stock, par value $0.001 per share, of the Company (the “ Common Stock ”).

 

To induce the Underwriters that may participate in the Public Offering to continue their efforts in connection with the Public Offering, the undersigned hereby agrees that, without the prior written consent of the Representatives on behalf of the Underwriters, the undersigned will not, during the period commencing on the date hereof and ending 180 days (the “ restricted period ”) after the date of the final prospectus relating to the Public Offering (the “ Prospectus ”), (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock beneficially owned (as such term is used in Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)), by the undersigned or any other securities so owned convertible into or exercisable or exchangeable for Common Stock or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing sentence shall not apply to (a) transactions relating to shares of

 

A-1



 

Common Stock or other securities acquired in open market transactions after the completion of the Public Offering, provided that no filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made during the restricted period in connection with subsequent sales of Common Stock or other securities acquired in such open market transactions, (b) the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of Common Stock; provided that such plan does not provide for the transfer of shares of Common Stock during the restricted period and no filing or other public announcement shall be required or shall be voluntarily made during the restricted period (as the same may be extended as provided herein) by the undersigned or the Company as a result of the establishment of any such plan, (c) transfers of shares of Common Stock or any security convertible into Common Stock by bona fide gift, will or intestacy, (d) distributions of shares of Common Stock or any security convertible into Common Stock to general or limited partners, members or stockholders of the undersigned and partnerships or limited liability companies for the benefit of the immediate family of the undersigned and the partners and members of which are only the undersigned and the immediate family of the undersigned, (e) distributions of shares of Common Stock or any security convertible into Common Stock to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned or (f) dispositions of shares of Common Stock to the Company (A) to satisfy tax withholding obligations in connection with the exercise of options to purchase Common Stock or (B) in connection with the rights of the Company to cause the undersigned to sell shares of Common Stock in effect on the date hereof; provided that in the case of any transfer or distribution pursuant to clause (c), (d) or (e), (1) each donee, distributee, trustee or transferee shall sign and deliver a lock-up letter substantially in the form of this agreement and (2) no filing under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of shares of Common Stock, shall be required or shall be voluntarily made during the restricted period (other than a Form 5 required to be filed within the 45 calendar days following September 30, 2011 and filed during such 45 calendar day period or thereafter). For the purposes of this agreement, “ immediate family ” shall include any spouse, or any lineal ancestor or descendent, niece, nephew, adopted child, or sibling of him or her or of such spouse, niece, nephew or adopted child. In addition, the undersigned agrees that, without the prior written consent of the Representatives on behalf of the Underwriters, it will not, during the period commencing on the date hereof and ending upon expiration of the restricted period (as the same may be extended as provided herein), make any demand for or exercise any right with respect to, the registration of any shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock. The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of the undersigned’s shares of Common Stock except in compliance with the foregoing restrictions.

 

A-2



 

If the undersigned is an officer or director of the Company, the Representatives agree that, at least three business days before the effective date of any release or waiver of the foregoing restrictions in connection with a transfer of shares of Common Stock, the Representatives will notify the Company of the impending release or waiver, and (ii) the Company has agreed in writing in the Underwriting Agreement to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver.  Any release or waiver granted by the Representatives hereunder to any such officer or director shall only be effective two business days after the publication date of such press release.  The provisions of this paragraph will not apply if (a) the release or waiver is effected solely to permit a transfer not for consideration and (b) the transferee has agreed in writing to be bound by the same terms described in this agreement to the extent and for the duration that such terms remain in effect at the time of the transfer.

 

If:

 

(1)                                   during the last 17 days of the restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs; or

 

(2)                                   prior to the expiration of the restricted period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the restricted period;

 

the restrictions imposed by this agreement shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

 

The undersigned shall not engage in any transaction that may be restricted by this agreement during the 34-day period beginning on the last day of the initial restricted period unless the undersigned requests and receives prior written confirmation from the Company that the restrictions imposed by this agreement have expired.

 

The undersigned understands that the Company and the Underwriters are relying upon this agreement in proceeding toward consummation of the Public Offering. The undersigned further understands that this agreement is irrevocable and shall be binding upon the undersigned’s heirs, legal representatives, successors and assigns.

 

Whether or not the Public Offering actually occurs depends on a number of factors, including market conditions. Any Public Offering will only be made pursuant to an Underwriting Agreement, the terms of which are subject to negotiation between the Company and the Underwriters.

 

A-3



 

This agreement shall lapse and become null and void if (i) prior to entering into the Underwriting Agreement, the Company notifies the Representatives in writing that the Company does not intend to proceed with the offering of the Shares through the Representatives, (ii) the Company, the Selling Stockholders and the Representatives have not entered into the Underwriting Agreement on or before December 31, 2011, or (iii) for any reason the Underwriting Agreement is terminated prior to the Closing Date (as defined therein).

 

 

Very truly yours,

 

 

 

 

 

 

 

(Name)

 

 

 

 

 

 

 

(Address)

 

A-4



 

EXHIBIT B

 

[FORM OF PRESS RELEASE]

 

B-1




Exhibit 3.1

 

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

 

OF

 

WESCO AIRCRAFT HOLDINGS, INC.

 

Wesco Aircraft Holdings, Inc. (the “ Corporation ”), a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby certify that:

 

1.     The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on July 21, 2006 under the name Wesco Holdings, Inc.  The original Certificate of Incorporation was subsequently amended on December 19, 2007 and April 7, 2011.

 

2.     In an action taken by written consent by the Board of Directors of the Corporation, a resolution was duly adopted pursuant to Sections 141(f), 242 and 245 of the General Corporation Law of the State of Delaware, setting forth this Amended and Restated Certificate of Incorporation, which restates and integrates and also further amends the original Certificate of Incorporation (including the prior amendments thereto), and declaring this Amended and Restated Certificate of Incorporation to be advisable.  The stockholders of the Corporation duly approved and adopted this Amended and Restated Certificate of Incorporation by written consent in accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware.

 

3.     The Corporation’s Certificate of Incorporation is hereby amended and restated in its entirety to read as follows:

 

FIRST :  The name of the corporation (hereinafter sometimes referred to as the “ Corporation ”) is:

 

Wesco Aircraft Holdings, Inc.

 



 

SECOND :  The address of the registered office of the Corporation in the State of Delaware is 160 Greentree Drive, Suite 101, Dover, Delaware 19904.  The name of its registered agent at such address is National Registered Agents, Inc.

 

THIRD :  The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “ DGCL ”).

 

FOURTH :  The Corporation is authorized to issue two classes of stock designated, respectively, as common stock (“ Common Stock ”) and preferred stock (“ Preferred Stock ”).  The total number of shares of capital stock that the Corporation is authorized to issue is one billion (1,000,000,000).  The total number of shares of Common Stock that the Corporation is authorized to issue is nine hundred fifty million (950,000,000), with a par value of $0.001 per share, and the total number of shares of Preferred Stock that the Corporation is authorized to issue is fifty million (50,000,000), with a par value of $0.001 per share.

 

FIFTH :  The rights, preferences, privileges and restrictions granted or imposed upon the Common Stock are as follows:

 

1.             Dividends .  Subject to the rights of any holders of any shares of Preferred Stock which may from time to time come into existence and be outstanding, the holders of Common Stock shall be entitled to the payment of dividends when and as declared by the board of directors of the Corporation (the “ Board ”) in accordance with applicable law and to receive other distributions from the Corporation.  Any dividends declared by the Board to the holders of the then outstanding Common Stock shall be paid to the holders thereof pro rata in accordance with the number of shares of Common Stock held by each such holder as of the record date of such dividend.

 

2.             Liquidation, Dissolution or Winding Up .  Subject to the rights of any holders of any shares of Preferred Stock which may from time to time come into existence and be outstanding, in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the funds and assets of the Corporation that may be legally distributed to the Corporation’s stockholders shall be distributed among the holders of the then outstanding Common Stock pro rata in accordance with the number of shares of Common Stock held by each such holder.

 

2



 

3.             Voting .  Each holder of Common Stock shall be entitled to one (1) vote for each share of Common Stock held by such holder.  Each holder of Common Stock shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Corporation (as in effect at the time in question) and applicable law on all matters put to a vote of the stockholders of the Corporation.  The number of authorized shares of Common Stock or Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Corporation entitled to vote thereon irrespective of the provisions of Section 242(b)(2) of the DGCL (or any successor provision thereto), and no vote of the holders of either the Common Stock or the Preferred Stock voting separately as a class shall be required therefor.

 

4.             Conversion of Class A Common Stock and Class B Common Stock .  Upon the filing and effectiveness of this Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware (the “ Effective Time ”), each outstanding share of Class A common stock and Class B common stock shall, without the payment of any additional consideration or other action on the part of the Corporation or the holder thereof, convert into one fully paid and nonassessable share of Common Stock.  Certificates dated as of a date prior to the Effective Time representing outstanding shares of Class A common stock or Class B common stock shall, immediately after the Effective Time, represent a number of shares of Common Stock equal to the same number of shares of Class A common stock or Class B common stock as is reflected on the face of such certificates.  The Corporation may, but shall not be obliged to, issue new certificates evidencing the shares of Common Stock outstanding as a result of such automatic conversion unless and until the certificates evidencing the shares held by a holder prior to such automatic conversion are either delivered to the Corporation or its transfer agent or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates.

 

5.             Stock Split .  At the Effective Time, immediately following the conversion described in paragraph 4 above, each then-outstanding share of Common Stock (“ Old Common Stock ”) shall be automatically converted into [          ] validly issued, fully paid and non-assessable shares of Common Stock without any further action by the Corporation or the holder of such shares of Old Common Stock (the “ Stock Split ”).  Each stock certificate representing shares of Old Common Stock shall thereafter represent the number of whole shares of Common Stock into which the shares of Old Common Stock previously represented by such stock certificate shall have been converted; provided , however , that each person holding of record a stock certificate or certificates that represented shares of Old Common Stock shall receive, upon surrender of such certificate or certificates, a new certificate or certificates evidencing and representing the number of whole shares of the Common Stock to which such person is entitled as a result of the Stock Split based on the aggregate number of shares of Old Common Stock held by such person.  All share numbers, dollar amounts and other provisions set forth herein give effect to the Stock Split.

 

SIXTH :  The Board is hereby expressly authorized, subject to limitation prescribed by law, to provide by resolution or resolutions for the issuance of the shares of

 

3



 

Preferred Stock as a class or in one or more series and, by filing a certificate of designation, pursuant to the DGCL, setting forth a copy of such resolution or resolutions to establish from time to time the number of shares to be included in the class or in each such series, and to fix the designations, powers, preferences and rights of the shares of the class or of each such series and the qualifications, limitations and restrictions thereof.  The authority of the Board with respect to the class or each such series shall include, but not be limited to, determination of the following:

 

1.             the number of shares constituting the class or any series and the distinctive designation of that class or series;

 

2.             the dividend rate or rates on the shares of the class or any series, the terms and conditions upon which and the periods in respect of which dividends shall be payable, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of that class or series;

 

3.             whether the class or any series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights;

 

4.             whether the class or any series shall have conversion privileges and, if so, the terms and conditions of conversion, including provision for adjustment of the conversion rate upon such events as the Board shall determine;

 

5.             whether or not the shares of the class or any series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;

 

6.             whether the class or any series shall have a sinking fund for the redemption or purchase of shares of that class or series, and, if so, the terms and amount of such sinking fund;

 

7.             the rights of the shares of the class or any series in the event of voluntary or involuntary dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of that class or series; and

 

8.             any other powers, preferences, rights, qualifications, limitations, and restrictions of the class or any series.

 

SEVENTH :  The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation and for the purpose of creating,

 

4



 

defining, limiting and regulating the powers of the Corporation and its directors and stockholders:

 

1.             Classified Board .  The directors of the Corporation, other than any directors elected by the holders of shares of any class or series of Preferred Stock provided for or fixed pursuant to the provisions of Article Sixth hereof (the “ Preferred Stock Directors ”), shall be classified with respect to the time for which they severally hold office into three classes, as nearly equal in number as possible, designated as Class I, Class II and Class III.  The initial Class I directors shall serve for a term expiring at the first annual meeting of the stockholders following the Effective Time, the initial Class II directors shall serve for a term expiring at the second annual meeting of the stockholders following the Effective Time and the initial Class III directors shall serve for a term expiring at the third annual meeting of stockholders following the Effective Time, with directors of each class to hold office until their successors are duly elected and qualified; provided that the term of each director shall continue until the election and qualification of a successor and be subject to such director’s earlier death, resignation or removal.  At each annual meeting of stockholders of the Corporation beginning with the first annual meeting of stockholders following the Effective Time, subject to any rights of the holders of shares of any class or series of Preferred Stock, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election; provided that the term of each director shall continue until the election and qualification of a successor and be subject to such director’s earlier death, resignation or removal.  In the case of any increase or decrease, from time to time, in the authorized number of directors of the Corporation (other than Preferred Stock Directors), the number of directors in each class shall be apportioned as nearly equal as possible.  No decrease in the number of directors shall shorten the term of any incumbent director.  The Board is authorized to assign members of the Board already in office to Class I, Class II and Class III.

 

2.             Board Size .  Subject to any rights of the holders of shares of any class or series of Preferred Stock to elect directors and the then-applicable terms of the Amended and Restated Stockholders Agreement among the Corporation and certain of its stockholders, dated as of [                    ], 2011 (as amended from time to time, the “ Stockholders Agreement ”), the precise number of directors of the Corporation shall be fixed, and may be altered from time to time, exclusively by resolution of the Board.

 

3.             Removal of Directors .  Subject to any rights of the holders of shares of any class or series of Preferred Stock to elect directors and the then-applicable terms of the Stockholders Agreement, (i) until the Trigger Date (as defined in Article Fifteenth), a director may be removed at any time, either for or without cause, upon the affirmative vote of the holders of a majority of the outstanding shares of stock of the Corporation entitled to vote generally for the election of directors, voting together as a single class, and (ii) from and after the Trigger Date, a director may be removed only for cause, upon the affirmative vote of the holders of a majority of the outstanding shares of stock of the Corporation entitled to vote generally for the election of directors, voting together as a single class.

 

5



 

4.             Board Vacancies .  Subject to any rights of the holders of shares of any class or series of Preferred Stock to elect directors and the then-applicable terms of the Stockholders Agreement, and except as otherwise provided by law, any newly-created directorship on the Board that results from an increase in the number of directors, or vacancy that results from the death, disability, resignation, disqualification or removal of any director or from any other cause shall be filled solely by the affirmative vote of a majority of the total number of directors then in office, even if less than a quorum, or by a sole remaining director.  Any director so chosen shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor shall be elected and qualified.

 

5.             Stockholder Action by Written Consent .  Until the Trigger Date, any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote of stockholders, if a consent or consents in writing, setting forth the action so taken, are:  (i) signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted (but not less than the minimum number of votes otherwise prescribed by law) and (ii) delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the books in which proceedings of meetings of the stockholders are recorded within 60 days of the earliest dated consent so delivered to the Corporation.  From and after the Trigger Date, any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken only upon the vote of the stockholders at an annual or special meeting duly called and may not be taken by written consent of the stockholders.  The bylaws of the Corporation may establish procedures regulating the submission by stockholders of nominations and proposals for consideration at meetings of stockholders of the Corporation.

 

6.             Special Meetings .  A special meeting of the stockholders of the Corporation for any purpose or purposes may be called at any time only by or at the direction of the Board pursuant to a resolution of the Board adopted by a majority of the total number of directors then in office; provided that, until the Trigger Date, a special meeting of the stockholders shall also be called by the Secretary of the Corporation at the request of the holders of record of a majority of the outstanding shares of Common Stock.  From and after the Trigger Date, the stockholders of the Corporation do not have the power to call a special meeting of the stockholders.

 

EIGHTH :  In furtherance and not in limitation of the power conferred by the laws of the State of Delaware, the Board is expressly authorized to make, alter or repeal the bylaws of the Corporation subject to any limitations contained therein.

 

NINTH :  No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of his or her fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as

 

6



 

the same exists or may hereafter be amended.  Any amendment, modification or repeal of the foregoing sentence shall not adversely affect any right or protection existing under this Amended and Restated Certificate of Incorporation immediately prior to such amendment, modification or repeal, including any right or protection of a current or former director of the Corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, modification or repeal.  If the DGCL is amended after the Effective Time to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.

 

TENTH :  Election of directors need not be by written ballot unless the bylaws of the Corporation shall so provide.

 

ELEVENTH :  The Corporation shall, through its bylaws or otherwise, indemnify and advance expenses to, to the fullest extent permitted under the DGCL (as it now exists or as amended from time to time), any person who is or was a director or officer of the Corporation or its subsidiaries.  The Corporation may, by action of the Board, provide rights to indemnification and to advancement of expenses to such other employees or agents of the Corporation or its subsidiaries to such extent and to such effect as the Board shall determine to be appropriate and authorized by the DGCL.

 

TWELFTH :  To the fullest extent permitted by Section 122(17) of the DGCL (or any successor provision) and except as may be otherwise expressly agreed in writing by the Corporation and the Carlyle Stockholder (as defined below), the Corporation, on behalf of itself and its subsidiaries, renounces any interest or expectancy of the Corporation and its subsidiaries in, or in being offered an opportunity to participate in, business opportunities, that are from time

 

7



 

to time presented to the Carlyle Stockholder or any of its agents or representatives, even if the opportunity is one that the Corporation or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, and no such person shall be liable to the Corporation or any of its subsidiaries for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such person pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the Corporation or its subsidiaries unless, in the case of any such person who is a director of the Corporation, such business opportunity is expressly offered to such director in writing solely in his or her capacity as a director of the Corporation.  Any person purchasing or otherwise acquiring any interest in any shares of stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article Twelfth.  Neither the alteration, amendment or repeal of this Article Twelfth, nor the adoption of any provision of this Amended and Restated Certificate of Incorporation inconsistent with this Article Twelfth, nor, to the fullest extent permitted by Delaware law, any modification of law, shall eliminate or reduce the effect of this Article Twelfth in respect of any business opportunity first identified or any other matter occurring, or any cause of action, suit or claim that, but for this Article Twelfth, would accrue or arise, prior to such alteration, amendment, repeal, adoption or modification.  If any provision or provisions of this Article Twelfth shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever:  (a) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article Twelfth (including, without limitation, each portion of any paragraph of this Article Twelfth containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid,

 

8



 

illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of this Article Twelfth (including, without limitation, each such portion of any paragraph of this Article Twelfth containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.  This Article Twelfth shall not limit any protections or defenses available to, or indemnification or advancement rights of, any director or officer of the Corporation under this Amended and Restated Certificate of Incorporation, the Corporation’s bylaws or applicable law.  For purposes of this Amended and Restated Certificate of Incorporation, the “Carlyle Stockholder” shall mean Falcon Aerospace Holdings, LLC and its affiliates and their respective affiliates, subsidiaries, members, partners, directors, officers and employees (in each case other than the Corporation and its subsidiaries).

 

THIRTEENTH :  The Corporation elects not to be governed by, and shall not be subject to the provisions of, Section 203 of the DGCL, “Business Combinations With Interested Stockholders,” as permitted under and pursuant to subsection (b)(3) thereof.

 

FOURTEENTH :  Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation arising pursuant to any provision of the DGCL, this Amended and Restated Certificate of Incorporation or the Corporation’s bylaws, or

 

9



 

(iv) any action asserting a claim against the Corporation governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.  Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article Fourteenth.

 

FIFTEENTH :  The Corporation reserves the right to amend, alter, change or repeal any provisions contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by the DGCL.  All rights conferred upon stockholders herein are granted subject to this reservation.  Notwithstanding any other provision of this Amended and Restated Certificate of Incorporation or the Corporation’s bylaws, and notwithstanding the fact that a lesser percentage or separate class vote may be specified by law, this Amended and Restated Certificate of Incorporation, the Corporation’s bylaws or otherwise, but in addition to any affirmative vote of the holders of any particular class or series of the capital stock required by law, this Amended and Restated Certificate of Incorporation, the Corporation’s bylaws or otherwise, on or following the Trigger Date, the affirmative vote of the holders of at least three-quarters of the voting power of all outstanding shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt any provision inconsistent with, to amend or repeal any provision of, or to adopt a bylaw inconsistent with, Articles Third, Seventh, Ninth, Eleventh, Twelfth, Thirteenth and Fifteenth of this Amended and Restated Certificate of Incorporation.  For purposes of this Amended and Restated Certificate of Incorporation, the “Trigger Date” shall mean the first date on which the Carlyle Stockholders and the Wesco Stockholders (in each case, as defined in the Stockholders

 

10



 

Agreement) cease to beneficially own (directly or indirectly) shares representing a majority of the then issued and outstanding shares of Common Stock.

 

[ Signature page follows .]

 

11



 

IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be duly executed as of the        day of                   , 2011.

 

 

 

By:

 

 

 

Name:

 

 

Title:

 




Exhibit 3.2

 

 

WESCO AIRCRAFT HOLDINGS, INC.

 

AMENDED AND RESTATED BYLAWS

 

As Adopted on [                  ], 2011

 

 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I MEETINGS OF STOCKHOLDERS

1

 

 

Section 1.01

Annual Meetings

1

Section 1.02

Special Meetings

1

Section 1.03

Participation in Meetings by Remote Communication

1

Section 1.04

Notice of Meetings; Waiver of Notice

2

Section 1.05

Proxies

2

Section 1.06

Voting Lists

3

Section 1.07

Quorum

3

Section 1.08

Voting

3

Section 1.09

Adjournment

4

Section 1.10

Organization; Procedure; Inspection of Elections

4

Section 1.11

Stockholder Action by Written Consent

5

Section 1.12

Notice of Stockholder Proposals and Nominations

6

 

 

 

ARTICLE II BOARD OF DIRECTORS

10

 

 

Section 2.01

General Powers

10

Section 2.02

Number and Term of Office

10

Section 2.03

Regular Meetings

11

Section 2.04

Special Meetings

11

Section 2.05

Notice of Meetings; Waiver of Notice

11

Section 2.06

Quorum; Voting

11

Section 2.07

Action by Telephonic Communications

12

Section 2.08

Adjournment

12

Section 2.09

Action Without a Meeting

12

Section 2.10

Regulations

12

Section 2.11

Resignations of Directors

12

Section 2.12

Removal of Directors

12

Section 2.13

Vacancies and Newly Created Directorships

13

Section 2.14

Director Fees and Expenses

13

Section 2.15

Reliance on Accounts and Reports, etc.

13

 

 

 

ARTICLE III COMMITTEES

13

 

 

Section 3.01

Designation of Committees

13

Section 3.02

Members and Alternate Members

14

Section 3.03

Committee Procedures

14

Section 3.04

Meetings and Actions of Committees

14

Section 3.05

Resignations and Removals

15

Section 3.06

Vacancies

15

 



 

ARTICLE IV OFFICERS

15

 

 

 

Section 4.01

Officers

15

Section 4.02

Election

15

Section 4.03

Compensation

15

Section 4.04

Removal and Resignation; Vacancies

16

Section 4.05

Authority and Duties of Officers

16

Section 4.06

Chairman of the Board

16

Section 4.07

President

16

Section 4.08

Vice Presidents

17

Section 4.09

Secretary

17

Section 4.10

Treasurer

18

Section 4.11

Security

18

 

 

 

ARTICLE V CAPITAL STOCK

18

 

 

Section 5.01

Certificates of Stock; Uncertificated Shares

18

Section 5.02

Facsimile Signatures

19

Section 5.03

Lost, Stolen or Destroyed Certificates

19

Section 5.04

Transfer of Stock

19

Section 5.05

Registered Stockholders

19

Section 5.06

Transfer Agent and Registrar

20

 

 

 

ARTICLE VI INDEMNIFICATION

20

 

 

Section 6.01

Indemnification

20

Section 6.02

Advance of Expenses

21

Section 6.03

Procedure for Indemnification

21

Section 6.04

Burden of Proof

21

Section 6.05

Contract Right; Non-Exclusivity; Survival

21

Section 6.06

Insurance

22

Section 6.07

Employees and Agents

22

Section 6.08

Interpretation; Severability

22

Section 6.09

Subrogation

23

 

 

 

ARTICLE VII OFFICES

23

 

 

Section 7.01

Registered Office

23

Section 7.02

Other Offices

23

 

 

 

ARTICLE VIII GENERAL PROVISIONS

23

 

 

Section 8.01

Dividends

23

Section 8.02

Reserves

24

Section 8.03

Execution of Instruments

24

Section 8.04

Voting as Stockholder

24

Section 8.05

Fiscal Year

24

Section 8.06

Seal

24

 

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Section 8.07

Books and Records; Inspection

24

Section 8.08

Electronic Transmission

25

 

 

 

ARTICLE IX AMENDMENT OF BYLAWS

25

 

 

Section 9.01

Amendment

25

 

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WESCO AIRCRAFT HOLDINGS, INC.

 

AMENDED AND RESTATED BYLAWS

 

As adopted on [                ], 2011

 

ARTICLE I

 

MEETINGS OF STOCKHOLDERS

 

Section 1.01                                                    Annual Meetings .  The annual meeting of the stockholders of Wesco Aircraft Holdings, Inc. (the “ Corporation ”) for the election of directors (each, a “ Director ”) and for the transaction of such other business as properly may come before such meeting shall be held each year either within or without the State of Delaware at such place, if any, and on such date and at such time, as may be fixed from time to time by resolution of the Corporation’s Board of Directors (the “ Board ”) and set forth in the notice or waiver of notice of the meeting, unless, subject to the certificate of incorporation of the Corporation (the “ certificate of incorporation ”) and Section 1.11 of these bylaws, the stockholders have acted by written consent to elect Directors as permitted by the General Corporation Law of the State of Delaware, as amended from time to time (the “ DGCL ”).  The Board may postpone, reschedule or cancel any annual meeting of stockholders previously scheduled by the Board.

 

Section 1.02                                                    Special Meetings .  A special meeting of the stockholders of the Corporation for any purpose or purposes may be called at any time only by or at the direction of the Board pursuant to a resolution of the Board adopted by a majority of the total number of Directors then in office; provided that, until the Trigger Date (as such term is defined in the certificate of incorporation), a special meeting of the stockholders shall also be called by the Secretary at the request of the holders of record of a majority of the shares entitled to vote at a meeting of stockholders.  Any special meeting of the stockholders shall be held at such place, if any, within or without the State of Delaware, and on such date and at such time, as shall be specified in such resolution.  From and after the Trigger Date, the stockholders of the Corporation do not have the power to call a special meeting of the stockholders.  Business transacted at any special meeting of the stockholders shall be limited to the purpose(s) stated in the notice.  The Board may postpone, reschedule or cancel any special meeting of the stockholders previously scheduled by the Board.

 

Section 1.03                                                    Participation in Meetings by Remote Communication .  The Board, acting in its sole discretion, may establish guidelines and procedures in accordance with applicable provisions of the DGCL and any other applicable law for the participation by stockholders and proxyholders in a meeting of stockholders by means of remote communications, and may determine that any meeting of stockholders will not be held at any place but will be held solely by means of remote communication.  Stockholders and proxyholders complying with such procedures and guidelines and otherwise entitled to vote at a meeting of stockholders shall be deemed present in person and entitled to vote at a meeting of stockholders, whether such meeting is to be held at a designated place or solely by means of remote communication.

 



 

Section 1.04                                                    Notice of Meetings; Waiver of Notice .

 

(a)                                   In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting.  If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination.  The Secretary or any Assistant Secretary shall cause notice of each meeting of stockholders to be given in writing in a manner permitted by the DGCL not less than ten (10) days nor more than sixty (60) days prior to the meeting to each stockholder of record entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting, subject to such exclusions as are then permitted by the DGCL.  The notice shall specify (i) the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for stockholders entitled to notice of the meeting), (ii) the place, if any, date and time of such meeting, (iii) the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, (iv) in the case of a special meeting, the purpose or purposes for which such meeting is called and (v) such other information as may be required by law or as may be deemed appropriate by the Board, the Chairman of the Board, the President or the Secretary of the Corporation.  If the stockholder list referred to in Section 1.06 of these bylaws is made accessible on an electronic network, the notice of meeting must indicate how the stockholder list can be accessed.  If the meeting of stockholders is to be held solely by means of electronic communications, the notice of meeting must provide the information required to access such stockholder list during the meeting.

 

(b)                                  A written waiver of notice of meeting signed by a stockholder or a waiver by electronic transmission by a stockholder, whether given before or after the meeting time stated in such notice, is deemed equivalent to notice.  Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in a waiver of notice.  Attendance of a stockholder at a meeting is a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business at the meeting on the ground that the meeting is not lawfully called or convened.

 

Section 1.05                                                    Proxies .

 

(a)                                   Each stockholder entitled to vote at a meeting of stockholders or to express consent to or dissent from corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy.

 

(b)                                  A stockholder may authorize a valid proxy by executing a written instrument signed by such stockholder, or by causing his or her signature to be affixed to such writing by any reasonable means, including but not limited to by facsimile signature, or by transmitting or authorizing an electronic transmission (as defined in Section 8.08 of these bylaws) setting forth an authorization to act as proxy to the person designated as the holder of the proxy, a proxy

 

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solicitation firm or a like authorized agent.  Proxies by electronic transmission must either set forth, or be submitted with, information from which it can be determined that the electronic transmission was authorized by the stockholder.  Any copy, facsimile telecommunication or other reliable reproduction of a writing or transmission created pursuant to this section may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used if such copy, facsimile telecommunication or other reproduction is a complete reproduction of the entire original writing or transmission.

 

(c)                                   No proxy may be voted or acted upon after the expiration of three years from the date of such proxy, unless such proxy provides for a longer period.  Every proxy is revocable at the pleasure of the stockholder executing it unless the proxy states that it is irrevocable and applicable law makes it irrevocable.  A stockholder may revoke any proxy that is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by filing another duly executed proxy bearing a later date with the Secretary.

 

Section 1.06                                                    Voting Lists .  The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare, at least ten (10) days before every meeting of the stockholders (and before any adjournment thereof for which a new record date has been set), a complete list of the stockholders of record entitled to vote at the meeting (provided, however, if the record date for determining the stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth (10 th ) day before the meeting date), arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder.  This list, which may be in any format including electronic format, shall be open to the examination of any stockholder prior to and during the meeting for any purpose germane to the meeting in the manner required by the DGCL and other applicable law.  The stock ledger shall be the only evidence as to who are the stockholders entitled by this section to examine the list required by this section or to vote in person or by proxy at any meeting of stockholders.

 

Section 1.07                                                    Quorum .  Except as otherwise provided in the certificate of incorporation or by law, the presence in person or by proxy of the holders of record of a majority in voting power of the shares entitled to vote at a meeting of stockholders shall constitute a quorum for the transaction of business at such meeting, provided , however , that where a separate vote by a class or series is required, the holders of a majority in voting power of all issued and outstanding stock of such class or series entitled to vote on such matter, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to such matter.  In the absence of a quorum, the stockholders so present may, by a majority in voting power thereof, adjourn the meeting from time to time in the manner provided in Section 1.09 of these bylaws until a quorum shall attend.

 

Section 1.08                                                    Voting .  Except as otherwise provided in the certificate of incorporation or by law, every holder of record of shares entitled to vote at a meeting of stockholders is entitled to one vote for each share outstanding in his or her name on the books of the Corporation (x) at the close of business on the record date for such meeting or (y) if no record date has been fixed, at the close of business on the day next preceding the day on which notice of the meeting is given, or if notice is waived, at the close of business on the day next preceding the day on which the

 

3



 

meeting is held.  Except as otherwise required by law, the certificate of incorporation, these bylaws, the rules and regulations of any stock exchange applicable to the Corporation or pursuant to any other rule or regulation applicable to the Corporation, its securities or its stockholders, the vote of a majority of the voting power of the shares entitled to vote at a meeting of stockholders on the subject matter in question represented in person or by proxy at any meeting at which a quorum is present shall be sufficient for the transaction of any business at such meeting.  The stockholders do not have the right to cumulate their votes for the election of Directors.

 

Section 1.09                                                    Adjournment .  Any meeting of stockholders may be adjourned from time to time, by the chairperson of the meeting or by the vote of a majority of the shares of stock present in person or represented by proxy at the meeting, to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the place, if any, and date and time thereof (and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting) are announced at the meeting at which the adjournment is taken unless the adjournment is for more than thirty (30) days or a new record date is fixed for the adjourned meeting after the adjournment, in which case notice of the adjourned meeting in accordance with Section 1.04 of these bylaws shall be given to each stockholder of record entitled to vote at the meeting.  At the adjourned meeting, the Corporation may transact any business that might have been transacted at the original meeting.  If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix as the record date for determining stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote at the adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record as of the record date so fixed for notice of such adjourned meeting.

 

Section 1.10                                                    Organization; Procedure; Inspection of Elections .

 

(a)                                   At every meeting of stockholders the presiding officer shall be the Chairman of the Board, or in the event of his or her absence or disability, a presiding officer chosen by resolution of the Board.  The Secretary, or in the event of his or her absence or disability, the Assistant Secretary, if any, or if there be no Assistant Secretary, in the absence of the Secretary, an appointee of the presiding officer, shall act as secretary of the meeting.  The Board may make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient.  Subject to any such rules and regulations, the presiding officer of any meeting shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting and to prescribe rules, regulations and procedures for such meeting and to take all such actions as in the judgment of the presiding officer are appropriate for the proper conduct of such meetings.  Such rules, regulations or procedures, whether adopted by the Board or prescribed by the presiding officer of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by

 

4



 

participants.  The presiding officer at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter of business not properly brought before the meeting shall not be transacted or considered.  Unless and to the extent determined by the Board or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

 

(b)                                  Preceding any meeting of the stockholders, the Board may, and when required by law shall, appoint one or more persons to act as inspectors of elections who may be employees of the Corporation, and may designate one or more alternate inspectors.  If no inspector or alternate so appointed by the Board is able to act, or if no inspector or alternate has been appointed and the appointment of an inspector is required by law, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting.  No Director or nominee for the office of Director shall be appointed as an inspector of elections.  Each inspector, before entering upon the discharge of the duties of an inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability.  The inspectors shall discharge their duties in accordance with the requirements of applicable law.

 

Section 1.11                                                    Stockholder Action by Written Consent .

 

(a)                                   Until the Trigger Date and except as otherwise provided in the certificate of incorporation, any action required or permitted to be taken at an annual or special meeting of the stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote of stockholders, if a consent or consents in writing, setting forth the action so taken, are: (i) signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted (but not less than the minimum number of votes otherwise prescribed by law) and (ii) delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded within sixty (60) days of the earliest dated consent so delivered to the Corporation.

 

(b)                                  From and after the Trigger Date and except as otherwise provided in the certificate of incorporation, any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken only upon the vote of the stockholders at an annual or special meeting duly called and may not be taken by written consent of the stockholders.

 

(c)                                   If a stockholder action by written consent is permitted under these bylaws and not restricted by the certificate of incorporation, and the Board has not fixed a record date for the purpose of determining the stockholders entitled to participate in such consent to be given, then: (i) if the DGCL does not require action by the Board prior to the proposed stockholder action, the record date shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation at any of the locations referred to in Section 1.11(a)(ii)  of these bylaws; and (ii) if the DGCL requires action by the Board prior to the

 

5



 

proposed stockholder action, the record date shall be at the close of business on the day on which the Board adopts the resolution taking such prior action.  Every written consent to action without a meeting shall bear the date of signature of each stockholder who signs the consent, and shall be valid if timely delivered to the Corporation at any of the locations referred to in Section 1.11(a)(ii)  of these bylaws.

 

(d)                                  The Secretary shall give prompt notice of the taking of an action without a meeting by less than unanimous written consent to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of stockholders to take the action were delivered to the Corporation in accordance with the DGCL.

 

Section 1.12                                                    Notice of Stockholder Proposals and Nominations .

 

(a)                                   Annual Meetings .

 

(i)                                      Nominations of persons for election to the Board and proposals of business to be considered by the stockholders at an annual meeting of stockholders may be made only (x) as specified in the Corporation’s notice of meeting (or any notice supplemental thereto), (y) by or at the direction of the Board, or a committee appointed by the Board for such purpose, or (z) subject to the then-applicable provisions of the Amended and Restated Stockholders Agreement among the Corporation and certain of its stockholders, dated as of [                    ], 2011 (as amended from time to time, the “ Stockholders Agreement ”), by any stockholder of the Corporation who or which (1) is entitled to vote at the meeting, (2) complies in a timely manner with all notice procedures set forth in this Section 1.12 , and (3) is a stockholder of record when the required notice is delivered and at the date of the meeting.  A stockholder proposal must constitute a proper matter for corporate action under the DGCL.

 

(ii)                                   Notice in writing of a stockholder nomination or stockholder proposal must be delivered to the attention of the Secretary at the principal place of business of the Corporation by the close of business not fewer than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting (which anniversary date, in the case of the first annual meeting of stockholders following the closing of the Corporation’s initial underwritten public offering of common stock, shall be deemed to be [                    ], 2012); provided that if the date of the annual meeting is advanced by more than 30 days or delayed by more than 70 days from such anniversary date of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than 120 days prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made.  If the number of Directors to be elected to the Board at an annual meeting is increased, and if the Corporation does not make a public announcement naming all of the nominees for Director or specifying the size of the increased Board at least 100 days prior to the first anniversary of the preceding year’s annual meeting, then any stockholder nomination in respect of the increased number of positions shall be considered timely if delivered not later than the close of business on

 

6



 

the 10th day following the day on which a public announcement naming all nominees or specifying the size of the increased Board is first made by the Corporation.

 

(iii)                                Notice of a stockholder nomination shall include, as to each person whom the stockholder proposes to nominate for election or reelection as a Director, all information relating to such person required to be disclosed in solicitations of proxies for election of Directors or is otherwise required, in each case pursuant to and in accordance with Section 14(a) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and the rules and regulations promulgated thereunder, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a Director if elected.  Notice of a stockholder proposal shall include a brief description of the business desired to be brought before the meeting, the text of the proposal (including the text of any resolutions proposed for consideration and if such business includes proposed amendments to the certificate of incorporation and/or bylaws of the Corporation, the text of the proposed amendments), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made.

 

(iv)                               Notice of a stockholder nomination or proposal shall also set forth, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made:

 

(1)                                   the name and address of such stockholder, as they appear on the Corporation’s books and records, and of any such beneficial owner;

 

(2)                                   the class or series and number of shares of capital stock of the Corporation which are owned beneficially and of record by such stockholder and any such beneficial owner;

 

(3)                                   a description of any agreement, arrangement or understanding between or among such stockholder and any such beneficial owner, any of their respective affiliates or associates, and any other person or persons (including their names) in connection with the proposal of such nomination or other business;

 

(4)                                   a description of any agreement, arrangement or understanding (including, regardless of the form of settlement, any derivative, long or short positions, profit interests, forwards, futures, swaps, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions and borrowed or loaned shares) that has been entered into by or on behalf of, or any other agreement, arrangement or understanding that has been made, the effect or intent of which is to create or mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or any such beneficial owner or any such nominee with respect to the Corporation’s securities (a “ Derivative Instrument ”);

 

(5)                                   to the extent not disclosed pursuant to clause (4) above, the principal amount of any indebtedness of the Corporation or any of its subsidiaries beneficially owned by such stockholder or by any such beneficial owner, together with the title of the instrument under which such indebtedness was issued and a description of any Derivative Instrument entered into by or on behalf of such stockholder or such beneficial owner relating to the value or payment of any indebtedness of the Corporation or any such subsidiary;

 

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(6)                                   a representation that such stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination;

 

(7)                                   any other information relating to such stockholder and any such beneficial owner required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in an election contest pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder; and

 

(8)                                   a representation as to whether such stockholder or any such beneficial owner intends or is part of a group which intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to elect the nominee or to approve or adopt the proposal or and/or (y) otherwise to solicit proxies from stockholders in support of such nomination or proposal.

 

If requested by the Corporation, the information required under clauses (iv)(2), (3), (4) and (5) of the preceding sentence of this Section 1.12(a)  shall be supplemented by such stockholder and any such beneficial owner not later than ten (10) days after the record date for notice of the meeting to disclose such information as of such record date.  The foregoing notice requirements of this Section 1.12(a)  shall be deemed satisfied by a stockholder with respect to business or a nomination if such stockholder has notified the Corporation of his or her intention to present a proposal or make a nomination at an annual meeting in compliance with the applicable rules and regulations promulgated under the Exchange Act and such stockholder’s proposal or nomination has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting.

 

(b)                                  Special Meetings .

 

(i)                                      Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting pursuant to Section 1.04 of these bylaws.  Nominations of persons for election to the Board at a special meeting of stockholders may be made only (x) by or at the direction of the Board, or a committee appointed by the Board for such purpose, (or the stockholders pursuant to Section 1.02 hereof) if the Corporation’s notice of meeting indicated that the purposes of meeting included the election of Directors and specified the number of Directors to be elected, or (y) provided that the Board of Directors (or stockholders pursuant to Section 1.02 hereof) has determined that directors shall be elected at such meeting, by any stockholder of the Corporation.  Subject to the then-applicable provisions of the Stockholders Agreement, a stockholder may nominate persons for election to the Board (a “ stockholder nomination ”) at a special meeting only if the stockholder (1) is entitled to vote at the meeting, (2) complies in a timely manner with the notice procedures set forth in paragraph (ii) of this Section 1.12(b) , and (3) is a stockholder of record when the required notice is delivered and at the date of the meeting.

 

(ii)                                   Notice in writing of a stockholder nomination must be delivered to the attention of the Secretary at the principal place of business of the Corporation not more than 120 days prior to the date of the meeting and not later than the close of business on the later of the 90th

 

8



 

day prior to the meeting or the 10th day following the last to occur of the public announcement by the Corporation of the date of such meeting and the public announcement by the Corporation of the nominees proposed by the Board to be elected at such meeting, and must comply with the provisions of Sections 1.12(a)(iii)  and (iv)  of these bylaws.  The foregoing notice requirements of this Section 1.12(b)  shall be deemed satisfied by a stockholder with respect to a nomination if the stockholder has notified the Corporation of his or her intention to present a nomination at such special meeting in compliance with the applicable rules and regulations promulgated under the Exchange Act and such stockholder’s nomination has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such special meeting.

 

(c)                                   General .

 

(i)                                      Except as otherwise expressly provided in any applicable rule or regulation promulgated under the Exchange Act, only such persons who are nominated in accordance with the procedures set forth in this Section 1.12 shall be eligible to be elected at an annual or special meeting of stockholders of the Corporation to serve as Directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 1.12 .  Except as otherwise provided by law, the certificate of incorporation or these bylaws, the presiding officer of a meeting of stockholders shall have the power and duty (x) to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 1.12 , and (y) if any proposed nomination or business is not in compliance with this Section 1.12 , to declare that such defective nomination shall be disregarded or that such proposed business shall not be transacted.

 

(ii)                                   The Corporation may require any proposed stockholder nominee for Director to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a Director of the Corporation.  Unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) making a nomination or proposal under this Section 1.12 does not appear at a meeting of stockholders to present such nomination or proposal, the nomination shall be disregarded and/or the proposed business shall not be transacted, as the case may be, notwithstanding that proxies in favor thereof may have been received by the Corporation.  For purposes of this Section 1.12 , to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

 

(iii)                                For purposes of this Section 1.12 , “ public announcement ” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

 

(iv)                               Notwithstanding the foregoing provisions of this Section 1.12 , a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations

 

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thereunder with respect to the matters set forth in this Section 1.12 ; provided , however , that any references in these bylaws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to nominations or proposals as to any other business to be considered pursuant to this Section 1.12 and compliance with paragraphs (a) and (b) of this Section 1.12 shall be the exclusive means for a stockholder to make nominations or submit other business (other than, as provided in the last sentences of paragraphs (a) and (b) hereof, business or nominations brought properly under and in compliance with Rule 14a-8 or Rule 14a-11 of the Exchange Act, as such Rules may be amended from time to time).  Nothing in this Section 1.12 shall be deemed to affect any rights of (x) stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (y) the holders of any series of preferred stock to elect Directors pursuant to any applicable provisions of the certificate of incorporation or of the relevant preferred stock certificate or designation.

 

(v)                                  The announcement of an adjournment or postponement of an annual or special meeting does not commence a new time period (and does not extend any time period) for the giving of notice of a stockholder nomination or a stockholder proposal.

 

ARTICLE II

 

BOARD OF DIRECTORS

 

Section 2.01                                                    General Powers .  Except as may otherwise be provided by law or by the certificate of incorporation, the affairs and business of the Corporation shall be managed by or under the direction of the Board and the Board may exercise all the powers and authority of the Corporation.  The Directors shall act only as a Board, and the individual Directors shall have no power as such.

 

Section 2.02                                                    Number and Term of Office .  The number of Directors, other than any directors elected by the holders of shares of any class or series of preferred stock provided for or fixed pursuant to the provisions of Article Sixth of the certificate of incorporation (the “ Preferred Stock Directors ”), shall initially be eight, classified (including Directors in office as of the date hereof) with respect to the time for which they severally hold office into three classes, as nearly equal in number as possible, designated as Class I, Class II and Class III, which number may be modified (but not reduced to less than three) from time to time exclusively by resolution of the Board, subject to the rights of the holders of shares of any class or series of preferred stock, if any, and the then-applicable terms of the Stockholders Agreement.  The initial Class I directors shall serve for a term expiring at the first annual meeting of the stockholders following the date hereof, the initial Class II directors shall serve for a term expiring at the second annual meeting of the stockholders following the date hereof and the initial Class III directors shall serve for a term expiring at the third annual meeting of stockholders following the date hereof, with Directors of each class to hold office until their successors are duly elected and qualified, provided that the term of each Director shall continue until the election and qualification of a successor and be subject to such Director’s earlier death, resignation or removal.  At each annual meeting of stockholders of the Corporation beginning with the first annual meeting of stockholders following the date hereof, subject to any rights of the holders of shares of any class or series of preferred stock, the successors of the class of Directors whose term expires at that

 

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meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election, provided that the term of each Director shall continue until the election and qualification of a successor and be subject to such Director’s earlier death, resignation or removal.  In the case of any increase or decrease, from time to time, in the authorized number of Directors (other than Preferred Stock Directors), the number of Directors in each class shall be apportioned as nearly equal as possible.  No decrease in the number of Directors shall shorten the term of any incumbent Director.  At each meeting of the stockholders for the election of Directors, provided a quorum is present, the Directors shall be elected by a plurality of the votes validly cast in such election.  The Board is authorized to assign members of the Board already in office to Class I, Class II and Class III.

 

Section 2.03                                                    Regular Meetings .  Regular meetings of the Board shall be held on such dates, and at such times and places as are determined from time to time by resolution of the Board.

 

Section 2.04                                                    Special Meetings .  Special meetings of the Board shall be held whenever called by the President or, if there is a separate Chairman of the Board, by the Chairman of the Board, or in the event of his or her absence or disability, by any Vice President, or by a majority of the Directors then in office, at such place, date and time as may be specified in the respective notices or waivers of notice of such meetings.  Any business may be conducted at a special meeting.

 

Section 2.05                                                    Notice of Meetings; Waiver of Notice .

 

(a)                                   Notices of special meetings shall be given to each Director, and notice of each resolution or other action affecting the date, time or place of one or more regular meetings shall be given to each Director not present at the meeting adopting such resolution or other action, subject to Section 2.08 of these bylaws.  Notices shall be given personally, or by telephone confirmed by facsimile or email dispatched promptly thereafter, or by facsimile or email confirmed by a writing delivered by a recognized overnight courier service, directed to each Director at the address from time to time designated by such Director to the Secretary.  Each such notice and confirmation must be given (received in the case of personal service or delivery of written confirmation) at least 24 hours prior to the time of a meeting.

 

(b)                                  A written waiver of notice of meeting signed by a Director or a waiver by electronic transmission by a Director, whether given before or after the meeting time stated in such notice, is deemed equivalent to notice.  Attendance of a Director at a meeting is a waiver of notice of such meeting, except when the Director attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business at the meeting on the ground that the meeting is not lawfully called or convened.

 

Section 2.06                                                    Quorum; Voting .  At all meetings of the Board, the presence of a majority of the total authorized number of Directors shall constitute a quorum for the transaction of business.  Except as otherwise provided by law, the certificate of incorporation or these bylaws, the vote of a majority of the Directors present at any meeting at which a quorum is present shall be the act of the Board.

 

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Section 2.07                                                    Action by Telephonic Communications .  Members of the Board may participate in a meeting of the Board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.

 

Section 2.08                                                    Adjournment .  A majority of the Directors present may adjourn any meeting of the Board to another date, time or place, whether or not a quorum is present.  No notice need be given of any adjourned meeting unless (a) the date, time and place of the adjourned meeting are not announced at the time of adjournment, in which case notice conforming to the requirements of Section 2.05 of these bylaws shall be given to each Director, or (b) the meeting is adjourned for more than 24 hours, in which case the notice referred to in clause (a) shall be given to those Directors not present at the announcement of the date, time and place of the adjourned meeting.

 

Section 2.09                                                    Action Without a Meeting .  Unless otherwise restricted in the Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board may be taken without a meeting if all members of the Board consent thereto in writing or by electronic transmission, and such writing or writings or electronic transmissions are filed with the minutes of proceedings of the Board.  Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

 

Section 2.10                                                    Regulations .  To the extent consistent with applicable law, the certificate of incorporation and these bylaws, the Board may adopt such rules and regulations for the conduct of meetings of the Board and for the management of the affairs and business of the Corporation as the Board may deem appropriate.  The Board may elect from among its members a chairperson and one or more vice-chairpersons to preside over meetings and to perform such other duties as may be designated by the Board.

 

Section 2.11                                                    Resignations of Directors .  Any Director may resign at any time by submitting an electronic transmission or by delivering a written notice of resignation, signed by such Director, to the Chairman of the Board, the President or the Secretary.  Such resignation shall take effect upon delivery unless the resignation specifies a later effective date or an effective date determined upon the happening of a specified event.

 

Section 2.12                                                    Removal of Directors .

 

(a)                                   Until the Trigger Date and subject to the rights of the holders of shares of any class or series of preferred stock, if any, to elect additional Directors pursuant to the certificate of incorporation (including any certificate of designation thereunder) and the then-applicable terms of the Stockholders Agreement, any Director may be removed at any time, either for or without cause, upon the affirmative vote of the holders of a majority of the outstanding shares of stock of the Corporation entitled to vote generally for the election of Directors, acting at a meeting of the stockholders or by written consent (if permitted) in accordance with the DGCL, the certificate of incorporation and these bylaws.

 

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(b)                                  From and after the Trigger Date and subject to the rights of the holders of shares of any class or series of preferred stock, if any, to elect additional Directors pursuant to the certificate of incorporation (including any certificate of designation thereunder) and the then-applicable terms of the Stockholders Agreement, any Director may be removed only for cause, upon the affirmative vote of the holders of at least a majority of the outstanding shares of stock of the Corporation entitled to vote generally for the election of Directors, acting at a meeting of the stockholders or by written consent (if permitted) in accordance with the DGCL, the certificate of incorporation and these bylaws.

 

Section 2.13                                                    Vacancies and Newly Created Directorships .  Subject to the rights of the holders of shares of any class or series of preferred stock, if any, to elect additional Directors pursuant to the certificate of incorporation (including any certificate of designation thereunder) and the then-applicable terms of the Stockholders Agreement, any vacancy in the Board that results from the death, disability, resignation, disqualification or removal of any Director or from any other cause or newly created directorship shall be filled solely by the affirmative vote of a majority of the total number of Directors then in office, even if less than a quorum, or by a sole remaining Director.  Any Director filling a vacancy shall be of the same class as that of the Director whose death, resignation, disqualification, removal or other event caused the vacancy, and any Director filling a newly created directorship shall be of the class specified by the Board at the time the newly created directorship was created.  A Director elected to fill a vacancy or newly created Directorship shall hold office until his or her successor has been elected and qualified or until his or her earlier death, resignation or removal.

 

Section 2.14                                                    Director Fees and Expenses .  The amount, if any, which each Director shall be entitled to receive as compensation for his or her services shall be fixed from time to time by the Board.  The Corporation will cause each non-employee Director serving on the Board to be reimbursed for all reasonable out-of-pocket costs and expenses incurred by him or her in connection with such service.

 

Section 2.15                                                    Reliance on Accounts and Reports, etc .  A Director, as such or as a member of any committee designated by the Board, shall in the performance of his or her duties be fully protected in relying in good faith upon the records of the Corporation and upon information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or committees designated by the Board, or by any other person as to the matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

 

ARTICLE III

 

COMMITTEES

 

Section 3.01                                                    Designation of Committees .  The Board shall designate such committees as may be required by applicable laws, regulations or stock exchange rules and may designate such additional committees as it deems necessary or appropriate.  Each committee shall consist of such number of Directors, with such qualifications, as may be required by applicable laws, regulations or stock exchange rules or as from time to time may be fixed by the Board and shall

 

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have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation to the extent delegated to such committee by resolution of the Board, which delegation shall include all such powers and authority as may be required by applicable laws, regulations or stock exchange rules.  No committee shall have any power or authority as to (a) approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, (b) adopting, amending or repealing any of these bylaws or (c) as may otherwise be excluded by law or by the certificate of incorporation.

 

Section 3.02                                                    Members and Alternate Members .  The members of each committee and any alternate members shall be selected by the Board.  The Board may provide that the members and alternate members serve at the pleasure of the Board.  An alternate member may replace any absent or disqualified member at any meeting of the committee.  An alternate member shall be given all notices of committee meetings, may attend any meeting of the committee, but may count towards a quorum and vote only if a member for whom such person is an alternate is absent or disqualified.  Each member (and each alternate member) of any committee shall hold office only until the time he or she shall cease for any reason to be a Director, or until his or her earlier death, resignation or removal.

 

Section 3.03                                                    Committee Procedures .  A quorum for each committee shall be a majority of its members, unless the committee has only one or two members, in which case a quorum shall be one member, or unless a greater quorum is established by the Board.  The vote of a majority of the committee members present at a meeting at which a quorum is present shall be the act of the committee.  Each committee shall keep regular minutes of its meetings and report to the Board when required.  The Board shall adopt a charter for each committee for which a charter is required by applicable laws, regulations or stock exchange rules, may adopt a charter for any other committee, and may adopt other rules and regulations for the government of any committee not inconsistent with the provisions of these bylaws or any such charter, and each committee may adopt its own rules and regulations of government, to the extent not inconsistent with these bylaws or any charter or other rules and regulations adopted by the Board.

 

Section 3.04                                                    Meetings and Actions of Committees .  Except to the extent that the same may be inconsistent with the terms of any committee charter required by applicable laws, regulations or stock exchange rules, meetings and actions of each committee shall be governed by, and held and taken in accordance with, the provisions of the following sections of these bylaws, with such bylaws being deemed to refer to the committee and its members in lieu of the Board and its members:

 

(a)                                   Section 2.03 (to the extent relating to place and time of regular meetings);

 

(b)                                  Section 2.04 (relating to special meetings);

 

(c)                                   Section 2.05 (relating to notice and waiver of notice);

 

(d)                                  Sections 2.07 and 2.9 (relating to telephonic communication and action without a meeting); and

 

(e)                                   Section 2.08 (relating to adjournment and notice of adjournment).

 

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Special meetings of committees may also be called by resolution of the Board.

 

Section 3.05                                                    Resignations and Removals .  Any member (and any alternate member) of any committee may resign from such position at any time by submitting an electronic transmission or by delivering a written notice of resignation, signed by such member, to the Chairman of the Board, the President or the Secretary.  Such resignation shall take effect upon delivery unless the resignation specifies a later effective date or an effective date determined upon the happening of a specified event.  Any member (and any alternate member) of any committee may be removed from such position by the Board at any time, either for or without cause.

 

Section 3.06                                                    Vacancies .  If a vacancy occurs in any committee for any reason, the remaining members (and any alternate members) may continue to act if a quorum is present.  A committee vacancy may be filled only by the Board.

 

ARTICLE IV

 

OFFICERS

 

Section 4.01                                                    Officers .  The Board shall elect a Chairman of the Board (who shall be a Director), a President and a Secretary as officers of the Corporation.  The Board may also elect a Treasurer, one or more Vice Presidents (any one or more of whom may be designated an Executive Vice President or Senior Vice President), Assistant Secretaries and Assistant Treasurers, and such other officers and agents as the Board may determine.  In addition, the Board from time to time may delegate to any officer the power to appoint subordinate officers or agents and to prescribe their respective rights, terms of office, authorities and duties.  Any action by an appointing officer may be superseded by action by the Board.  Any number of offices may be held by the same person, except that one person may not hold both the office of President and the office of Secretary.  No officer need be a Director of the Corporation.  For the avoidance of doubt, the term Vice President shall refer to an officer elected by the Board as Vice President and shall not include any employees of the Corporation whose employment title is “Vice President” unless such individual has been elected as a Vice President of the Corporation in accordance with these bylaws.

 

Section 4.02                                                    Election .  Unless otherwise determined by the Board, the officers of the Corporation need not be elected for a specified term but shall serve at the pleasure of the Board or for such terms as may be agreed in the individual case by each officer and the Board.  Officers and agents appointed pursuant to delegated authority as provided in Section 4.01 (or, in the case of agents, as provided in Section 4.07 ) shall hold their offices for such terms as may be determined from time to time by the appointing officer.  Each officer shall hold office until his or her successor has been elected or appointed and qualified, or until his or her earlier death, resignation or removal.  A failure to elect officers shall not dissolve or otherwise affect the Corporation.

 

Section 4.03                                                    Compensation .  The salaries and other compensation of all officers and agents of the Corporation shall be fixed by the Board or in the manner established by the Board.

 

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Section 4.04                                                    Removal and Resignation; Vacancies .  Any officer may be removed for or without cause at any time by the Board, without prejudice to the rights, if any, of such officer under any contract to which such officer is a party.  Any officer granted the power to appoint subordinate officers and agents as provided in Section 4.01 may remove any subordinate officer or agent appointed by such officer, at any time, for or without cause, without prejudice to the rights, if any, of such officer under any contract to which such officer is a party.  Any officer or agent may resign at any time by delivering notice of resignation, either in writing signed by such officer or by electronic transmission, to the Board, the Chairman of the Board or the President, without prejudice to the rights, if any, of the Corporation under any contract to which such officer is a party.  Unless otherwise specified therein, such resignation shall take effect upon delivery.  Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise, may be filled by the Board or by the officer, if any, who appointed the person formerly holding such office.

 

Section 4.05                                                    Authority and Duties of Officers .  An officer of the Corporation shall have such authority and shall exercise such powers and perform such duties (a) as may be required by law, (b) to the extent not inconsistent with law, as are specified in these bylaws, (c) to the extent not inconsistent with law or these bylaws, as may be specified by resolution of the Board, and (d) to the extent not inconsistent with any of the foregoing, as may be specified by the appointing officer with respect to a subordinate officer appointed pursuant to delegated authority under Section 4.01 .

 

Section 4.06                                                    Chairman of the Board . The Chairman of the Board shall preside at all meetings of the stockholders and Directors at which he or she is present. He or she shall have the authority to sign, in the name and on behalf of the Corporation, checks, orders, contracts, leases, notes, drafts and all other documents and instruments in connection with the business of the Corporation, and to perform such other duties as shall be assigned to or required of the Chairman of the Board by the Board.

 

Section 4.07                                                    President .  Unless there is a separately designated Chairman of the Board, the President shall preside at all meetings of the stockholders and Directors at which he or she is present, shall be the chief executive officer of the Corporation, shall have general control and supervision of the policies and operations of the Corporation and shall see that all orders and resolutions of the Board are carried into effect.  He or she shall manage and administer the Corporation’s business and affairs and shall also perform all duties and exercise all powers usually pertaining to the office of a chief executive officer of a corporation, including, without limitation under the DGCL.  He or she shall have the authority to sign, in the name and on behalf of the Corporation, checks, orders, contracts, leases, notes, drafts and all other documents and instruments in connection with the business of the Corporation.  Except as otherwise determined by the Board, he or she shall have the authority to cause the employment or appointment of such employees (other than the President) or agents of the Corporation as the conduct of the business of the Corporation may require, to fix their compensation, and to remove or suspend such employee or any agent employed or appointed by any officer or to suspend any agent appointed by the Board.  The President shall have the duties and powers of the Treasurer if no Treasurer is elected and shall have such other duties and powers as the Board may from time to time prescribe.

 

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Section 4.08                                                    Vice Presidents .  Unless otherwise determined by the Board, if one or more Vice Presidents have been elected, each Vice President shall perform such duties and exercise such powers as may be assigned to him or her from time to time by the Board or the President.  In the event of absence or disability of the President, the duties of the President shall be performed, and his or her powers may be exercised, by such Vice President as shall be designated by the Board or, failing such designation, by the Vice President in order of seniority of election to that office.

 

Section 4.09                                                    Secretary .  Unless otherwise determined by the Board, the Secretary shall have the following powers and duties:

 

(a)                                   The Secretary shall keep or cause to be kept a record of all the proceedings of the meetings of the stockholders, the Board and any committees thereof in books provided for that purpose.

 

(b)                                  The Secretary shall cause all notices to be duly given in accordance with the provisions of these bylaws and as required by law.

 

(c)                                   Whenever any committee shall be appointed pursuant to a resolution of the Board, the Secretary shall furnish a copy of such resolution to the members of such committee.

 

(d)                                  The Secretary shall be the custodian of the records and of the seal of the Corporation and cause such seal (or a facsimile thereof) to be affixed to all certificates representing shares of the Corporation prior to the issuance thereof and to all documents and instruments that the Board or any officer of the Corporation has determined should be executed under seal, may sign (together with any other authorized officer) any such document or instrument, and when the seal is so affixed he or she may attest the same.

 

(e)                                   The Secretary shall properly maintain and file all books, reports, statements, certificates and all other documents and records required by law, the certificate of incorporation or these bylaws.

 

(f)                                     The Secretary shall have charge of the stock books and ledgers of the Corporation and shall cause the stock and transfer books to be kept in such manner as to show at any time the number of shares of stock of the Corporation of each class issued and outstanding, the names (alphabetically arranged) and the addresses of the holders of record of such shares, the number of shares held by each holder and the date as of which each such holder became a holder of record.

 

(g)                                  The Secretary shall sign (unless the Treasurer, an Assistant Treasurer or an Assistant Secretary shall have signed) certificates representing shares of the Corporation the issuance of which shall have been authorized by the Board.

 

(h)                                  The Secretary shall perform, in general, all duties incident to the office of secretary and such other duties as may be specified in these bylaws or as may be assigned to the Secretary from time to time by the Board or the President.

 

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Section 4.10                                                    Treasurer .  Unless otherwise determined by the Board, the Treasurer, if there be one, shall be the chief financial officer of the Corporation and shall have the following powers and duties:

 

(a)                                   The Treasurer shall have charge and supervision over and be responsible for the moneys, securities, receipts and disbursements of the Corporation, and shall keep or cause to be kept full and accurate records thereof.

 

(b)                                  The Treasurer shall cause the moneys and other valuable effects of the Corporation to be deposited in the name and to the credit of the Corporation in such banks or trust companies or with such bankers or other depositaries as shall be determined by the Board or the President, or by such other officers of the Corporation as may be authorized by the Board or the President to make such determinations.

 

(c)                                   The Treasurer shall cause the moneys of the Corporation to be disbursed by checks or drafts (signed by such officer or officers or such agent or agents of the Corporation, and in such manner, as the Board or the President may determine from time to time) upon the authorized depositaries of the Corporation and cause to be taken and preserved proper vouchers for all moneys disbursed.

 

(d)                                  The Treasurer shall render to the Board or the President, whenever requested, a statement of the financial condition of the Corporation and of the transactions of the Corporation, and render a full financial report at the annual meeting of the stockholders, if called upon to do so.

 

(e)                                   The Treasurer shall be empowered from time to time to require from all officers or agents of the Corporation reports or statements giving such information as he or she may desire with respect to any and all financial transactions of the Corporation.

 

(f)                                     The Treasurer may sign (unless an Assistant Treasurer or the Secretary or an Assistant Secretary shall have signed) certificates representing shares of stock of the Corporation the issuance of which shall have been authorized by the Board.

 

(g)                                  The Treasurer shall perform, in general, all duties incident to the office of treasurer and such other duties as may be specified in these bylaws or as may be assigned to the Treasurer from time to time by the Board or the President.

 

Section 4.11                                                    Security .  The Board may require any officer, agent or employee of the Corporation to provide security for the faithful performance of his or her duties, in such amount and of such character as may be determined from time to time by the Board.

 

ARTICLE V

 

CAPITAL STOCK

 

Section 5.01                                                    Certificates of Stock; Uncertificated Shares .  The shares of the Corporation shall be represented by certificates, except to the extent that the Board has provided by resolution that some or all of any or all classes or series of the stock of the Corporation shall

 

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be uncertificated shares.  Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation.  Every holder of stock in the Corporation represented by certificates shall be entitled to have, and the Board may in its sole discretion permit a holder of uncertificated shares to receive upon request, a certificate signed by the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, representing the number of shares registered in certificate form.  Such certificate shall be in such form as the Board may determine, to the extent consistent with applicable law, the certificate of incorporation and these bylaws.

 

Section 5.02                                                    Facsimile Signatures .  Any or all signatures on the certificates referred to in Section 5.01 of these bylaws may be in facsimile form, to the extent permitted by law.  If any officer, transfer agent or registrar who has signed, or whose facsimile signature has been placed upon, a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

 

Section 5.03                                                    Lost, Stolen or Destroyed Certificates .  A new certificate may be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed only upon delivery to the Corporation of an affidavit of the owner or owners (or their legal representatives) of such certificate, setting forth such allegation, and a bond or other undertaking as may be satisfactory to a financial officer of the Corporation designated by the Board to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate.

 

Section 5.04                                                    Transfer of Stock .

 

(a)                                   Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares, duly endorsed or accompanied by appropriate evidence of succession, assignment or authority to transfer, the Corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.  Within a reasonable time after the transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the DGCL.  Subject to the provisions of the certificate of incorporation and these bylaws, the Board may prescribe such additional rules and regulations as it may deem appropriate relating to the issue, transfer and registration of shares of the Corporation.

 

(b)                                  The Corporation may enter into additional agreements with shareholders to restrict the transfer of stock of the Corporation in any manner not prohibited by the DGCL.

 

Section 5.05                                                    Registered Stockholders .  Prior to due surrender of a certificate for registration of transfer, the Corporation may treat the registered owner as the person exclusively entitled to receive dividends and other distributions, to vote, to receive notice and otherwise to exercise all the rights and powers of the owner of the shares represented by such certificate, and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have notice of such

 

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claim or interests.  If a transfer of shares is made for collateral security, and not absolutely, this fact shall be so expressed in the entry of the transfer if, when the certificates are presented to the Corporation for transfer or uncertificated shares are requested to be transferred, both the transferor and transferee request the Corporation to do so.

 

Section 5.06                                                    Transfer Agent and Registrar .  The Board may appoint one or more transfer agents and one or more registrars, and may require all certificates representing shares to bear the signature of any such transfer agents or registrars.

 

ARTICLE VI

 

INDEMNIFICATION

 

Section 6.01                                                    Indemnification .

 

(a)                                   In General .  The Corporation shall indemnify, to the full extent permitted by the DGCL and other applicable law, as it presently exists or may hereafter be amended, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (each, a “ proceeding ”) by reason of the fact that (x) such person is or was serving or has agreed to serve as a Director or officer of the Corporation, or (y) such person, while serving as a Director or officer of the Corporation, is or was serving or has agreed to serve at the request of the Corporation as a Director, officer, employee, manager or agent of another corporation, partnership, joint venture, trust, nonprofit entity or other enterprise or (z) such person is or was serving or has agreed to serve at the request of the Corporation as a Director, officer or manager of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted by such person in such capacity, and who satisfies the applicable standard of conduct set forth in the DGCL or other applicable law:

 

(1)                                   in a proceeding other than a proceeding by or in the right of the Corporation, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person or on such person’s behalf in connection with such proceeding and any appeal therefrom; or

 

(2)                                   in a proceeding by or in the right of the Corporation to procure a judgment in its favor, against expenses (including attorneys’ fees) actually and reasonably incurred by such person or on such person’s behalf in connection with the defense or settlement of such proceeding and any appeal therefrom.

 

(b)                                  Indemnification in Respect of Successful Defense .  To the extent that a present or former Director or officer of the Corporation has been successful on the merits or otherwise in defense of any proceeding referred to in Section 6.01(a)  or in defense of any claim, issue or matter therein, such person shall be indemnified by the Corporation against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.

 

(c)                                   Indemnification in Respect of Proceedings Instituted by Indemnitee Section 6.01(a)  does not require the Corporation to indemnify a present or former Director or officer of the Corporation in respect of a proceeding (or part thereof) instituted by such person on

 

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his or her own behalf, unless such proceeding (or part thereof) has been authorized by the Board or the indemnification requested is pursuant to the last sentence of Section 6.03 of these bylaws.

 

Section 6.02                                                    Advance of Expenses .  The Corporation shall advance all expenses (including reasonable attorneys’ fees) incurred by a present or former Director or officer in defending any proceeding prior to the final disposition of such proceeding upon written request of such person and delivery of an undertaking by such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation.  The Corporation may authorize any counsel for the Corporation to represent (subject to applicable conflict of interest considerations) such present or former Director or officer in any proceeding, whether or not the Corporation is a party to such proceeding.

 

Section 6.03                                                    Procedure for Indemnification .  Any indemnification under Section 6.01 of these bylaws or any advance of expenses under Section 6.02 of these bylaws shall be made only against a written request therefor (together with supporting documentation) submitted by or on behalf of the person seeking indemnification or advance.  Indemnification may be sought by a person under Section 6.01 of these bylaws in respect of a proceeding only to the extent that both the liabilities for which indemnification is sought and all portions of the proceeding relevant to the determination of whether the person has satisfied any appropriate standard of conduct have become final.  A person seeking indemnification or advance of expenses may seek to enforce such person’s rights to indemnification or advance of expenses (as the case may be) in the Delaware Court of Chancery to the extent all or any portion of a requested indemnification has not been granted within ninety (90) days of, or to the extent all or any portion of a requested advance of expenses has not been granted within twenty (20) days of, the submission of such request.  All expenses (including reasonable attorneys’ fees) incurred by such person in connection with successfully establishing such person’s right to indemnification or advancement of expenses under this Article VI , in whole or in part, shall also be indemnified by the Corporation to the fullest extent permitted by law.

 

Section 6.04                                                    Burden of Proof .

 

(a)                                   In any proceeding brought to enforce the right of a person to receive indemnification to which such person is entitled under Section 6.01 of these bylaws, the Corporation has the burden of demonstrating that the standard of conduct applicable under the DGCL or other applicable law was not met.  A prior determination by the Corporation (including its Board or any committee thereof, its independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct does not itself constitute evidence that the claimant has not met the applicable standard of conduct.

 

(b)                                  In any proceeding brought to enforce a claim for advances to which a person is entitled under Section 6.02 of these bylaws, the person seeking an advance need only show that he or she has satisfied the requirements expressly set forth in Section 6.02 of these bylaws.

 

Section 6.05                                                    Contract Right; Non-Exclusivity; Survival .

 

(a)                                   The rights to indemnification and advancement of expenses provided by this Article VI shall be deemed to be separate contract rights between the Corporation and each

 

21



 

Director and officer who serves in any such capacity at any time while these provisions as well as the relevant provisions of the DGCL are in effect, and no repeal or modification of any of these provisions or any relevant provisions of the DGCL shall adversely affect any right or obligation of such Director or officer existing at the time of such repeal or modification with respect to any state of facts then or previously existing or any proceeding previously or thereafter brought or threatened based in whole or in part upon any such state of facts.  Such “contract rights” may not be modified retroactively as to any present or former Director or officer without the consent of such Director or officer.

 

(b)                                  The rights to indemnification and advancement of expenses provided by this Article VI shall not be deemed exclusive of any other indemnification or advancement of expenses to which a present or former Director or officer of the Corporation seeking indemnification or advancement of expenses may be entitled by any agreement, vote of stockholders or disinterested Directors, or otherwise.

 

(c)                                   The rights to indemnification and advancement of expenses provided by this Article VI to any present or former Director or officer of the Corporation shall inure to the benefit of the heirs, executors and administrators of such person.

 

Section 6.06                                                    Insurance .  The Corporation may purchase and maintain insurance on behalf of any person who is or was or has agreed to become a Director or officer of the Corporation, or is or was serving at the request of the Corporation as a Director or officer of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person or on such person’s behalf in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article VI .

 

Section 6.07                                                    Employees and Agents .  The Board, or any officer authorized by the Board to make indemnification decisions, may cause the Corporation to indemnify and advance expenses to any present or former employee or agent of the Corporation in such manner and for such liabilities as the Board may determine, up to the fullest extent permitted by the DGCL and other applicable law.

 

Section 6.08                                                    Interpretation; Severability .  Terms defined in Sections 145(h) or (i) of the DGCL have the meanings set forth in such sections when used in this Article VI .  If this Article VI or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless (i) indemnify each Director or officer of the Corporation as to costs, charges and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, and (ii) advance expenses to each Director or officer of the Corporation entitled to advancement of expenses under Section 6.02 in accordance therewith, in each case, to the fullest extent permitted by any applicable portion of this Article VI that shall not have been invalidated and to the fullest extent permitted by applicable law.

 

22



 

Section 6.09                                                    Subrogation .  Any person entitled to indemnification and/or advancement of expenses, in each case pursuant to this Article VI , and that is an officer, employee, partner or advisor of the Carlyle Stockholder (as such term is defined in the certificate of incorporation) (each such person, a “ Sponsor Indemnitee ”), may have certain rights to indemnification and/or advancement of expenses provided by or on behalf of the Carlyle Stockholder.  Notwithstanding anything to the contrary in these bylaws or otherwise: (i) the Corporation is the indemnitor of first resort (i.e., the Corporation’s obligations to each Sponsor Indemnitee are primary and any obligation of the Carlyle Stockholder to advance expenses or to provide indemnification for the same expenses or liabilities incurred by each Sponsor Indemnitee are secondary), (ii) the Corporation will be required to advance the full amount of expenses incurred by each Sponsor Indemnitee and will be liable for the full amount of all liabilities, expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by this Article VI , without regard to any rights each Sponsor Indemnitee may have against the Carlyle Stockholder, and (iii) the Corporation irrevocably waives, relinquishes and releases the Carlyle Stockholder from any and all claims against the Carlyle Stockholder for contribution, subrogation or any other recovery of any kind in respect thereof.  Notwithstanding anything to the contrary in these bylaws or otherwise, no advancement or payment by the Carlyle Stockholder on behalf of a Sponsor Indemnitee with respect to any claim for which such Sponsor Indemnitee has sought indemnification or advancement of expenses from the Corporation will affect the foregoing and the Carlyle Stockholder will have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Sponsor Indemnitee against the Corporation.  The Carlyle Stockholder is an express third party beneficiary of the terms of this Article VI .

 

ARTICLE VII

 

OFFICES

 

Section 7.01                                                    Registered Office .  The registered office of the Corporation in the State of Delaware shall be located at the location provided in the certificate of incorporation.

 

Section 7.02                                                    Other Offices .  The Corporation may maintain offices or places of business at such other locations within or without the State of Delaware as the Board may from time to time determine or as the business of the Corporation may require.

 

ARTICLE VIII

 

GENERAL PROVISIONS

 

Section 8.01                                                    Dividends .

 

(a)                                   Subject to any applicable provisions of law and the certificate of incorporation, dividends upon the shares of the Corporation may be declared by the Board at any regular or special meeting of the Board, or by written consent in accordance with the DGCL and these bylaws, and any such dividend may be paid in cash, property or shares of the Corporation’s stock.

 

23



 

(b)                                  A member of the Board, or a member of any committee designated by the Board shall be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board, or by any other person as to matters the Director reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation, as to the value and amount of the assets, liabilities and/or net profits of the Corporation, or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid.

 

Section 8.02                                                    Reserves .  There may be set apart out of any funds of the Corporation available for dividends such sum or sums as the Board from time to time may determine proper as a reserve or reserves for meeting contingencies, equalizing dividends, repairing or maintaining any property of the Corporation or for such other purpose or purposes as the Board may determine conducive to the interest of the Corporation, and the Board may similarly modify or abolish any such reserve.

 

Section 8.03                                                    Execution of Instruments .  Except as otherwise required by law or the certificate of incorporation, the Board or any officer of the Corporation authorized by the Board may authorize any other officer or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation.  Any such authorization must be in writing or by electronic transmission and may be general or limited to specific contracts or instruments.

 

Section 8.04                                                    Voting as Stockholder .  Unless otherwise determined by resolution of the Board, the President or any Vice President shall have full power and authority on behalf of the Corporation to attend any meeting of stockholders of any corporation in which the Corporation may hold stock, and to act, vote (or execute proxies to vote) and exercise in person or by proxy all other rights, powers and privileges incident to the ownership of such stock at any such meeting, or through action without a meeting.  The Board may by resolution from time to time confer such power and authority (in general or confined to specific instances) upon any other person or persons.

 

Section 8.05                                                    Fiscal Year .  The fiscal year of the Corporation shall end on September 30th of each year, or such other twelve (12) consecutive months as the Board may designate.

 

Section 8.06                                                    Seal .  The seal of the Corporation shall be circular in form and shall contain the name of the Corporation, the year of its incorporation and the words “Corporate Seal” and “Delaware”.  The form of such seal shall be subject to alteration by the Board.  The seal may be used by causing it or a facsimile thereof to be impressed, affixed or reproduced, or may be used in any other lawful manner.

 

Section 8.07                                                    Books and Records; Inspection .  Except to the extent otherwise required by law, the books and records of the Corporation shall be kept at such place or places within or without the State of Delaware as may be determined from time to time by the Board.

 

24



 

Section 8.08                                                    Electronic Transmission .  “ Electronic transmission ”, as used in these bylaws, means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

 

ARTICLE IX

 

AMENDMENT OF BYLAWS

 

Section 9.01                                                    Amendment .  Subject to the provisions of the certificate of incorporation, these bylaws may be amended, altered or repealed (a) by resolution adopted by a majority of the Directors present at any special or regular meeting of the Board at which a quorum is present if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting, (b) until the Trigger Date, at any regular or special meeting of the stockholders upon the affirmative vote of at least a majority of the shares of the Corporation entitled to vote generally in the election of Directors if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting, or (c) from and after the Trigger Date, at any regular or special meeting of the stockholders upon the affirmative vote of at least three-quarters of the shares of the Corporation entitled to vote generally in the election of Directors if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting.  So long as the Stockholders Agreement remains in effect, the Board shall not approve any amendment, alteration or repeal of any provision of these bylaws, or the adoption of any new bylaw, that would be contrary to or inconsistent with the Stockholders Agreement or this sentence.

 

Notwithstanding the foregoing, (x) no amendment to the Stockholders Agreement (whether or not such amendment modifies any provision of the Stockholders Agreement to which these bylaws are subject) shall be deemed an amendment of these bylaws for purposes of this Section 9.01 , and (y) no amendment, alteration or repeal of Article VI shall adversely affect any right or protection existing under bylaws immediately prior to such amendment, alteration or repeal, including any right or protection of a present or former Director or officer thereunder in respect of any act or omission occurring prior to the time of such amendment.

 

25




Exhibit 4.1

SECRETARY PRESIDENT COUNTERSIGNED AND REGISTERED: AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC (NEW YORK, NY) TRANSFER AGENT AND REGISTRAR BY: AUTHORIZED SIGNATURE THIS CERTIFIES THAT IS THE RECORD HOLDER OF FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE $0.001 PER SHARE, OF WESCO AIRCRAFT HOLDINGS, INC. transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of the Certificate properly endorsed. This Certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. DATED Wesco Aircraft Holdings, Inc. CORPORATE SEAL DELAWARE 2006 WESCO AIRCRAFT HOLDINGS, INC. COMMON STOCK WESCO AIRCRAFT HOLDINGS, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE SEE REVERSE FOR CERTAIN DEFINITIONS CUSIP TO COME WA S H A R E S

 

 

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM TEN ENT JT TEN as tenants in common as tenants by the entireties as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT– Custodian (Cust) (Minor) under Uniform Gifts to Minors Act (State) Additional abbreviations may also be used though not in the above list. – – – of the Common Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint to transfer the said shares of Common Stock on the books of the Company with full power of substitution in the premises. Dated For Value Received, hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE Shares Attorney THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. NOTICE: Signature(s) Guaranteed: THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15. (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)   ABnote North America 711 ARMSTRONG LANE COLUMBIA, TENNESSEE 38401 (931) 388-3003 SALES; HOLLY GRONER 931-490-7660  PROOF OF: MAY 27, 2011 WESCO AIRCRAFT HOLDINGS, INC. WO 3750 BACK OERATOR: TS NEW  PLEASE THE APPROPRIATE SELECTION FOR THIS PROOF. OK AS IS OK WITH CHANGES MAKE CHANGES AND SEND ANOTHER PROOF

 

 



Exhibit 10.1

 

EXECUTION VERSION

 

$765,000,000

 

CREDIT AGREEMENT

 

among

 

WESCO HOLDINGS, INC.,

as Holdings,

 

WESCO AIRCRAFT HARDWARE CORP.,

as Borrower,

 

The Several Lenders from Time to Time Parties Hereto,

 

BARCLAYS BANK PLC,
as Administrative Agent, Collateral Agent, Issuing Lender and Swingline Lender,

 

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

KEY BANK, N.A.,

 

and

BARCLAYS CAPITAL,

as Joint Lead Arrangers,

 

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

BARCLAYS CAPITAL,

J.P. MORGAN SECURITIES LLC,

MORGAN STANLEY SENIOR FUNDING, INC.,

SUMITOMO MITSUI BANKING CORPORATION,

 

and

 

ROYAL BANK OF CANADA,

as Joint Bookrunners,

 

BANK OF AMERICA, N.A.,

as Syndication Agent

 

and

 

BARCLAYS BANK PLC,

as Documentation Agent

 

Dated as of April 7, 2011

 



 

TABLE OF CONTENTS

 

 

 

 

Page

SECTION 1.

DEFINITIONS

1

 

 

 

 

 

1.1

Defined Terms

1

 

1.2

Other Definitional Provisions

35

 

1.3

Accounting Terms

36

 

1.4

Currencies; Currency Equivalents; Euro

36

 

1.5

Calculation of Baskets

37

 

1.6

Pro Forma Calculations

37

 

 

 

 

SECTION 2.

AMOUNT AND TERMS OF COMMITMENTS

38

 

 

 

 

 

2.1

Term Loan Commitments

38

 

2.2

Procedure for Term Loan Borrowing

38

 

2.3

Repayment of Term Loans

38

 

2.4

Revolving Commitments

39

 

2.5

Procedure for Revolving Loan Borrowing

39

 

2.6

Swingline Commitment

40

 

2.7

Procedure for Swingline Borrowing; Refunding of Swingline Loans

41

 

2.8

Repayment of Loans

43

 

2.9

Commitment Fees, etc.

43

 

2.10

Termination or Reduction of Revolving Commitments

44

 

2.11

Optional Prepayments

44

 

2.12

Mandatory Prepayments

44

 

2.13

Conversion and Continuation Options

46

 

2.14

Minimum Amounts and Maximum Number of Eurocurrency Tranches

47

 

2.15

Interest Rates and Payment Dates

47

 

2.16

Computation of Interest and Fees

48

 

2.17

Inability to Determine Interest Rate

48

 

2.18

Pro Rata Treatment and Payments

49

 

2.19

Requirements of Law

50

 

2.20

Taxes

52

 

2.21

Indemnity

54

 

2.22

Illegality

54

 

2.23

Change of Lending Office

55

 

2.24

Replacement of Lenders

55

 

2.25

Incremental Loans

56

 

2.26

Defaulting Lenders

57

 

 

 

 

SECTION 3.

LETTERS OF CREDIT

59

 

 

 

 

 

3.1

L/C Commitment

59

 

3.2

Procedure for Issuance of Letter of Credit

59

 

3.3

Fees and Other Charges

59

 

3.4

L/C Participations

60

 

3.5

Reimbursement Obligation of the Borrower

61

 

3.6

Obligations Absolute

62

 

3.7

Letter of Credit Payments

62

 



 

 

3.8

Applications

62

 

 

 

 

SECTION 4.

REPRESENTATIONS AND WARRANTIES

62

 

 

 

 

 

4.1

Financial Condition

63

 

4.2

No Change

63

 

4.3

Existence; Compliance with Law

63

 

4.4

Corporate Power; Authorization; Enforceable Obligations

63

 

4.5

No Legal Bar

65

 

4.6

No Material Litigation

64

 

4.7

No Default

64

 

4.8

Ownership of Property; Liens

64

 

4.9

Intellectual Property

64

 

4.10

Taxes

64

 

4.11

Federal Regulations

65

 

4.12

ERISA

65

 

4.13

Investment Company Act

65

 

4.14

Subsidiaries

65

 

4.15

Environmental Matters

65

 

4.16

Accuracy of Information, etc.

66

 

4.17

Security Documents

66

 

4.18

Solvency

66

 

 

 

 

SECTION 5.

CONDITIONS PRECEDENT

67

 

 

 

 

 

5.1

Conditions to Initial Extension of Credit

67

 

5.2

Conditions to Each Extension of Credit

68

 

 

 

 

SECTION 6.

AFFIRMATIVE COVENANTS

69

 

 

 

 

 

6.1

Financial Statements

69

 

6.2

Certificates; Other Information

70

 

6.3

Payment of Obligations

71

 

6.4

Conduct of Business and Maintenance of Existence, etc.; Compliance

71

 

6.5

Maintenance of Property; Insurance

71

 

6.6

Inspection of Property; Books and Records; Discussions

72

 

6.7

Notices

72

 

6.8

Additional Collateral, etc.

73

 

6.9

Further Assurances

75

 

6.10

Use of Proceeds

75

 

6.11

Changes in Jurisdictions of Organization; Name

75

 

 

 

 

SECTION 7.

NEGATIVE COVENANTS

75

 

 

 

 

 

7.1

Financial Condition Covenants

76

 

7.2

Indebtedness

76

 

7.3

Liens

79

 

7.4

Fundamental Changes

81

 

7.5

Dispositions of Property

82

 

7.6

Restricted Payments

84

 

7.7

[Reserved.]

86

 

iii



 

 

7.8

Investments

86

 

7.9

Optional Payments and Modifications of Certain Debt Instruments

89

 

7.10

Transactions with Affiliates

89

 

7.11

Sales and Leasebacks

89

 

7.12

Changes in Fiscal Periods

90

 

7.13

Negative Pledge Clauses

90

 

7.14

Clauses Restricting Subsidiary Distributions

90

 

7.15

Lines of Business

91

 

7.16

Limitation on Hedge Agreements

91

 

 

 

 

SECTION 8.

EVENTS OF DEFAULT

91

 

 

 

 

SECTION 9.

THE AGENTS

94

 

 

 

 

 

9.1

Appointment

94

 

9.2

Delegation of Duties

94

 

9.3

Exculpatory Provisions

94

 

9.4

Reliance by the Agents

95

 

9.5

Notice of Default

95

 

9.6

Non-Reliance on Agents and Other Lenders

95

 

9.7

Indemnification

96

 

9.8

Agent in Its Individual Capacity

96

 

9.9

Successor Agents

96

 

9.10

Authorization to Release Liens and Guarantees

97

 

9.11

Joint Lead Arrangers, Joint Bookrunners, Documentation Agent and Syndication Agent

97

 

9.12

Administrative Agent May File Proof of Claims

97

 

 

 

 

SECTION 10.

MISCELLANEOUS

98

 

 

 

 

 

10.1

Amendments and Waivers

98

 

10.2

Notices

101

 

10.3

No Waiver; Cumulative Remedies

102

 

10.4

Survival of Representations and Warranties

103

 

10.5

Payment of Expenses; Indemnification

103

 

10.6

Successors and Assigns; Participations and Assignments

104

 

10.7

Adjustments; Set-off

108

 

10.8

Counterparts

108

 

10.9

Severability

109

 

10.10

Integration

109

 

10.11

GOVERNING LAW

109

 

10.12

Submission To Jurisdiction; Waivers

109

 

10.13

Judgment Currency

109

 

10.14

Acknowledgments

110

 

10.15

Confidentiality

110

 

10.16

Release of Collateral and Guarantee Obligations; Subordination of Liens

111

 

10.17

Accounting Changes

112

 

10.18

WAIVERS OF JURY TRIAL

112

 

10.19

USA PATRIOT ACT

112

 

10.20

Delivery of Lender Addenda

112

 

iv



 

SCHEDULES :

 

 

1

Revolving Commitments, Tranche A Term Loan Commitments and Tranche B Term Loan Commitments

1.1A

Excluded Subsidiaries

4.4

Consents, Authorizations, Filings and Notices

4.8A

Excepted Property

4.8B

Owned or Leased Real Property

4.14

Subsidiaries

4.17

UCC Filing Jurisdictions

7.2(d)

Existing Indebtedness

7.3(f)

Existing Liens

7.8

Existing Investments

7.13

Restrictions on Restricted Subsidiaries

 

 

EXHIBITS :

 

 

A

Form of Guarantee and Collateral Agreement

B

Form of Compliance Certificate

C

Form of Closing Certificate

D

Form of Assignment and Assumption

E

Form of Legal Opinion of Latham & Watkins LLP

F

Form of Exemption Certificate

G

Form of Solvency Certificate

H

Form of Joinder Agreement

I

Form of Lender Addendum

J

Auction Procedures

K-1

Form of Notice of Term Loan Borrowing

K-2

Form of Notice Revolving Loan Borrowing

L

Form of Prepayment Option Notice

M

Form of Notice of Continuation/Conversion

 

v



 

CREDIT AGREEMENT, dated as of April 7, 2011, among WESCO HOLDINGS, INC., a Delaware corporation (“ Holdings ”), WESCO AIRCRAFT HARDWARE CORP., a California corporation (the “ Borrower ”), the several banks and other financial institutions or entities from time to time parties to this Agreement (the “ Lenders ”), BARCLAYS BANK PLC, as Administrative Agent, Collateral Agent, Issuing Lender and Swingline Lender, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, KEY BANK, N.A. and BARCLAYS CAPITAL, the investment banking division of Barclays Bank PLC, as joint lead arrangers, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, BARCLAYS CAPITAL, the investment banking division of Barclays Bank PLC, J.P MORGAN SECURITIES LLC, MORGAN STANLEY SENIOR FUNDING, INC., SUMITOMO MITSUI BANKING CORPORATION and ROYAL BANK OF CANADA, as joint bookrunners, BANK OF AMERICA, N.A., as syndication agent, and BARCLAYS BANK PLC, as documentation agent.

 

The parties hereto hereby agree as follows:

 

SECTION 1.                                 DEFINITIONS

 

1.1                                  Defined Terms .  As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.

 

ABR ”:  for any day, a rate per annum rounded upwards, if necessary, to the next 1/100 of 1% equal to the highest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1% and (c) the Eurocurrency Rate for a Eurocurrency Loan denominated in Dollars for a three-month interest period beginning on such day (or if such day is not a Business Day, on the immediately preceding Business Day) plus  1%; provided that, for the avoidance of doubt, the Eurocurrency Rate for any day shall be based on the rate appearing on the Screen for Dollars on such day at approximately 11 A.M., London time, as the Eurocurrency Rate for deposits denominated in Dollars and having a three-month interest period.  For purposes hereof:  “ Prime Rate ” means the prime commercial lending rate of the Administrative Agent as established from time to time in its principal U.S. office, as in effect from time to time.  Any change in the ABR due to a change in the Eurocurrency Rate, the Prime Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Eurocurrency Rate, the Prime Rate or the Federal Funds Effective Rate, respectively.

 

ABR Loans ”:  Loans denominated in Dollars the rate of interest applicable to which is based upon the ABR.

 

Accepting Lenders ”:  as defined in Section 10.1.

 

Accounting Changes ”:  as defined in Section 10.17.

 

Acquisition ”:  as defined in the definition of “Permitted Acquisition”.

 

Administrative Agent ”:  Barclays Bank PLC, as the administrative agent for the Lenders under this Agreement and the other Loan Documents, together with any of its successors and permitted assigns.

 

Affiliate ”:  as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person.  For purposes of this definition, “control” of a Person means the power, directly or indirectly to direct or cause the direction of the management and policies of such Person, in either case whether by contract or otherwise.

 



 

Affiliate Assignment Agreement ”:  an Assignment and Assumption Agreement substantially in the form of Exhibit 1 to Exhibit D hereto, with such amendments or modifications as may be approved by the Administrative Agent.

 

Affiliate Lenders ”:  collectively, Holdings and its Subsidiaries and Other Affiliates.

 

Agents ”:  the collective reference to the Collateral Agent and the Administrative Agent.

 

Aggregate Exposure ”:  with respect to any Lender at any time, an amount equal to (a) until the Closing Date, the aggregate amount of such Lender’s Commitments at such time and (b) thereafter, the sum of (i) the aggregate then unpaid principal amount of such Lender’s Tranche A Term Loans and Tranche B Term Loans, (ii) the aggregate amount of such Lender’s Revolving Dollar Exposure or Revolving Multicurrency Exposure, or if the Revolving Commitments of any Class have been terminated, the amount of such Lender’s Revolving Extensions of Credit then outstanding of such Class and (iii) the aggregate amount of such Lender’s New Term Loan Commitments then in effect, or if such New Term Loan Commitments have been terminated, the amount of such Lender’s New Term Loans.

 

Aggregate Exposure Percentage ”:  with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the total Aggregate Exposures of all Lenders at such time.

 

Agreed Foreign Currency ”:  at any time, Pounds Sterling or euro.

 

Agreed Foreign Currency Equivalent ”:  with respect to any amount in Dollars, the amount of any Agreed Foreign Currency that could be purchased with such amount of Dollars using the reciprocal of the foreign exchange rate(s) specified in the definition of the term “Dollar Equivalent”, as determined by the Administrative Agent.

 

Agreed Purposes ”:  as defined in Section 10.15.

 

Agreement ”:  this Credit Agreement, as amended, restated, amended and restated, waived, supplemented or otherwise modified from time to time.

 

Applicable Class ”:  as defined in Section 2.12(f).

 

Applicable Margin ” or “ Applicable Commitment Fee Rate ”:  for any day, with respect to Revolving Loans (including any Swingline Loans), Tranche A Term Loans, Tranche B Term Loans and the commitment fee payable hereunder, the applicable rate per annum determined pursuant to the Pricing Grid; provided that (a) from the Closing Date until the six-month anniversary of the Closing Date, the Applicable Margin with respect to Revolving Loans and Tranche A Term Loans and the Applicable Commitment Fee Rate shall be determined by reference to Level IV of the Pricing Grid, and thereafter the Applicable Margin with respect to Revolving Loans and Tranche A Term Loans and the Applicable Commitment Fee Rate shall be determined in accordance with the Pricing Grid based on the most recently delivered financial statements delivered pursuant to Section 6.1 and (b) from the Closing Date until June 30, 2012, the Applicable Margin with respect to Tranche B Term Loans shall be determined by reference to Level IV of the Pricing Grid, and thereafter the Applicable Margin with respect to Tranche B Term Loans shall be determined in accordance with the Pricing Grid based on the most recently delivered financial statements delivered pursuant to Section 6.1.

 

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Application ”:  an application, in such form as the relevant Issuing Lender may specify from time to time, requesting such Issuing Lender to open a Letter of Credit.

 

Approved Fund ”:  as defined in Section 10.6(b).

 

Asset Sale ”:  any Disposition of Property or series of related Dispositions of Property by any Loan Party (a) not in the ordinary course of business under Section 7.5(e) or (v) or (b) not otherwise permitted under Section 7.5, in each case, which yields Net Cash Proceeds to any Loan Party (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $7,500,000.

 

Assignee ”:  as defined in Section 10.6(b).

 

Assignment and Assumption ”:  an Assignment and Assumption, substantially in the form of Exhibit D.

 

Auction ”:  as defined in Section 10.6(g).

 

Auction Manager ”:  (a) any of the Administrative Agent or the Joint Lead Arrangers, as determined by the Borrower or (b) any other financial institution or advisor agreed by the Borrower and the Administrative Agent (whether or not an Affiliate of the Administrative Agent) to act as an arranger in connection with any repurchases pursuant to Section 10.6(g).

 

Available Amount ”:  as at any date, the sum of, without duplication and, in the case of clauses (c) through (g) below, to the extent not otherwise included in Excess Cash Flow:

 

(a)                                   $25,000,000;

 

(b)                                  the Available Excess Cash Flow Amount;

 

(c)                                   the Net Cash Proceeds received from any Equity Issuance by, or capital contribution to, Holdings or the Borrower made after the Closing Date (other than Specified Equity Contributions and Equity Issuances of Disqualified Capital Stock) which, in the case of any such Equity Issuance by, or capital contribution to, Holdings, have been contributed in cash as common equity to the Borrower;

 

(d)                                  the aggregate amount of proceeds received by the Loan Parties after the Closing Date that (i) would have constituted Net Cash Proceeds pursuant to clause (a) of the definition of “Net Cash Proceeds” except for the operation of any of (A) the Dollar threshold set forth in the definition of “Asset Sale”, and (B) the Dollar threshold set forth in the definition of “Recovery Event” or (ii) constitutes proceeds declined for prepayment that are returned to the Borrower pursuant to Section 2.12;

 

(e)                                   the aggregate principal amount of any Indebtedness of Holdings or any Restricted Subsidiary issued after the Closing Date (other than Indebtedness issued to a Restricted Subsidiary), which has been extinguished after being converted into or exchanged for Capital Stock in Holdings or any parent company;

 

(f)                                     the amount received by Holdings or any Restricted Subsidiary in cash (and the fair market value (as determined in good faith by Holdings) of Property other than cash received

 

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by Holdings or any Restricted Subsidiary) after the Closing Date from any dividend or other distribution by an Unrestricted Subsidiary;

 

(g)                                  in the event any Unrestricted Subsidiary has been redesignated as a Restricted Subsidiary and becomes a Subsidiary Guarantor or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, Holdings, the Borrower or any Subsidiary Guarantor, the fair market value (as determined in good faith by the Borrower) of the Investments of Holdings or any Restricted Subsidiary in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable) to the extent the Investment in such Unrestricted Subsidiary was made by Holdings or any of its Restricted Subsidiaries with the Available Amount;

 

(h)                                  an amount equal to any returns (including dividends, interest, distributions, returns of principal, profits on sale, repayments, income and similar amounts) actually received in cash or Cash Equivalents by the Borrower or any Restricted Subsidiary in respect of any Permitted Acquisition or Investments made after the Closing Date pursuant to Sections 7.8(f), 7.8(n) and 7.8(o) using the Available Amount; and

 

(i)                                      the aggregate amount actually received in cash or Cash Equivalents by the Borrower or any Restricted Subsidiary in connection with the sale, transfer or other disposition of its ownership interest in any joint venture that is not a Subsidiary or in any Unrestricted Subsidiary, in each case, to the extent of the Investment in such joint venture or Unrestricted Subsidiary;

 

minus , the sum of

 

(a)                                   the amount of Indebtedness incurred after the Closing Date pursuant to Section 7.2(h) using the Available Amount;

 

(b)                                  the amount of Restricted Payments made after the Closing Date pursuant to Section 7.6(e) using the Available Amount; and

 

(c)                                   the amount of any Investments made after the Closing Date in respect of any Permitted Acquisition or Investments made after the Closing Date pursuant to Sections 7.8(f) and 7.8(o) using the Available Amount.

 

Available Excess Cash Flow Amount ”:  the aggregate cumulative amount, not less than zero, of Excess Cash Flow for all fiscal years ending on or after September 30, 2012 that is not required pursuant to the provisions of Section 2.12(c) to be applied to the prepayment of Term Loans.

 

Available Revolving Commitment ”:  as to any Revolving Lender of any Class at any time, an amount equal to the excess, if any, of (a) such Lender’s Revolving Commitment of such Class then in effect over (b) such Lender’s Revolving Extensions of Credit of such Class then outstanding; provided that in calculating any Revolving Lender’s Revolving Extensions of Credit of Dollar Revolving Commitments for the purpose of determining such Revolving Lender’s Available Revolving Commitments of such Class pursuant to Section 2.9(a), the aggregate principal amount of Swingline Loans then outstanding shall be deemed to be zero.

 

Below Threshold Asset Disposition Proceeds ”:  the aggregate cumulative amount of Net Cash Proceeds received by the Loan Parties after the Closing Date that would have constituted Net Cash Proceeds of an Asset Sale except for the operation of clause (a) of the definition thereof.

 

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Benefitted Lender ”:  as defined in Section 10.7(a).

 

Board ”:  the Board of Governors of the Federal Reserve System of the United States (or any successor).

 

Borrower ”:  as defined in the preamble hereto.

 

Borrowing Date ”:  any Business Day specified by the Borrower as a date on which the Borrower requests the relevant Lenders to make Loans hereunder.

 

Business ”:  the provision of inventory management services and the purchase, sale and distribution of parts, machined parts, electronic products, bearings, other C-class parts, fastener installation tooling and other parts used by the Borrower’s customers and various services relating, incidental or ancillary thereto.

 

Business Day ”:  a day (a) other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close, (b) with respect to notices and determinations in connection with, and payments of principal and interest on, Eurocurrency Loans, such day is also a day for trading by and between banks in deposits in the relevant Currency in the interbank eurocurrency market, (c) with respect to notices and determinations in connection with, and payments of principal and interest on, Eurocurrency Loans denominated in Pounds Sterling, such day is also a day on which commercial banks and the London foreign exchange market settle payments in the Principal Financial Center for such Foreign Currency and (d) with respect to notices and determinations in connection with, and payments of principal and interest on, Eurocurrency Loans denominated in euro, such day is also a day on which the Trans-European Automated Real-time Gross Settlement Express Transfer payment system (or any successor settlement system as determined by the Administrative Agent) is open for the settlement of payments in euro.

 

Capital Expenditures ”:  for any period, with respect to any Person, the aggregate of all cash expenditures by such Person for the acquisition or leasing (pursuant to a capital lease but excluding any amount representing capitalized interest) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) which are required to be capitalized under GAAP on a balance sheet of such Person; provided that in any event the term “Capital Expenditures” shall exclude:  (i) any Permitted Acquisition and any other Investment permitted hereunder; (ii) any expenditures to the extent financed with any Reinvestment Deferred Amount; (iii) expenditures for leasehold improvements for which such Person is reimbursed or receives a credit; and (iv) expenditures to the extent they are made with the proceeds of equity contributions (other than Specified Equity Contributions and in respect of Disqualified Capital Stock) made to Holdings or the Restricted Subsidiaries after the Closing Date.

 

Capital Lease Obligations ”:  as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.

 

Capital Stock ”:  any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, and any and all equivalent ownership interests in a Person (other than a corporation).

 

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Cash Equivalents ”:  (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of one year or less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000; (c) commercial paper of an issuer rated at least A-2 by S&P or P-2 by Moody’s, or carrying an equivalent rating by a nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within one year from the date of acquisition; (d) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition; and (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of any of clauses (a) through (f) of this definition; or (h) money market funds that (i) purport to comply generally with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P or Aaa by Moody’s or carrying an equivalent rating by a nationally recognized rating agency, and (iii) have portfolio assets of at least $5,000,000,000.

 

Certificated Security ”:  as defined in the Guarantee and Collateral Agreement.

 

Chattel Paper ”:  as defined in the Guarantee and Collateral Agreement.

 

Class ”:  (a) when used in reference to any Loan or borrowing, refers to whether such Loan, or the Loans constituting such borrowing, are Dollar Revolving Loans, Multicurrency Revolving Loans, Tranche A Term Loans, Tranche B Term Loans or, if applicable, a Tranche of New Term Loans; (b) when used in reference to any Swingline Loan, refers to whether such Swingline Loans are Dollar Swingline Loans or Multicurrency Swingline Loans; (c) when used in reference to any Lender, refers to whether such Lender is a Dollar Revolving Lender, a Multicurrency Revolving Lender, a Tranche A Term Lender, a Tranche B Term Lender or a New Term Lender under a Tranche of New Term Loans; (d) when used in reference to any Commitment, refers to whether such Commitment is a Dollar Revolving Commitment, Multicurrency Revolving Commitment, Tranche A Term Loan Commitment, Tranche B Term Loan Commitment or Tranche of New Term Loan Commitment; and (e) when used in reference to a Letter of Credit refers, refers to whether such Letter of Credit is a Dollar Letter of Credit or a Multicurrency Letter of Credit.

 

Closing Date ”:  the date on which the conditions precedent set forth in Section 5.1 shall have been satisfied and the initial Loans hereunder shall have been funded, which date is April 7, 2011.

 

Code ”:  the Internal Revenue Code of 1986, as amended from time to time.

 

Co-Investors ”:  any co-investors designated by the Sponsor who may own, directly or indirectly, no more than 15%, in the aggregate, of the Capital Stock of Holdings.

 

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Collateral ”:  the meaning assigned to such term in the Guarantee and Collateral Agreement.

 

Collateral Agent ”:  Barclays Bank PLC, in its capacity as collateral agent for the Secured Parties under the Security Documents and any of its successors and permitted assigns.

 

Commitment ”:  as to any Lender, the sum of the Revolving Commitments, the Tranche A Term Loan Commitments, the Tranche B Term Loan Commitments and the New Term Loan Commitments (if any) of such Lender.

 

Committed Reinvestment Amount ”:  as defined in the definition of “Reinvestment Prepayment Amount”.

 

Commonly Controlled Entity ”:  an entity, whether or not incorporated, that is under common control with Holdings within the meaning of Section 4001 of ERISA or is part of a group that includes Holdings and that is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.

 

Commonly Controlled Plan ”:  as defined in Section 4.12(b).

 

Compliance Certificate ”:  a certificate duly executed by a Responsible Officer substantially in the form of Exhibit B.

 

Confidential Information ”:  as defined in Section 10.15.

 

Consolidated Current Assets ”:  at any date, all amounts (other than cash, Cash Equivalents and Foreign Cash Equivalents) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of Holdings and its Restricted Subsidiaries at such date.

 

Consolidated Current Liabilities ”:  at any date, all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of Holdings and its Restricted Subsidiaries at such date, but excluding (a) the current portion of any Indebtedness of Holdings and its Restricted Subsidiaries and (b) without duplication, all Indebtedness consisting of Revolving Loans or Swingline Loans, to the extent otherwise included therein.

 

Consolidated EBITDA ”:  of any Person for any period, Consolidated Net Income of such Person and its Subsidiaries (or, in the case of Holdings, its Restricted Subsidiaries) for such period plus , without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax (or any alternative tax in lieu thereof) expense (including state, local, franchise, excise, foreign withholding and similar taxes), (b) Consolidated Net Interest Expense of such Person and its Subsidiaries (or, in the case of Holdings, its Restricted Subsidiaries), amortization or writeoff of debt discount, debt issuance costs and commissions, premiums, discounts and other fees and charges associated with Indebtedness (including commitment and administrative fees and charges with respect to the Facilities), (c) depreciation and amortization expense, (d) amortization or impairment of intangibles (including, but not limited to, goodwill) and organization costs, (e) any extraordinary, unusual or non-recurring expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, losses on sales of assets outside of the ordinary course of business), (f) any other non-cash charges, expenses or losses, including in relation to earn-outs and similar obligations, (g) restructuring and

 

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integration costs, including, without limitation, any severance costs, costs associated with office openings or closings and consolidation, relocation or integration costs and other non-recurring business optimization and restructuring charges and expenses, (h) stock-option based and other equity-based compensation expenses, (i) transaction costs, fees, losses and expenses (including those relating to transactions contemplated hereby (including any amendments or waivers of the Loan Documents), and those payable in connection with the sale of Capital Stock, the incurrence of Indebtedness permitted under Section 7.2, transactions permitted by Section 7.4, Dispositions permitted by Section 7.5 or any Permitted Acquisition or other Investment permitted under Section 7.8 (in each case whether or not successful)), (j) all fees and expenses paid pursuant to the Management Agreement, (k) proceeds from any business interruption insurance (in the case of this clause (k) to the extent not reflected as revenue or income in such statement of such Consolidated Net Income), (l) losses recognized and expenses incurred in connection with the effect of currency and exchange rate fluctuations on intercompany balances and other balance sheet items, (m) cash expenses relating to earn-outs and similar obligations, (n) to the extent actually reimbursed, charges, losses, lost profits, write-offs or expenses incurred to the extent covered by indemnification provisions in any agreement in connection with a Permitted Acquisition or any other acquisition permitted by Section 7.8, (o) the amount of cost savings and other operating improvements and synergies projected by the Borrower in good faith and certified in writing to the Administrative Agent to be realized as a result of any acquisition or Disposition (including the termination or discontinuance of activities constituting such business) of business entities or properties or assets, constituting a division or line of business of any business entity, division or line of business that is the subject of any such acquisition or Disposition, or from any operational change taken or committed to be taken during such period (in each case calculated on a pro forma basis as though such cost savings and other operating improvements and synergies had been realized on the first day of such period), net of the amount of actual benefits realized during such period from such actions to the extent already included in the Consolidated Net Income for such period, provided that (i) the Borrower shall have certified to the Administrative Agent that (A) such cost savings, operating improvements and synergies are reasonably anticipated to result from such actions and (B) such actions have been taken, or have been committed to be taken and the benefits resulting therefrom are anticipated by the Borrower to be realized within 12 months, (ii) no cost savings shall be added pursuant to this clause (o) to the extent already included in clause (e) above with respect to such period and (iii) the amount of such cost savings, operating improvements and synergies shall not exceed 10% of Consolidated EBITDA for any period of 12 consecutive months and (p) Public Company Costs, provided that amount of such costs and Public Company Costs shall not exceed $4,000,000 for any period of 12 consecutive months; minus , to the extent included in the statement of such Consolidated Net Income for such period, the sum of (a) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on the sales of assets outside of the ordinary course of business), (b) any other non-cash income or gains (other than the accrual of revenue in the ordinary course), but excluding any such items (i) in respect of which cash was received in a prior period or will be received in a future period or (ii) which represents the reversal in such period of any accrual of, or reserve for, anticipated cash charges in any prior period where such accrual or reserve is no longer required, all as determined on a consolidated basis and (c) gains realized and income accrued in connection with the effect of currency and exchange rate fluctuations on intercompany balances and other balance sheet items; provided that for purposes of calculating Consolidated EBITDA of Holdings and its Restricted Subsidiaries for any period, (A) the Consolidated EBITDA of any Person acquired by Holdings or its Restricted Subsidiaries during such period shall be included on a pro forma basis for such period (but assuming the consummation of such acquisition and the incurrence or assumption of any Indebtedness in connection therewith occurred on the first day of such period), (B) the Consolidated EBITDA of any Person Disposed of by Holdings or its Restricted Subsidiaries during such period shall be excluded for such period (assuming the consummation of such Disposition and the repayment of any Indebtedness in connection therewith occurred on the first day of such period) and (C) the Consolidated EBITDA generated by any Qualified Contract that has been entered into by Holdings or any Restricted

 

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Subsidiary during such period will be given pro forma effect for such period as if such Qualified Contract had been entered into on the first day of such period; provided that such Consolidated EBITDA shall be certified by Holdings as having been determined in good faith to be reasonably anticipated to be realizable within 12 months following the date such Qualified Contract is entered into.  For purposes of determining compliance with the financial covenants set forth in Section 7.1, (i) any cash common equity contribution or (ii) any other equity contribution on terms reasonably acceptable to the Administrative Agent, made by Holdings to the Borrower or any Subsidiary Guarantor on or after the first day of any fiscal quarter and prior to the day that is 10 days after the day on which financial statements are required to be delivered for such fiscal quarter (it being understood that each such contribution shall be credited with respect to only one fiscal quarter; provided that such credit shall be effective as to such fiscal quarter for all periods in which such fiscal quarter is included) will, at the request of Holdings, be deemed to increase, dollar for dollar, Consolidated EBITDA for such fiscal quarter for the purposes of determining compliance with such financial covenants at the end of such fiscal quarter and applicable subsequent periods (any such equity contribution so included in the calculation of Consolidated EBITDA, a “ Specified Equity Contribution ”); provided that (a) in each four fiscal quarter period there shall be a period of at least two fiscal quarters in which no Specified Equity Contribution is made, (b) no more than four Specified Equity Contributions shall be made so long as the Commitments remain in effect, any Letter of Credit remains outstanding (that has not been cash collateralized or backstopped) or any Loan or other amount is owing to any Lender or any Agent hereunder and (c) the amount of any Specified Equity Contribution shall be no greater than the amount required to cause Holdings to be in compliance with the financial covenants set forth in Section 7.1.  Notwithstanding the forgoing, Consolidated EBITDA shall be calculated without giving effect to the non-cash effects of purchase accounting or similar adjustments required or permitted by GAAP in connection with any Investment (including any Permitted Acquisition).

 

Consolidated Net Income ”:  of any Person for any period, the consolidated net income (or loss) of such Person and its Subsidiaries (or, in the case of Holdings, its Restricted Subsidiaries) for such period, determined on a consolidated basis in accordance with GAAP; provided that in calculating Consolidated Net Income of Holdings and its consolidated Restricted Subsidiaries for any period, there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Restricted Subsidiary of Holdings or is merged into or consolidated with Holdings or any of its Subsidiaries and (b) the income (or deficit) of any Person (other than a Restricted Subsidiary of Holdings) in which Holdings or any of its Restricted Subsidiaries has an ownership interest, except to the extent that any such income is actually received by Holdings or such Restricted Subsidiary in the form of dividends or similar distributions (which dividends and distributions shall be included in the calculation of Consolidated Net Income).  Notwithstanding the foregoing, for purposes of calculating Excess Cash Flow, Consolidated Net Income shall not include:  (i) extraordinary gains for such period, (ii) the cumulative effect of a change in accounting principles during such period, (iii) any fees and expenses incurred during such period, or any amortization thereof for such period, in connection with any acquisition, investment, recapitalization, asset disposition, issuance or repayment of debt, issuance of equity securities, refinancing transaction or amendment or other modification of any debt instrument (in each case, including any such transaction undertaken but not completed) and any charges or non-recurring merger costs incurred during such period as a result of any such transaction and (iv) any income (loss) for such period attributable to the early extinguishment of Indebtedness or Hedge Agreements.  There shall be excluded from Consolidated Net Income for any period the purchase accounting effects of adjustments to inventory, property and equipment, software and other intangible assets and deferred revenue required or permitted by GAAP and related authoritative pronouncements as a result of any consummated acquisition whether consummated before or after the Closing Date, or the amortization or write-off of any amounts thereof.

 

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Consolidated Net Interest Coverage Ratio ”:  for any period, the ratio of (a) Consolidated EBITDA of Holdings and its Restricted Subsidiaries for such period to (b) Consolidated Net Interest Expense of Holdings and its Restricted Subsidiaries for such period.

 

Consolidated Net Interest Expense ”:  of any Person for any period, (a) total cash interest expense (including that attributable to Capital Lease Obligations) of such Person and its Subsidiaries (or, in the case of Holdings, its Restricted Subsidiaries) for such period with respect to all outstanding Indebtedness of such Person and its Subsidiaries (or, in the case of Holdings, its Restricted Subsidiaries), minus  (b) the sum of (i) total cash interest income of such Person and its Subsidiaries (or, in the case of Holdings, its Restricted Subsidiaries) for such period, in each case determined in accordance with GAAP plus (ii) any one time financing fees (to the extent included in such Person’s consolidated interest expense for such period), including, with respect to Holdings, those paid in connection with the transactions occurring on the Closing Date or in connection with any amendment hereof.  For purposes of the foregoing, interest expense of any Person shall be determined after giving effect to any net payments made or received by such Person with respect to interest rate Hedge Agreements (other than early termination payments) permitted hereunder.

 

Consolidated Total Leverage ”:  at any date, the aggregate principal amount of all Funded Debt of Holdings and its Restricted Subsidiaries at such date, minus cash and Cash Equivalents (other than any restricted cash, Cash Equivalents or Foreign Cash Equivalents) held by Holdings and its Restricted Subsidiaries on such date, in each case determined on a consolidated basis in accordance with GAAP.

 

Consolidated Total Leverage Ratio ”:  as at the last day of any period of four consecutive fiscal quarters of Holdings, the ratio of (a) Consolidated Total Leverage on such day to (b) Consolidated EBITDA of Holdings and its Restricted Subsidiaries for such period.

 

Consolidated Working Capital ”:  at any date, the difference of (a) Consolidated Current Assets on such date less (b) Consolidated Current Liabilities on such date.

 

Continuing Directors ”:  the directors of Holdings on the Closing Date and each other director of Holdings, if, in each case, such other director’s nomination for election to the board of directors of Holdings is recommended by at least 51% of the then Continuing Directors or such other director receives the vote of the Sponsor and/or its Affiliates (excluding any operating portfolio companies of the Sponsor) or any other Permitted Investor in his or her election by the shareholders of Holdings.

 

Contractual Obligation ”:  as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its Property is bound.

 

Currency ”:  Dollars or any Agreed Foreign Currency.

 

Debt Fund Affiliate ”:  any Affiliate of Holdings that is a bona fide diversified debt fund, provided that the Sponsor does not, directly or indirectly, possess the power to direct or cause the direction of the investment policies of any such fund.

 

Debtor Relief Laws ”:  means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.

 

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Default ”:  any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

 

Defaulting Lender ”:  subject to Section 2.26(a), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (which conditions precedent, together with the applicable default, if any, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, any Issuing Lender, any Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent or any Issuing Lender or Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder or has made a public statement to that effect (unless such writing or public statement relates to such Lenders’ obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with the applicable default, if any, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder ( provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.  Any determination by the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.26(a)) upon delivery of written notice of such determination to the Borrower, each Issuing Lender, each Swingline Lender and each Lender.

 

Derivatives Counterparty ”:  as defined in Section 7.6.

 

Differential Amount ”:  as defined in Section 7.5(l).

 

Disposition ”:  with respect to any Property, any sale, sale and leaseback, assignment, conveyance, transfer or other effectively complete disposition thereof.  The terms “ Dispose ” and “ Disposed of ” shall have correlative meanings.

 

Disqualified Capital Stock ”:  Capital Stock (other than, for purposes of determining compliance with Section 7.1, any Capital Stock issued in connection with a Specified Equity Contribution for such periods as such Specified Equity Contribution is deemed to increase Consolidated EBITDA) that (a) requires the payment of any dividends (other than dividends payable solely in shares of Qualified Capital Stock), (b) matures or is mandatorily redeemable or subject to mandatory repurchase or redemption or repurchase at the option of the holders thereof (other than solely for Qualified Capital

 

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Stock), in each case in whole or in part and whether upon the occurrence of any event, pursuant to a sinking fund obligation on a fixed date or otherwise (including as the result of a failure to maintain or achieve any financial performance standards), prior to the date that is 91 days after the final scheduled maturity date of the Loans (other than (i) upon payment in full of the Obligations (other than indemnification and other contingent obligations not yet due and owing and Obligations in respect of Specified Hedge Agreements) or (ii) upon a “change in control”; provided that any payment required pursuant to this clause (ii) is contractually subordinated in right of payment to the Obligations on terms reasonably satisfactory to the Administrative Agent) or (c) are convertible or exchangeable, automatically or at the option of any holder thereof, into any Indebtedness, Capital Stock or other assets other than Qualified Capital Stock.

 

Disqualified Institution ”:  (i) those institutions identified by the Borrower in writing to the Administrative Agent prior to the Closing Date, as the case may be, or with the consent of the Administrative Agent (not to be unreasonably withheld; consent of the Administrative Agent shall be deemed to have been given if the Administrative Agent does not object within 5 Business Days after identification of an institution) from time to time thereafter, and their known Affiliates and (ii) business competitors of the Borrower and its Subsidiaries identified in writing to the Administrative Agent from time to time and their known Affiliates.

 

Documentation Agent ”:  as defined in the preamble hereto.

 

Dollar Amount ”:  in respect of any amount, the sum of (a) the portion thereof denominated in Dollars (if any), plus (b) the Dollar Equivalent of the portion thereof denominated in any Foreign Currency (if any).

 

Dollar Equivalent ”:  of any amount means, on the applicable Valuation Date, (a) if such amount is expressed in Dollars, such amount, (b) if such amount is expressed in any Agreed Foreign Currency, the equivalent of such amount in Dollars determined by using the rate of exchange quoted by the Administrative Agent in New York, New York at 11:00 a.m. (New York time) on the Valuation Date (or, in the case of any determination made under Section 2.12(f) or the last sentence of Section 2.18(g), on the date of determination or redenomination therein referred to) to prime banks in New York for the spot purchase in the New York foreign exchange market of such amount of Dollars with such Agreed Foreign Currency.

 

Dollar L/C Obligations ”:  at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Dollar Letters of Credit and (b) the aggregate amount of drawings under Dollar Letters of Credit that have not then been reimbursed.  The Dollar L/C Obligations of any Lender at any time shall be its Dollar Revolving Percentage of the total Dollar L/C Obligations at such time.

 

Dollar Letter of Credit ”:  Letters of Credit that utilize the Dollar Revolving Commitments.

 

Dollar Revolving Commitments ”:  as to any Dollar Revolving Lender, the obligation of such Lender, if any, to make Dollar Revolving Loans and participate in Dollar Swingline Loans and Dollar Letters of Credit in an aggregate principal and/or face amount not to exceed the amount set forth under the heading “Dollar Revolving Commitment” opposite such Lender’s name on Schedule 1, or as the case may be, in the Assignment and Assumption pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof.  The original aggregate amount of the Dollar Revolving Commitments is $110,000,000.

 

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Dollar Revolving Extensions of Credit ”:  as to any Dollar Revolving Lender at any time, an amount equal to the sum of (a) the aggregate principal amount of all Dollar Revolving Loans held by such Lender then outstanding, (b) such Lender’s Dollar Revolving Percentage of the Dollar L/C Obligations then outstanding and (c) such Lender’s Dollar Revolving Percentage of the aggregate principal amount of Dollar Swingline Loans then outstanding.

 

Dollar Revolving Facility ”:  as defined in the definition of “Facility”.

 

Dollar Revolving Lender ”:  each Lender that has a Dollar Revolving Commitment or that holds Dollar Revolving Loans.

 

Dollar Revolving Loans ”:  as defined in Section 2.4(a).

 

Dollar Revolving Percentage ”:  as to any Dollar Revolving Lender at any time, the percentage which such Lender’s Dollar Revolving Commitment then constitutes of the aggregate Dollar Revolving Commitments or, at any time after the Dollar Revolving Commitments shall have expired or terminated, the percentage which the Dollar Amount of the aggregate principal amount of such Dollar Revolving Lender’s Dollar Revolving Loans then outstanding constitutes of the aggregate principal amount of the Dollar Revolving Loans then outstanding, provided that in the event that the Dollar Revolving Loans are paid in full prior to the reduction to zero of the Dollar Revolving Extensions of Credit, the Dollar Revolving Percentages shall be determined in a manner designed to ensure that the other outstanding Dollar Revolving Extensions of Credit shall be held by the Dollar Revolving Lenders on a comparable basis.

 

Dollar Swingline Loans ”:  as defined in Section 2.6(a).

 

Dollars ” and “ $ ”:  dollars in lawful currency of the United States.

 

Domestic Subsidiary ”:  any direct or indirect Restricted Subsidiary of Holdings organized under the laws of any jurisdiction within the United States other than those directly owned by a Foreign Subsidiary.

 

Environmental Laws ”:  any and all applicable laws, rules, orders, regulations, statutes, ordinances, codes or decrees (including, without limitation, common law) of any international authority, foreign government, the United States, or any state, provincial, local, municipal or other governmental authority, regulating, relating to or imposing liability or standards of conduct concerning protection of the environment, as has been, is now, or at any time hereafter is, in effect.

 

Environmental Liability ”:  any liability, claim, action, suit, judgment or order under or relating to any Environmental Law for any damages, injunctive relief, losses, fines, penalties, fees, expenses (including reasonable fees and expenses of attorneys and consultants) or costs, whether contingent or otherwise, including those arising from or relating to:  (a) compliance or non-compliance with any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Materials of Environmental Concern, (c) exposure to any Materials of Environmental Concern, (d) the Release of any Materials of Environmental Concern or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

Equity Issuance ”:  any issuance by Holdings or its Restricted Subsidiaries of its Capital Stock in a public or private offering.

 

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ERISA ”:  the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

euro ”:  the single currency of Participating Member States of the European Union, which shall be an Agreed Foreign Currency and a Foreign Currency under this Agreement.

 

Eurocurrency Base Rate ”:  with respect to each day during each Interest Period pertaining to a Eurocurrency Loan denominated in any Currency, the rate per annum determined on the basis of the rate for deposits in the relevant Currency for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on the Screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period, as the Eurocurrency Rate for deposits denominated in such Currency with a maturity comparable to such Interest Period.  In the event that such rate does not appear on the Screen at such time for any reason, then the “ Eurocurrency Base Rate ” shall be determined by reference to such other comparable publicly available service for displaying eurocurrency rates in such Currency as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the rate at which the Administrative Agent is offered deposits in the relevant currency at or about 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period in the interbank eurocurrency market where its eurodollar and foreign currency and exchange operations are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein.

 

Eurocurrency Loans ”:  Loans the rate of interest applicable to which is based upon the Eurocurrency Rate.

 

Eurocurrency Rate ”:  with respect to each day during each Interest Period pertaining to a Eurocurrency Loan, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%):

 

 

Eurocurrency Base Rate

 

 

1.00 - Eurocurrency Reserve Requirements

 

 

Eurocurrency Reserve Requirements ”:  for any day as applied to a Eurocurrency Loan, the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including basic, supplemental, marginal and emergency reserves) under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the Federal Reserve System.

 

Eurocurrency Tranche ”:  the collective reference to Eurocurrency Loans denominated in the same Currency under a particular Facility the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day).

 

Event of Default ”:  any of the events specified in Section 8; provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

 

Excess Amount ”:  as defined in Section 7.4(c).

 

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Excess Cash Flow ”:  for any fiscal year of Holdings, the difference, if any, of (a) the sum, without duplication, of (i) Consolidated Net Income for such fiscal year, (ii) the amount of all non-cash charges (including depreciation, amortization and deferred tax expense) deducted in arriving at such Consolidated Net Income, (iii) the amount of the decrease, if any, in Consolidated Working Capital for such fiscal year, (iv) the aggregate net amount of non-cash loss on the Disposition of Property by Holdings and its Restricted Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of business), to the extent deducted in arriving at such Consolidated Net Income and (v) the net increase during such fiscal year (if any) in deferred tax liabilities or decrease in deferred tax assets (in each case to the extent reflected in Consolidated Net Income and not included in Consolidated Working Capital) of Holdings minus  (b) the sum, without duplication (including, in the case of clauses (ii) and (viii) below, duplication across periods; provided that all or any portion of the amounts referred to in clauses (ii) and (viii) below with respect to a period may be applied in the determination of Excess Cash Flow for any subsequent period to the extent such amounts did not previously result in a reduction of Excess Cash Flow in any prior period), of (i) the amount of all non-cash gains or credits included in arriving at such Consolidated Net Income (including, without limitation, credits included in the calculation of deferred tax assets and liabilities), (ii) the aggregate amount (A) actually paid by Holdings and its Restricted Subsidiaries in cash during such fiscal year on account of Capital Expenditures and Permitted Acquisitions and (B) committed during such fiscal year to be used to make Capital Expenditures or Permitted Acquisitions which in either case have been actually made or consummated or for which a binding agreement exists as of the time of determination of Excess Cash Flow for such fiscal year (in each case under this clause (ii) other than to the extent any such Capital Expenditure or Permitted Acquisition is made (or, in the case of the preceding clause (B), is expected to be made) with the proceeds of new long-term Indebtedness or an Equity Issuance or with the proceeds of any Reinvestment Deferred Amount), (iii) the aggregate amount of all regularly scheduled principal payments or prepayments (including, without limitation, voluntary prepayments (other than with respect to the Term Loans or Revolving Loans)) of Indebtedness (including, without limitation, the Term Loans) of Holdings and its Restricted Subsidiaries made during such fiscal year (other than in respect of any revolving credit facility to the extent there is not an equivalent permanent reduction in commitments thereunder and other than to the extent any such prepayments are the result of the incurrence of additional indebtedness), (iv) the amount of the increase, if any, in Consolidated Working Capital for such fiscal year, (v) the aggregate net amount of non-cash gain on the Disposition of Property by Holdings and its Restricted Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of business), to the extent included in arriving at such Consolidated Net Income, (vi) fees and expenses incurred in connection with the closing of the Loan Documents (including amendments of the foregoing), (vii) purchase price adjustments paid or received in connection with any Permitted Acquisition or any other acquisition permitted under Section 7.8, (viii) the net amount of Investments made during such period pursuant to paragraphs (d), (f), (h), (l), (o), (q), (x) and (aa) of Section 7.8 or committed during such period to be used to make Investments pursuant to such paragraphs of Section 7.8 which have been actually made or for which a binding agreement exists as of the time of determination of Excess Cash Flow for such period, (ix) the amount (determined by Holdings) of such Consolidated Net Income which is mandatorily prepaid or reinvested pursuant to Section 2.12(b) (or as to which a waiver of the requirements of such Section applicable thereto has been granted under Section 10.1) prior to the date of determination of Excess Cash Flow for such fiscal year as a result of any Asset Sale or Recovery Event and (x) the net decrease during such fiscal year (if any) in deferred tax liabilities or increase in deferred tax assets (in each case to the extent reflected in Consolidated Net Income and not included in Consolidated Working Capital) of Holdings.

 

Excess Cash Flow Application Date ”:  as defined in Section 2.12(c).

 

Excess Cash Flow Percentage ”:  50%; provided that the Excess Cash Flow Percentage for any Excess Cash Flow Application Date shall be reduced to 25% if the Consolidated Total Leverage

 

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Ratio as of the last day of the fiscal year most recently ended prior to such date is less than 3.00 to 1.0 but not less than 2.50:1.00 and reduced further to 0% if the Consolidated Total Leverage Ratio as of the last day of such fiscal year is less than 2.50 to 1.0.

 

Excluded Subsidiary ”:  (a) each Domestic Subsidiary which is an Immaterial Subsidiary as of the Closing Date and listed on Schedule 1.1A to this Agreement and each future Domestic Subsidiary which is an Immaterial Subsidiary, in each case, for so long as such Subsidiary remains an Immaterial Subsidiary, (b) each Domestic Subsidiary that is not a wholly-owned Subsidiary on any date such Subsidiary would otherwise be required to become a Guarantor pursuant to the requirements of Section 6.8(c) (for so long as such Subsidiary remains a non-wholly-owned Restricted Subsidiary), (c) any Foreign Subsidiary Holding Company and any Subsidiaries owned directly or indirectly by such Foreign Subsidiary Holding Company, (d) each Domestic Subsidiary that is a direct or indirect Subsidiary of a Foreign Subsidiary, (e) each Unrestricted Subsidiary, (f) each Domestic Subsidiary to the extent that (i) such Domestic Subsidiary is prohibited by any applicable Contractual Obligation or Requirement of Law from guaranteeing the Obligations, (ii) any Contractual Obligation prohibits such guarantee without the consent of the other party or (iii) a guarantee of the Obligations would give any other party to a Contractual Obligation the right to terminate its obligation thereunder; provided that such Contractual Obligation was not entered into in contemplation of permitting such Domestic Subsidiary not to become a Guarantor and clauses (ii) and (iii) shall not be applicable if (A) such other party is a Loan Party or a wholly-owned Subsidiary or (B) consent has been obtained to provide such guarantee and for so long as such Contractual Obligation or replacement or renewal thereof is in effect, (g) any special purpose entity or (h) any other Domestic Subsidiary with respect to which, in the reasonable judgment of the Administrative Agent (confirmed by notice to the Borrower) the cost of providing a guarantee is excessive in view of the benefits to be obtained by the Lenders.

 

Excluded Taxes ”:  as defined in Section 2.20(a).

 

Facility ”:  each of (a) the Tranche A Term Loan Commitments and the the Tranche A Term Loans (the “ Tranche A Term Facility ”), (b) the Tranche B Term Loan Commitments and the Tranche B Term Loans (the “ Tranche B Term Facility ”), (c) the Dollar Revolving Commitments and the extensions of credit made thereunder (the “ Dollar Revolving Facility ”), (d) the Multicurrency Revolving Commitments and the extensions of credit made thereunder (the “ Multicurrency Revolving Facility ” and, together with the Dollar Revolving Facility, the “ Revolving Facility ”) and (e) each Tranche of New Term Loans and the related New Term Loan Commitments (each, a “ New Term Loan Facility ”).

 

FATCA ”:  means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended version that is substantively comparable if such amended version provides a reasonable method for a Lender to certify that it has complied with information reporting requirements and would be exempt from any withholding imposed) and any current or future regulations or official interpretations thereof.

 

Federal Funds Effective Rate ”:  for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.

 

Fee Payment Date ”:  commencing on June 30, 2011, (a) the last Business Day of each March, June, September and December and (b) the last day of the Revolving Commitment Period.

 

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First Lien Credit Agreement ”:  the First Lien Credit Agreement dated as of September 29, 2006, among Holdings, the Borrower, the lenders party thereto, and Barclays Bank PLC (successor to Lehman Commercial Paper Inc.), as Administrative Agent.

 

Flintbrook ”:  Flintbrook Limited, a limited holding company incorporated under the laws of England and Wales.

 

Foreign Cash Equivalents ”:  (a) certificates of deposit or bankers acceptances of, and bank deposits with, any bank organized under the laws of any country that is a member of the European Economic Community or Canada or any subdivision thereof, whose short-term commercial paper rating from S&P is at least A-1 or the equivalent thereof or from Moody’s is at least P-1 or the equivalent thereof, in each case with maturities of not more than six months from the date of acquisition, (b) commercial paper maturing not more than one year from the date of creation thereof and, at the time of acquisition, having the highest rating obtainable from either S&P’s or Moody’s and (c) shares of any money market mutual fund that has its assets invested continuously in the types of investments referred to in clauses (a) and (b) above.

 

Foreign Currency ”:  at any time, any Currency other than Dollars.

 

Foreign Subsidiary ”:  any Restricted Subsidiary of Holdings that is not a Domestic Subsidiary.

 

Foreign Subsidiary Holding Company ”:  any Restricted Subsidiary of Holdings which is a Domestic Subsidiary substantially all of the assets of which consist of the Capital Stock of one or more Foreign Subsidiaries (or Restricted Subsidiaries thereof) and other assets relating to an ownership interest in such Capital Stock or Restricted Subsidiaries.

 

Funded Debt ”:  with respect to any Person, all Indebtedness of such Person of the types described in clauses (a), (c) and (e) of the definition of “Indebtedness”.

 

Funding Office ”:  for each Currency, the office of the Administrative Agent specified in Section 10.2 or such other office as may be specified from time to time by the Administrative Agent as its funding office in respect of such Currency by written notice to the Borrower and the Lenders.

 

GAAP ”:  generally accepted accounting principles in the United States as in effect from time to time.  If at any time the SEC requires U.S.-domiciled companies subject to the reporting requirements of the Exchange Act to use IFRS in lieu of GAAP for financial reporting purposes, without limiting Section 10.16, effective from and after the date on which such transition from GAAP to IFRS is required to be completed (or, upon notice from the Borrower or Holdings to the Administrative Agent, such earlier date as the Borrower or Holdings, as applicable, reasonably determines that it should effectuate the transition from GAAP to IFRS in contemplation of such SEC requirement), references herein to GAAP shall thereafter be construed to mean (a) for periods beginning on and after the required transition date or the date specified in such notice, as the case may be, IFRS as in effect from time to time and (b) for prior periods, GAAP as defined in the first sentence of this definition.

 

Governmental Authority ”:  any nation or government, any state, province or other political subdivision thereof and any governmental entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and, as to any Lender, any securities exchange and any self regulatory organization (including the National Association of Insurance Commissioners).

 

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Guarantee and Collateral Agreement ”:  the Guarantee and Collateral Agreement to be executed and delivered by Holdings, the Borrower and each Subsidiary Guarantor, substantially in the form of Exhibit A, as the same may be amended, supplemented or otherwise modified from time to time.

 

Guarantee Obligation ”:  as to any Person (the “ guaranteeing person ”), any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit) pursuant to which the guaranteeing person has issued a guarantee, reimbursement, counterindemnity or similar obligation, in either case guaranteeing or by which such Person becomes contingently liable for any Indebtedness, net worth, working capital earnings, leases, dividends or other distributions upon the stock or equity interests (the “ primary obligations ”) of any other third Person (the “ primary obligor ”) in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any Property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase Property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided , however , that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business and reasonable indemnity obligations in effect on the Closing Date or entered into in connection with any acquisition or disposition of assets or any Investment permitted under this Agreement.  The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.

 

Guarantors ”:  the collective reference to Holdings and the Subsidiary Guarantors.

 

Hedge Agreements ”:  all interest rate swaps, caps or collar agreements or similar arrangements entered into by the Borrower or its Subsidiaries providing for protection against fluctuations in interest rates or currency exchange rates or the exchange of nominal interest obligations, either generally or under specific contingencies.

 

Holdings ”:  as defined in the preamble hereto.

 

IFRS ”:  International Financial Reporting Standards and applicable accounting requirements set by the International Accounting Standards Board or any successor thereto (or the Financial Accounting Standards Board, the Accounting Principles Board of the American Institute of Certified Public Accountants, or any successor to either such Board, or the SEC, as the case may be), as in effect from time to time.

 

Immaterial Subsidiary ”:  on any date, any Subsidiary of Holdings that (i) had less than 7% of consolidated assets and 7% of annual consolidated revenues of Holdings and its Restricted Subsidiaries as reflected on the most recent financial statements delivered pursuant to Section 6.1 prior to such date and (ii) has been designated as such by Holdings in a written notice delivered to the Administrative Agent (other than any such Subsidiary as to which Holdings has revoked such designation by written notice to the Administrative Agent); provided that at no time shall all Immaterial Subsidiaries so designated by Holdings have in the aggregate consolidated assets or annual consolidated revenues (as reflected on the most recent financial statements delivered pursuant to Section 6.1 prior to such time) in excess of 7.5% of consolidated assets or annual consolidated revenues, respectively, of Holdings and its Restricted Subsidiaries.

 

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Increased Amount Date ”:  as defined in Section 2.25(a).

 

Indebtedness ”:  of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of Property or services (other than (i) trade payables, current accounts and similar obligations incurred in the ordinary course of such Person’s business and intercompany liabilities arising in the ordinary course of business and (ii) earn-outs and other contingent payments in respect of acquisitions except to the extent that the liability on account of any such earn-out or contingent payment becomes fixed), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to Property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such Property, in which case only the lesser of the amount of such obligation and the fair market value of such Property shall constitute Indebtedness), (e) all Capital Lease Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under acceptance, letter of credit or similar facilities, (g) all obligations of such Person in respect of Disqualified Capital Stock, except for agreements with directors, officers and employees to acquire such Capital Stock upon the death or termination of employment of such director, officer or employee, (h) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (f) above, and (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on Property (including, without limitation, accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation (and in the event such Person has not assumed or become liable for payment of such obligation, only the lesser of the amount of such obligation and the fair market value of such Property shall constitute Indebtedness).

 

Indebtedness for Borrowed Money ”:  to the extent the following would be reflected on a consolidated balance sheet of Holdings and its Restricted Subsidiaries prepared in accordance with GAAP, the principal amount of all Indebtedness of Holdings and its Restricted Subsidiaries with respect to (i) borrowed money, evidenced by debt securities, debentures, acceptances, notes or other similar instruments, (ii) obligations under Capital Leases, (iii) reimbursement obligations for letters of credit and financial guarantees (without duplication) (other than ordinary course of business contingent reimbursement obligations) and (iv) the deferred purchase price of property or services (except for accounts payable, deferred compensation arrangements and accrued expenses and receipt of progress and advance payments related to such purchase price, in each case arising in the ordinary course of business).

 

Insolvency ”:  with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

 

Insolvent ”:  pertaining to a condition of Insolvency.

 

Instrument ”:  as defined in the Guarantee and Collateral Agreement.

 

Intellectual Property ”:  the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, copyrights, copyright licenses, domain names, patents, patent licenses, trademarks, trademark licenses, trade names, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

 

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Interest Payment Date ”:  commencing on June 30, 2011, (a) as to any ABR Loan (other than any Swingline Loan), the last Business Day of each March, June, September and December to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any Eurocurrency Loan having an Interest Period of three months or less, the last day of such Interest Period, (c) as to any Eurocurrency Loan having an Interest Period longer than three months, each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period, (d) as to any Loan (other than any Revolving Loan that is an ABR Loan and any Swingline Loan), the date of any repayment or prepayment made in respect thereof and (e) as to any Swingline Loan, the day that such Loan is required to be repaid.

 

Interest Period ”:  as to any Eurocurrency Loan, (a) initially, the period commencing on the borrowing, continuation or conversion date, as the case may be, with respect to such Eurocurrency Loan and ending one, two, three or six or (if available to all Lenders under the relevant Facility) nine or twelve months (or such other period acceptable to all such Lenders) thereafter, as selected by the Borrower in its notice of borrowing or notice of continuation or conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurocurrency Loan and ending one, two, three or six or (with the consent of each affected Lender under the relevant Facility) nine or twelve months (or such other period acceptable to all such Lenders) thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not later than 1:00 P.M., New York City time, on the date that is three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that all of the foregoing provisions relating to Interest Periods are subject to the following:

 

(i)            if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

 

(ii)           any Interest Period that would otherwise extend beyond the scheduled Revolving Termination Date or beyond the date final payment is due on the Term Loans shall end on the Revolving Termination Date or such due date, as applicable; and

 

(iii)          any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month.

 

Investments ”:  as defined in Section 7.8.

 

Issuing Lenders ”:  with respect to each Class of Revolving Commitments, (a) Barclays Bank PLC or (b) any other Revolving Lender of any Class from time to time designated by the Borrower, in its sole discretion with the consent of the applicable Lender, as an Issuing Lender for such Class with the consent of such other Revolving Lender in its sole discretion.

 

Joinder Agreement ”:  an agreement substantially in the form of Exhibit H.

 

Joint Bookrunners ”:  the collective reference to Merrill Lynch, Pierce, Fenner & Smith Incorporated,  Barclays Capital, the investment banking division of Barclays Bank PLC, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc., Sumitomo Mitsui Banking Corporation and Royal Bank of Canada.

 

20



 

Joint Lead Arrangers ”:  the collective reference to Merrill Lynch, Pierce, Fenner & Smith Incorporated, Key Bank, N.A. and Barclays Capital, the investment banking division of Barclays Bank PLC.

 

L/C Commitment ”:  $50,000,000.

 

L/C Disbursements ”:  as defined in Section 3.4(a).

 

L/C Obligations ”:  at any time, the sum of the Dollar L/C Obligations and the Multicurrency L/C Obligations.

 

L/C Participants ”:  with respect to Letter of Credit of a Class, the collective reference to all the Revolving Lenders of such Class other than the applicable Issuing Lender.

 

L/C Shortfall ”:  as defined in Section 3.4(d).

 

Lender Addendum ”:  with respect to any initial Lender, a Lender Addendum, substantially in the form of Exhibit I, to be executed and delivered by such Lender on the Closing Date as provided in Section 10.20.

 

Lenders ”:  as defined in the preamble hereto.

 

Letters of Credit ”:  as defined in Section 3.1(a).

 

Lien ”:  any mortgage, pledge, hypothecation, collateral assignment, encumbrance, lien (statutory or other), charge or other security interest or any other security agreement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing).  For the avoidance of doubt, it is understood and agreed that each of Holdings and any Restricted Subsidiary may, as part of its business, grant licenses to third parties to use Intellectual Property owned or developed by, or licensed to, such entity.  For purposes of this Agreement and the other Loan Documents, such licensing activity shall not constitute a “Lien” on such Intellectual Property.  Each of the Administrative Agent and each Lender understands that any such licenses may be exclusive to the applicable licensees, and such exclusivity provisions may limit the ability of the Administrative Agent to utilize, sell, lease, license or transfer the related Intellectual Property or otherwise realize value from such Intellectual Property pursuant hereto.

 

Loan ”:  any loan made by any Lender pursuant to this Agreement.

 

Loan Documents ”:  the collective reference to this Agreement, the Security Documents, and the Notes (if any) and any amendment, waiver, supplement or other modification to any of the foregoing.

 

Loan Modification Agreement ”:  as defined in Section 10.1.

 

Loan Modification Offer ”:  as defined in Section 10.1.

 

Loan Parties ”:  Holdings, the Borrower and each Subsidiary Guarantor.

 

Local Time ”:  with respect to any Loan denominated in or any payment to be made in any Currency, the local time in the Principal Financial Center for the Currency in which such Loan is denominated or such payment is to be made.

 

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Majority Facility Lenders ”:  with respect to any Facility, the holders of more than 50% of the aggregate unpaid principal amount of the Tranche Term A Loans, Tranche B Term Loans, New Term Loans (if any) or the Revolving Extensions of Credit, as the case may be, outstanding under such Facility (or, (a) in the case of the Tranche A Term Facility, prior to the borrowings to occur on the Closing Date, the holders of more than 50% of the Tranche A Term Loan Commitments, (b) in the case of the Tranche B Term Facility, prior to the borrowings to occur on the Closing Date, the holders of more than 50% of the Tranche B Term Loan Commitments, (c) in the case of any New Term Facility, prior to the termination of the New Term Loan Commitments under such Facility, the holders of more than 50% of the New Term Loan Commitments under such Facility, and (d) in the case of the Revolving Facility, prior to any termination of the Revolving Commitments under such Facility, the holders of more than 50% of the Revolving Commitments under such Facility); provided that in determining Majority Facility Lenders at any time, the Loans, Commitments and Revolving Extensions of Credit of each Defaulting Lender and each Affiliate Lender (other than any Debt Fund Affiliate) shall be disregarded.

 

Management Agreement ”:  the Management Agreement, by and between Holdings and TC Group, L.L.C., a Delaware limited liability company, as in effect on the Closing Date and as modified from time to time with the consent of the Administrative Agent.

 

Management Rights Agreement ”:  the Management Rights Agreement, by and between Carlyle Partners IV, L.P., a Delaware limited partnership, CP IV Coinvestment L.P., a Delaware limited partnership, Falcon Aerospace Holdings, LLC, a Delaware limited liability company, Holdings, Randy Snyder, an Individual, Susan Snyder, an Individual and the Wesco Entities, as in effect on the Closing Date and as modified from time to time with the consent of the Administrative Agent.

 

Mandatory Prepayment Date ”:  as defined in Section 2.12(f).

 

Material Adverse Effect ”:  a material adverse effect on (a) the business, operations, property or financial condition of Holdings and its Restricted Subsidiaries, taken as a whole, or (b) the validity or enforceability of the Loan Documents or the material rights and remedies of the Administrative Agent and the Lenders thereunder, in each case, taken as a whole.

 

Material Subsidiary ”:  any Subsidiary that is not an Immaterial Subsidiary.

 

Materials of Environmental Concern ”:  any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products, polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants, contaminants, radioactivity and any other substances that is defined as hazardous or toxic under any Environmental Law, that is regulated pursuant to any Environmental Law.

 

Moody’s ”:  Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.

 

Mortgage ”:  any mortgage, deed of trust, hypothec or other similar document made by any Loan Party in favor of, or for the benefit of, the Collateral Agent for the benefit of the Secured Parties, in form and substance reasonably satisfactory to the Administrative Agent and Holdings (taking into account the law of the jurisdiction in which such mortgage, deed of trust, hypothec or similar document is to be recorded), as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.

 

Multicurrency L/C Obligations ”:  at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Multicurrency Letters of Credit and (b) the aggregate amount of drawings under Multicurrency Letters of Credit that have not then been

 

22



 

reimbursed.  The Multicurrency L/C Obligations of any Lender at any time shall be its Multicurrency Revolving Percentage of the total Multicurrency L/C Obligations at such time.

 

Multicurrency Letter of Credit ”:  Letters of Credit that utilize the Multicurrency Revolving Commitments.

 

Multicurrency Revolving Commitments ”:  as to any Multicurrency Revolving Lender, the obligation of such Lender, if any, to make Multicurrency Revolving Loans and participate in Multicurrency Swingline Loans and Multicurrency Letters of Credit in an aggregate principal and/or face Dollar Amount not to exceed the amount set forth under the heading “Multicurrency Revolving Commitment” opposite such Lender’s name on Schedule 1 hereto, or, as the case may be, in the Assignment and Assumption pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof.  The original Dollar Amount of the Multicurrency Revolving Commitments is $40,000,000.

 

Multicurrency Revolving Extensions of Credit ”:  as to any Multicurrency Revolving Lender at any time, an amount equal to the Dollar Amount of the sum of (a) the aggregate principal amount of all Multicurrency Revolving Loans held by such Lender then outstanding, (b) such Lender’s Multicurrency Revolving Percentage of the Multicurrency L/C Obligations then outstanding and (c) such Lender’s Multicurrency Revolving Percentage of the aggregate principal amount of Multicurrency Swingline Loans then outstanding.

 

Multicurrency Revolving Facility ”:  as defined in the definition of “Facility”.

 

Multicurrency Revolving Lender ”:  each Lender that has a Multicurrency Revolving Commitment or that holds Multicurrency Revolving Loans.

 

Multicurrency Revolving Loans ”:  as defined in Section 2.4(b).

 

Multicurrency Revolving Percentage ”:  as to any Multicurrency Revolving Lender at any time, the percentage which such Lender’s Multicurrency Revolving Commitment then constitutes of the aggregate Multicurrency Revolving Commitments or, at any time after the Multicurrency Revolving Commitments shall have expired or terminated, the percentage which the Dollar Amount of the aggregate principal amount of such Lender’s Multicurrency Revolving Loans then outstanding constitutes of the Dollar Amount of the aggregate principal amount of the Multicurrency Revolving Loans then outstanding, provided that in the event that the Multicurrency Revolving Loans are paid in full prior to the reduction to zero of the Multicurrency Revolving Extensions of Credit, the Multicurrency Revolving Percentages shall be determined in a manner designed to ensure that the other outstanding Multicurrency Revolving Extensions of Credit shall be held by the Multicurrency Revolving Lenders on a comparable basis.

 

Multicurrency Swingline Loans ”:  as defined in Section 2.6(b).

 

Multiemployer Plan ”:  a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

Net Cash Proceeds ”:  (a) in connection with any Asset Sale or any Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) of such Asset Sale or Recovery Event received by any Loan Party, net of attorneys’ fees, accountants’ fees, investment banking fees, consulting fees,

 

23



 

amounts required to be applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any asset which is the subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a Security Document) and other customary fees and expenses actually incurred by any Loan Party in connection therewith and net of taxes paid or reasonably estimated to be payable by any Loan Party as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements) and (b) in connection with any Equity Issuance or other issuance or sale of debt securities or instruments or the incurrence of Funded Debt, the cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees, consulting fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith.

 

New Lender ”:  as defined in Section 2.25(c).

 

New Term Lender ”:  as defined in Section 2.25(b).

 

New Term Loan Commitments ”:  as defined in Section 2.25(a).

 

New Term Loan Facility ”:  as defined in the definition of “Facility”.

 

New Term Loans ”:  any term loan made by any New Lender pursuant to this Agreement.

 

New Tranche Term Percentage ”:  as to any New Term Lender under any Tranche of New Term Loans at any time, the percentage which the sum of such Lender’s New Term Loan Commitments of such Tranche then constitutes of the aggregate New Term Loan Commitments of such Tranche (or, at any time after the termination of such New Term Loan Commitments, the percentage which the aggregate principal amount of such Lender’s New Term Loans of such Tranche then outstanding constitutes of the aggregate principal amount of the New Term Loans of such Tranche then outstanding).

 

No Undisclosed Information Representation ”:  by a Person means a representation that such Person is not in possession of any material non-public information with respect to Holdings or any of its direct or indirect Subsidiaries that has not been disclosed to the Lenders generally (other than those Lenders who have elected to not receive any non-public information with respect to Holdings or any of its Subsidiaries), and if so disclosed could reasonably be expected to have a material effect upon, or otherwise be material to, the market price of the applicable Loan, or the decision of an assigning Lender to sell, or of an assignee to purchase, such Loan.

 

Non-Defaulting Lender ”:  any Lender other than a Defaulting Lender.

 

Non-Excluded Taxes ”:  as defined in Section 2.20(a).

 

Non-Guarantor Subsidiary ”:  any Subsidiary of Holdings which is not a Subsidiary Guarantor.

 

Non-Recourse Debt ”:  Indebtedness (a) no default with respect to which would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of Holdings or any of the Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity, and (b) as to which the lenders or holders thereof will not have any recourse to the capital stock or assets of Holdings or any of the Restricted Subsidiaries.

 

24



 

Non-US Lender ”:  as defined in Section 2.20(d).

 

Note ”:  any promissory note evidencing any Loan.

 

Obligations ”:  the unpaid principal of and interest on (including, without limitation, interest accruing after the maturity of the Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans, the Reimbursement Obligations and all other obligations and liabilities of the Borrower to the Administrative Agent, the Collateral Agent or to any Lender (or, in the case of Specified Hedge Agreements of the Borrower or any of its Subsidiaries to the Administrative Agent, the Collateral Agent, any Lender or any affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit, any Specified Hedge Agreement or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all fees, charges and disbursements of counsel to the Administrative Agent or any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise; provided that (a) obligations of the Borrower or any of its Subsidiaries under any Specified Hedge Agreement shall be secured and guaranteed pursuant to the Security Documents only to the extent that, and for so long as, the other Obligations are so secured and guaranteed and (b) any release of Collateral or Guarantors effected in the manner permitted by this Agreement shall not require the consent of holders of obligations under Specified Hedge Agreements.

 

Other Affiliate ”:  any Affiliate of Holdings other than (i) any Subsidiary of Holdings and (ii) any natural person.

 

Other Taxes ”:  any and all present or future stamp, court or, documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, or enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to any Loan Document.

 

Participant ”:  as defined in Section 10.6(c).

 

Participant Register ”:  as defined in Section 10.6(c).

 

Participating Member State ”:  any member state of the European Communities that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union.

 

Payment Amount ”:  as defined in Section 3.5.

 

PBGC ”:  the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).

 

Permitted Acquisition ”:  (i) any acquisition (including, if applicable, in the case of any Intellectual Property, by way of license) approved by the Required Lenders or (ii) any acquisition of a majority controlling interest in the Capital Stock, or all or substantially all of the assets, of any Person, or of all or substantially all of the assets constituting a division, product line or business line of any Person (each, an “ Acquisition ”), if in each case such Acquisition complies with the following criteria:

 

25


 

(a)           No Event of Default shall be in effect immediately prior or after giving effect to the consummation of such Acquisition.

 

(b)           After giving effect to the consummation of such Acquisition and to the incurrence or assumption of any Indebtedness associated therewith, Holdings shall be in pro forma compliance with Section 7.1 (calculated as of the last day of the fiscal quarter immediately preceding the fiscal quarter in which such acquisition is consummated for which financial statements were required to be delivered pursuant to Section 6.1, giving pro forma effect to such Acquisition and the incurrence or assumption of any related Indebtedness).

 

(c)           Prior to the consummation of such Acquisition (i) the Administrative Agent shall have received the then current financial projections in respect of the Person, division, product line or line of business to be acquired in such Acquisition for the one-year period following the consummation of such acquisition, (ii) the Administrative Agent shall have received the then current drafts of the documentation to be executed in connection with such Acquisition (with final copies of such documentation to be delivered to the Administrative Agent promptly upon becoming available), including all schedules and exhibits thereto; provided, that with respect to clauses (i) and (ii), such items will be required to be delivered to the Administrative Agent only to the extent available and (iii) the Administrative Agent shall have received notice of the closing date for such Acquisition; provided , that, such notice shall be given unless doing so would materially interfere with, or would cause materially adverse economic consequences with respect to, the consummation of such Acquisition.

 

(d)           Such Person shall have become a Restricted Subsidiary and, if such Person shall be a wholly-owned Domestic Subsidiary (and not an Immaterial Subsidiary after giving pro forma effect to the consummation of such Acquisition), a Guarantor and the provisions of Section 6.8 shall have been complied with to the reasonable satisfaction of the Administrative Agent.

 

Permitted Amendments ”:  as defined in Section 10.1.

 

Permitted Investors ”:  the collective reference to the Sponsor, any Co-Investors and their respective Affiliates (but excluding, any operating portfolio companies of the foregoing) and the directors, officers and other employees of Holdings and its Subsidiaries or any parent company of Holdings.

 

Permitted Seller Note ”:  a promissory note containing subordination and other related provisions reasonably acceptable to the Administrative Agent, representing Indebtedness of Holdings or any of its Subsidiaries incurred in connection with any acquisition permitted under Section 7.8(f) and payable to the seller in connection therewith.

 

Permitted Subordinated Indebtedness ”:  as defined in Section 7.2(p).

 

Person ”:  an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

 

Plan ”:  at a particular time, any employee benefit plan as defined in Section 3(3) of ERISA and in respect of which Holdings or any of its Restricted Subsidiaries is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

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Pledged Securities ”:  as defined in the Guarantee and Collateral Agreement.

 

Pledged Stock ”:  as defined in the Guarantee and Collateral Agreement.

 

Prepayment Amount ”:  as defined in Section 2.12(f).

 

Prepayment Option Notice ”:  as defined in Section 2.12(f).

 

Pricing Grid ”:  the table set forth below:

 

Consolidated
Total Leverage
Ratio

 

Applicable
Margin for
Revolving
Loans and
Tranche A
Term Loans
that are
Eurocurrency
Loans

 

Applicable
Margin for
Revolving
Loans and
Tranche A
Term Loans
that are
ABR Loans
and
Swingline
Loans

 

Applicable
Margin for
Tranche B Term
Loans that are
Eurocurrency
Loans

 

Applicable
Margin for
Tranche B
Term Loans
that are ABR
Loans

 

Applicable
Commitment
Fee Rate

 

Level I < 2.00:1.00

 

2.25

%

1.25

%

2.75

%

1.75

%

0.375

%

Level II < 2.50:1.00 but > 2.00 to 1.00

 

2.50

%

1.50

%

2.75

%

1.75

%

0.375

%

Level III < 3.00:1.00 but > 2.50 to 1.00

 

2.75

%

1.75

%

3.00

%

2.00

%

0.375

%

Level IV < 3.50:1.00 but > 3.00 to 1.00

 

3.00

%

2.00

%

3.00

%

2.00

%

0.50

%

Level V > 3.50:1.00

 

3.25

%

2.25

%

3.00

%

2.00

%

0.50

%

 

Changes in the Applicable Margin or the Applicable Commitment Fee Rate resulting from changes in the Consolidated Total Leverage Ratio shall become effective on the date on which financial statements are delivered to the Lenders pursuant to Section 6.1 and shall remain in effect until the next change to be effected pursuant to this paragraph.  If any financial statements required to be delivered pursuant to Section 6.1 are not delivered within the time periods specified in Section 6.1, then, at the option of (and upon the delivery of notice (telephonic or otherwise) by) the Administrative Agent or the Required Lenders, until such financial statements are delivered, the Applicable Margin and the Applicable Commitment Fee Rate pricing shall be determined by reference to Level V of the Pricing Grid.  In addition, at all times that an Event of Default set forth in Section 8(a) or Section 8(f) shall have occurred and be continuing, pricing shall be determined by reference to Level V of the Pricing Grid.

 

Prime Rate ”:  as defined in the definition of “ABR”.

 

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Principal Financial Center ”:  in the case of any Currency, the principal financial center where such Currency is cleared and settled, as reasonably determined by the Administrative Agent.

 

Property ”:  any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including, without limitation, Capital Stock.

 

Public Company Costs ”:  costs associated with, or in anticipation of, or preparation for, compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith and costs relating to compliance with the provisions of the Securities Act and the Exchange Act, as applicable to companies with equity or debt securities held by the public, the rules of national securities exchange companies with listed equity or debt securities, directors’ compensation, fees and expense reimbursement, costs relating to investor relations, shareholder meetings and reports to shareholders or debtholders, directors and officers’ insurance and other executive costs, legal and other professional fees, and listing fees.

 

Qualified Capital Stock ”:  any Capital Stock that is not Disqualified Capital Stock.

 

Qualified Contract ”:  any contract related to the Business entered into by Holdings or any of its Restricted Subsidiaries so long as (i) an officer of Holdings has certified to the Administrative Agent that the investment related to such contract is at least $5,000,000, (ii) such contract has a stated term of at least two years, (iii) it is reasonably expected that Holdings or its Restricted Subsidiaries will be responsible for substantially all of the parts supplied under such contract and (iv) such contract includes specified pricing levels.

 

Qualified IPO ”:  the issuance by Holdings of its Common Stock in an underwritten primary public offering (other than a public offering pursuant to a registration statement on Form S-8) pursuant to an effective registration statement filed with the SEC in accordance with the Securities Exchange Act of 1934 as amended (whether alone or in connection with a secondary public offering) and such Common Stock is listed on a nationally-recognized stock exchange in the United States.

 

Recovery Event ”:  any settlement of or payment in respect of any property or casualty insurance claim or any condemnation proceeding relating to any asset of any Loan Party, in an amount for each such event exceeding $7,500,000.

 

Refinanced Revolving Commitments ”:  as defined in Section 10.1.

 

Refinanced Term Loans ”:  as defined in Section 10.1.

 

Refunded Swingline Loans ”:  as defined in Section 2.7(b).

 

Register ”:  as defined in Section 10.6(b).

 

Regulation U ”:  Regulation U of the Board as in effect from time to time.

 

Reimbursement Obligation ”:  the obligation of the Borrower to reimburse an Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit issued by such Issuing Lender.

 

Reinvestment Deferred Amount ”:  with respect to any Reinvestment Event, the aggregate Net Cash Proceeds received by any Loan Party for its own account in connection therewith that are not applied to prepay the Term Loans pursuant to Section 2.12(b) as a result of the delivery of a Reinvestment Notice.

 

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Reinvestment Event ”:  any Asset Sale or Recovery Event in respect of which a Loan Party has delivered a Reinvestment Notice.

 

Reinvestment Notice ”:  a written notice signed on behalf of any Loan Party by a Responsible Officer stating that such Loan Party (directly or indirectly through a Subsidiary) intends and expects to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or Recovery Event to acquire assets or make investments useful in its (or such Subsidiary’s) business.

 

Reinvestment Prepayment Amount ”:  with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any amount committed to be expended prior to the relevant Reinvestment Prepayment Date (a “ Committed Reinvestment Amount ”), or actually expended prior to such date, in each case to acquire assets useful in the Business.

 

Reinvestment Prepayment Date ”:  with respect to any Reinvestment Event, the earlier of (i) the date occurring 15 months after such Reinvestment Event and (ii) with respect to any portion of a Reinvestment Deferred Amount, the date on which any Loan Party shall have determined not to acquire assets or make investments useful in its or such Subsidiary’s business with such portion of such Reinvestment Deferred Amount.

 

Release ”:  any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or within or upon any building, structure or facility.

 

Reorganization ”:  with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

 

Removal Effective Date ” as defined in Section 9.9(b).

 

Replacement Revolving Commitments ”:  as defined in Section 10.1.

 

Replacement Term Loans ”:  as defined in Section 10.1.

 

Reportable Event ”:  any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived by the PBGC in accordance with the regulations thereunder.

 

Representatives ”:  as defined in Section 10.15.

 

Repricing Loans ”:  as defined in definition of “Repricing Transaction.”

 

Repricing Transaction ”:  any prepayment of the Tranche B Term Loans using proceeds of Indebtedness incurred by Holdings or one or more of its Restricted Subsidiaries from a substantially concurrent issuance or incurrence of secured, syndicated term loans, including, without limitation, by way of Replacement Term Loans incurred pursuant to Section 10.1 (“ Repricing Loans ”), provided by one or more banks, financial institutions or other Persons for which the Yield payable thereon (disregarding any performance or ratings based pricing grid that could result in a lower interest rate based on future performance) is lower than the Yield with respect to the Tranche B Term Loans on the date of such optional prepayment or any amendment, amendment and restatement or any other modification of this Agreement that reduces the Yield with respect to any Tranche B Term Loans; provided that the primary purpose of such prepayment, amendment, amendment and restatement or modification, as reasonably determined by the Borrower in good faith, is to refinance Tranche B Term Loans at a lower interest rate.

 

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Required Lenders ”:  at any time, the holders of more than 50% of (a) until the Closing Date, the Commitments then in effect and (b) thereafter, the sum of (i) the aggregate unpaid principal amount of the Term Loans then outstanding and (ii) the Revolving Commitments then in effect or, if the Revolving Commitments have been terminated, the Dollar Amount of the Revolving Extensions of Credit then outstanding; provided that in determining Required Lenders at any time, the Loans, Commitments and Revolving Extensions of Credit of each Defaulting Lender and each Affiliate Lender (other than any Debt Fund Affiliate) shall be disregarded.

 

Required Prepayment Lenders ”:  the holders of more than 50% of the aggregate unpaid principal amount of the Term Loans; provided that in determining Required Prepayment Lenders at any time, the Term Loans of each Defaulting Lender and each Affiliate Lender (other than any Debt Fund Affiliate) shall be disregarded.

 

Requirement of Law ”:  as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

Resignation Effective Date ”:  as defined in Section 9.9(a).

 

Responsible Officer ”:  the chief executive officer, president, chief financial officer (or similar title), controller or treasurer (or similar title) of Holdings or the Borrower, as applicable, or (with respect to Section 6.7) any Loan Party and, with respect to financial matters, the chief financial officer (or similar title) or treasurer (or similar title) of Holdings or the Borrower, as applicable.

 

Restricted Payments ”:  as defined in Section 7.6.

 

Restricted Subsidiary ”:  any Subsidiary which is not an Unrestricted Subsidiary.

 

Revolving Commitment Period ”:  the period from and including the Closing Date to the Revolving Termination Date.

 

Revolving Commitments ”:  collectively, the Dollar Revolving Commitments and the Multicurrency Revolving Commitments set forth on Schedule 1 hereto.  The original aggregate amount of the Revolving Commitments is $150,000,000.

 

Revolving Dollar Exposure ”:  with respect to any Dollar Revolving Lender, the sum of the outstanding principal amount of such Lender’s Dollar Revolving Loans (including Dollar Swingline Loans) and its Dollar L/C Obligations at such time made or incurred under the Dollar Revolving Commitments.

 

Revolving Extensions of Credit ”:  collectively, the Dollar Revolving Extensions of Credit and the Multicurrency Revolving Extensions of Credit.

 

Revolving Facility ”:  as defined in the definition of “Facility”.

 

Revolving Lender ”:  each Dollar Revolving Lender and Multicurrency Revolving Lender.

 

Revolving Loans ”:  collectively, the Dollar Revolving Loans and the Multicurrency Revolving Loans.

 

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Revolving Multicurrency Exposure ”:  with respect to any Multicurrency Revolving Lender, the sum of the Dollar Amount of the outstanding principal amount of such Lender’s Multicurrency Revolving Loans (including Multicurrency Swingline Loans) and its Multicurrency L/C Obligations at such time made or incurred under the Multicurrency Revolving Commitments.

 

Revolving Percentage ”:  collectively, the Dollar Revolving Percentage and the Multicurrency Revolving Percentage.

 

Revolving Termination Date ”:  April 7, 2016.

 

S&P ”:  Standard & Poor’s Ratings Services, Standard & Poor’s Financial Services LLC business, or any successor to the rating agency business thereof.

 

Screen ”:  for any Currency, the relevant display page for the Eurocurrency Base Rate for such Currency (as reasonably determined by the Administrative Agent) on the Bloomberg Information Service or any successor thereto; provided that if the Administrative Agent determines that there is no such relevant display page for the Eurocurrency Rate for such Currency, “Screen” means the relevant display page for the Eurocurrency Base Rate for such Currency (as reasonably determined by the Administrative Agent) on the Reuter Monitor Money Rates Service.

 

SEC ”:  the Securities and Exchange Commission (or successors thereto or an analogous Governmental Authority).

 

Second Lien Credit Agreement ”:  the Second Lien Credit Agreement dated as of September 29, 2006, among Holdings, the Borrower, the lenders party thereto and Barclays Bank PLC (successor to Lehman Commercial Paper Inc.), as Administrative Agent.

 

Secured Parties ”:  collectively, the Lenders, the Administrative Agent, the Collateral Agent, the Swingline Lender, any Issuing Lender, any other holder from time to time of any of the Obligations and, in each case, their respective successors and permitted assigns.

 

Security Documents ”:  the collective reference to the Guarantee and Collateral Agreement and all other security documents (including any Mortgages) hereafter delivered to the Administrative Agent or the Collateral Agent purporting to grant a Lien on any Property of any Loan Party to secure the Obligations.

 

Single Employer Plan ”:  any Plan that is covered by Title IV of ERISA, but which is not a Multiemployer Plan.

 

Solvent ”:  with respect to any Person, as of any date of determination, (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business and (d) such Person will be able to pay its debts as they mature.  For purposes of this definition, (i) “debt” means liability on a “claim”, (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment,

 

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whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured and (iii) except as otherwise provided by applicable law, the amount of “contingent liabilities” at any time shall be the amount thereof which, in light of all the facts and circumstances existing at such time, can reasonably be expected to become actual or matured liabilities.

 

Specified Equity Contribution ”:  as defined in the definition of Consolidated EBITDA.

 

Specified Hedge Agreement ”:  any Hedge Agreement (a) entered into by (i) the Borrower or any of its Subsidiaries and (ii) any Lender or any affiliate thereof at the time such Hedge Agreement was entered into, as counterparty, and (b) that has been designated by such Lender and the Borrower, by notice to the Administrative Agent, as a Specified Hedge Agreement.  The designation of any Hedge Agreement as a Specified Hedge Agreement shall not create in favor of the Lender or affiliate thereof that is a party thereto any rights in connection with the management or release of any Collateral or of the obligations of any Guarantor under the Guarantee and Collateral Agreement.  For the avoidance of doubt, all Hedge Agreements in existence on the Closing Date between the Borrower or any of its Subsidiaries and any Lender shall constitute Specified Hedge Agreements.

 

Sponsor ”:  The Carlyle Group and any Affiliates (excluding any Debt Fund Affiliates) thereof (but excluding any operating portfolio companies of the foregoing).

 

Subsidiary ”:  as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a direct or indirect Subsidiary or Subsidiaries of Holdings.

 

Subsidiary Guarantors ”:  each wholly owned Domestic Subsidiary (other than the Borrower or any Excluded Subsidiary).

 

Swingline Commitment ”:  the obligation of the Swingline Lenders to make Swingline Loans pursuant to Section 2.6(a) and (b) in an aggregate principal amount at any one time outstanding not to exceed $40,000,000.

 

Swingline Lender ”:  (a) with respect to each Class of Swingline Loans, Barclays Bank PLC, in its capacity as the lender of Swingline Loans or (b) upon the resignation of Barclays Bank PLC, any Revolving Lender of the applicable Class of Swingline Loans from time to time designated by the Borrower as the Swingline Lender with respect to such Class of Swingline Loans (with the consent of such other Revolving Lender (in its sole discretion)).

 

Swingline Loans ”:  collectively, the Dollar Swingline Loans and the Multicurrency Swingline Loans.

 

Swingline Participation Amount ”:  as defined in Section 2.7(c).

 

Syndication Agent ”:  as defined in the preamble hereto.

 

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Taxes ”:  all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

Term Lender ”:  each Tranche A Term Lender, Tranche B Term Lender and New Term Lender (if any).

 

Term Loans ”:  collectively, the Tranche A Term Loans, the Tranche B Term Loans and the New Term Loans (if any).

 

Test Period ”:  on any date of determination, the period of four consecutive fiscal quarters of Holdings most recently ended on or prior to such date for which financial statements have been or are required to be delivered pursuant to Section 6.1.

 

Tranche ”:  as defined in Section 2.25(c).

 

Tranche A Term Facility ”:  as defined in the definition of “Facility.”

 

Tranche A Term Lender ”:  each Lender that has a Tranche A Term Loan Commitment or that holds a Tranche A Term Loan.

 

Tranche A Term Loan ”:  as defined in Section 2.1.

 

Tranche A Term Loan Commitments ”:  as to any Lender, the obligation of such Lender, if any, to make a Tranche A Term Loan to the Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche A Term Loan Commitment” opposite such Lender’s name on Schedule 1 hereto, or, as the case may be, in the Assignment and Assumption pursuant to which such Lender became a party hereto.  The original aggregate amount of the Tranche A Term Loan Commitments is $265,000,000.

 

Tranche A Term Maturity Date ”:  April 7, 2016.

 

Tranche A Term Percentage ”:  as to any Tranche A Term Lender at any time, the percentage which the sum of such Lender’s Tranche A Term Loan Commitments then constitutes of the aggregate Tranche A Term Loan Commitments (or, at any time after the Closing Date, the percentage which the aggregate principal amount of such Lender’s Tranche A Term Loans then outstanding constitutes of the aggregate principal amount of the Tranche A Term Loans then outstanding).

 

Tranche B Term Facility ”:  as defined in the definition of “Facility.”

 

Tranche B Term Lender ”:  each Lender that has a Tranche B Term Loan Commitment or that holds a Tranche B Term Loan.

 

Tranche B Term Loan ” :  as defined in Section 2.1.

 

Tranche B Term Loan Commitments ”:  as to any Lender, the obligation of such Lender, if any, to make a Tranche B Term Loan to the Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche B Term Loan Commitment” opposite such Lender’s name on Schedule 1 hereto, or, as the case may be, in the Assignment and Assumption pursuant to which such Lender became a party hereto.  The original aggregate amount of the Tranche B Term Loan Commitments is $350,000,000.

 

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Tranche B Term Maturity Date ”:  April 7, 2017.

 

Tranche B Term Percentage ”:  as to any Tranche B Term Lender at any time, the percentage which the sum of such Lender’s Tranche B Term Loan Commitments then constitutes of the aggregate Tranche B Term Loan Commitments (or, at any time after the Closing Date, the percentage which the aggregate principal amount of such Lender’s Tranche B Term Loans then outstanding constitutes of the aggregate principal amount of the Tranche B Term Loans then outstanding).

 

Type ”:  (i) as to any Loan denominated in Dollars, its nature as an ABR Loan or Eurocurrency Loan, and (ii) as to any Loan denominated in an Agreed Foreign Currency, its nature as a Eurocurrency Loan.

 

UK GAAP ”:  generally accepted accounting principles in the United Kingdom as in effect from time to time.

 

United States ”:  the United States of America.

 

Unrestricted Subsidiary ”:  (i) any Subsidiary of Holdings (other than the Borrower) designated as such and listed on Schedule 4.14 on the Closing Date and (ii) any Subsidiary of Holdings (other than the Borrower) that is designated by a resolution of the board of directors of Holdings as an Unrestricted Subsidiary, but only to the extent that, in the case of each of clauses (i) and (ii), such Subsidiary:  (a) has no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or understanding with Holdings or any Restricted Subsidiary unless (x) the terms of any such agreement, contract, arrangement or understanding are no less favorable to Holdings or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of Holdings or (y) Holdings or any of its Restricted Subsidiaries would be permitted to enter into such agreement, contract, arrangement or understanding with an Unrestricted Subsidiary pursuant to Section 7.10; (c) is a Person with respect to which neither Holdings nor any of the Restricted Subsidiaries has any direct or indirect obligation (x) to subscribe for additional Capital Stock or warrants, options or other rights to acquire Capital Stock or (y) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results, unless, in each case, Holdings or any of its Restricted Subsidiaries would be permitted to incur any such obligation with respect to an Unrestricted Subsidiary pursuant to Section 7.8; and (d) has not guaranteed or otherwise provided credit support at the time of such designation for any Indebtedness of Holdings or any of its Restricted Subsidiaries, in the case of clauses (a), (b) and (c), except to the extent not otherwise prohibited by Section 7; provided that after giving effect to any such designation of a Domestic Subsidiary, the combined Consolidated EBITDA of Domestic Subsidiaries that are Unrestricted Subsidiaries for the most recently ended Test Period does not exceed 5% of the Consolidated EBITDA of Holdings for the most recently ended Test Period.  If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes hereof.  Subject to the foregoing, the board of directors of Holdings may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary or any Restricted Subsidiary to be an Unrestricted Subsidiary; provided that (i) such designation shall only be permitted if no Default or Event of Default would be in existence following such designation, (ii) any designation of an Unrestricted Subsidiary as a Restricted Subsidiary shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary and (iii) any designation of a Restricted Subsidiary as an Unrestricted Subsidiary shall be deemed to be an Investment in an Unrestricted Subsidiary and shall reduce amounts available for Investments in Unrestricted Subsidiaries permitted by Section 7.8 in an amount equal to the fair market value of the Subsidiary so designated; provided that the Borrower may subsequently redesignate any such Unrestricted Subsidiary as a

 

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Restricted Subsidiary so long as the Borrower does not subsequently re-designate such Restricted Subsidiary as an Unrestricted Subsidiary for a period of the succeeding four fiscal quarters.

 

Valuation Date ” means (i) the date two (2) Business Days prior to the making, continuing or converting of any Multicurrency Revolving Loan or the date of issuance or continuation of any Letter of Credit and (ii) any later date designated by the Administrative Agent or Issuing Lender .

 

Vehicles ”:  all cars, trucks, trailers, construction and earth moving equipment and other vehicles covered by a certificate of title law of any state or province.

 

Wesco Entities ”:  Wesco US; Flintbrook; S.A.S. Wesco Aircraft France, a company organized under the laws of France; Wesco Aircraft Germany GmbH, a company organized under the laws of Germany; Wesco Aircraft Israel Ltd., a company organized under the laws of Israel; and each Subsidiary of the foregoing (if any).

 

Wesco Europe ”:  Wesco Aircraft Europe Limited, a private limited company incorporated under the laws of England and Wales.

 

Wesco US ”:  Wesco Aircraft Hardware Corp., a California corporation.

 

Yield ”:  on any date on which the “Yield” is required to be calculated hereunder, will be the internal rate of return on the Repricing Loans or Tranche B Term Loans, as applicable, determined by the Administrative Agent in consultation with the Borrower utilizing (a) the greater of (i) if applicable, any “LIBOR floor” applicable to such Repricing Loans or Tranche B Term Loans, as applicable, on such date and (ii) the price of a LIBOR swap-equivalent maturing on the earlier of (x) the date that is four years following such date and (y) the final maturity date of such Repricing Loans or Tranche B Term Loans, as applicable; (b) the “applicable margin” for such Repricing Loans or Tranche B Term Loans, as applicable, on such date; and (c) the issue price of such Repricing Loans or Tranche B Term Loans, as applicable, (after giving effect to any original issue discount or upfront fees paid to the market (but excluding commitment or arrangement fees in respect of such Repricing Loans or Tranche B Term Loans, as applicable) in respect of such Repricing Loans or Tranche B Term Loans, as applicable, calculated based on an assumed four year average life to maturity).

 

1.2           Other Definitional Provisions .  (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.

 

(b)           As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, (i) accounting terms relating to Holdings and its Subsidiaries not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, and (iii) references to agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise modified from time to time.

 

(c)           The words “hereof”, “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Annex, Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

 

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(d)           The term “license” shall include sub-license.

 

(e)           The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

 

1.3           Accounting Terms .  If at any time any change in GAAP or the application thereof would affect the computation of any financial ratio, basket or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent and the Borrower shall negotiate in good faith to amend such ratio, basket or requirement to preserve the original intent thereof in light of such change in GAAP or the application thereof (subject to the approval of the Required Lenders not to be unreasonably withheld, conditioned or delayed and, in the case of any amendment arising out of an accounting change described in the Proposed Accounting Standards Update to Leases (Topic 840) dated August 17, 2010, not subject to any amendment fee); provided , that, until so amended, (i) such ratio basket or requirement shall continue to be computed in accordance with GAAP or the application thereof prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders a written reconciliation in form and substance reasonably satisfactory to the Administrative Agent, between calculations of such ratio or requirement made before and after giving effect to such change in GAAP or the application thereof.

 

1.4           Currencies; Currency Equivalents; Euro .  At any time, any reference in the definition of the term “Agreed Foreign Currency” or in any other provision of this Agreement to the Currency of any particular nation means the lawful currency of such nation at such time whether or not the name of such Currency is the same as it was on the date hereof.  Except as provided in Section 2.12(d) or the last sentence of Section 2.18(f), for purposes of determining (i) whether the amount of any borrowing or Letter of Credit under the Multicurrency Revolving Commitments, together with all other borrowings and Letters of Credit under the Multicurrency Revolving Commitments then outstanding or to be borrowed at the same time as such borrowing, would exceed the total Multicurrency Revolving Commitments, (ii) the aggregate unused amount of the Multicurrency Revolving Commitments and (iii) the outstanding aggregate principal amount of borrowings and Multicurrency L/C Obligations, the outstanding principal amount of any borrowing or Multicurrency Letter of Credit that is denominated in any Foreign Currency shall be deemed to be the Dollar Equivalent of the amount of the Foreign Currency of such borrowing or Letter of Credit determined as of the date of such borrowing or Letter of Credit.  Wherever in this Agreement in connection with a borrowing, Loan or Letter of Credit an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such borrowing, Loan or Letter of Credit is denominated in a Foreign Currency, such amount shall be the relevant Agreed Foreign Currency Equivalent of such amount (rounded to the nearest 1,000 units of such Foreign Currency).

 

Each obligation hereunder of any party hereto that is denominated in a Currency of a country that is not a Participating Member State on the date hereof shall, effective from the date on which such country becomes a Participating Member State, be redenominated in euro in accordance with the legislation of the European Union applicable to the European Monetary Union; provided that if and to the extent that any such legislation provides that any such obligation of any such party payable within such Participating Member State by crediting an account of the creditor can be paid by the debtor either in euro or such Currency, such party shall be entitled to pay or repay such amount either in euro or in such Currency.  If the basis of accrual of interest or fees expressed in this Agreement with respect to an Agreed Foreign Currency of any country that becomes a Participating Member State after the date on which such currency becomes an Agreed Foreign Currency shall be inconsistent with any convention or practice in the interbank market for the basis of accrual of interest or fees in respect of the euro, such convention or practice shall replace such expressed basis effective as of and from the date on which such country becomes a Participating Member State; provided that with respect to any borrowing or Letter of Credit denominated in such Currency that is outstanding immediately prior to such date, such replacement shall

 

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take effect at the end of the Interest Period therefor.  Without prejudice to the respective liabilities of the Borrower to the Lenders and of the Lenders to the Borrower under or pursuant to this Agreement, each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time reasonably specify to be necessary or appropriate to reflect the introduction or changeover to the euro in any country that becomes a Participating Member State after the date hereof.

 

Any baskets specified in this Agreement that are exceeded solely as a result of fluctuations in applicable currency exchange rates after the last time such baskets were assessed will not be deemed to have exceeded solely as a result of such fluctuations in currency exchange rates.

 

1.5           Calculation of Baskets .  If any of the baskets set forth in Section 7 of this Agreement are exceeded solely as a result of fluctuations to consolidated total assets or the financial ratios for the most recently completed fiscal quarter after the last time such baskets were calculated for any purpose under Section 7, such baskets will not be deemed to have been exceeded solely as a result of such fluctuations.

 

1.6           Pro Forma Calculations .  Solely for purposes of determining whether any action is otherwise permitted to be taken hereunder, (i) any calculation to be determined on a “ pro forma ” basis, after giving “ pro forma ” effect to certain transactions or pursuant to words of similar import and (ii) the Consolidated Total Leverage Ratio, in each case, shall be calculated as follows:

 

(A)          For purposes of making the computation referred to above, in the event that Holdings or any Restricted Subsidiary incurs, assumes, guarantees, redeems, retires or extinguishes any Indebtedness subsequent to the commencement of the period for which such ratio is being calculated but on or prior to or simultaneously with the event for which the calculation is made (a “ Calculation Date ”), then such calculation shall be made giving pro forma effect to such incurrence, assumption, guarantee, redemption, retirement or extinguishment of Indebtedness as if the same had occurred at the beginning of the applicable Test Period; provided that, for purposes of making the computation of Consolidated Total Leverage for the computation of Consolidated Total Leverage Ratio referred to above, Consolidated Total Leverage shall be Consolidated Total Leverage as of the date the relevant action is being taken.

 

(B)           For purposes of making the computation referred to above, if any Investments, Dispositions or designations of Unrestricted Subsidiaries or Restricted Subsidiaries are made (or committed to be made pursuant to a definitive agreement) subsequent to the commencement of the period for which such calculation is being made but on or prior to or simultaneously with the relevant Calculation Date, then such calculation shall be made giving pro forma effect to such Investments, Dispositions and designations as if the same had occurred at the beginning of the applicable Test Period in a manner consistent, where applicable, with the pro forma adjustments set forth in clause (o) of and the last proviso of the first sentence of the definition of “Consolidated EBITDA.”  If since the beginning of such period any Person that subsequently became a Restricted Subsidiary or was merged with or into the Borrower or any of its Restricted Subsidiaries since the beginning of such period shall have made any Investment or Disposition that would have required adjustment pursuant to this provision, then such calculation shall be made giving pro forma effect thereto for such Test Period as if such Investment or Disposition had occurred at the beginning of the applicable Test Period.

 

(C)           For purposes of determining any financial ratio or making any financial covenant calculation for any period or a portion of a period prior to the first delivery of financial statements pursuant to Section 6.1, the Consolidated Total Leverage Ratio shall be determined based on the

 

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most recent financial statements of Holdings that have been furnished as referred to in Section 4.1, and, to the extent that pro forma compliance with the Consolidated Total Leverage Ratio is required, the levels for such Consolidated Total Leverage Ratio shall be the levels set forth in Section 7.1(a) for the fiscal period ended March 31, 2011.

 

SECTION 2.           AMOUNT AND TERMS OF COMMITMENTS

 

2.1           Term Loan Commitments .  Subject to the terms and conditions hereof, (a) each Tranche A Term Lender severally agrees to make a term loan (a “ Tranche A Term Loan ”) in Dollars to the Borrower on the Closing Date in an amount not to exceed the amount of the Tranche A Term Loan Commitment of such Lender; and (b) each Tranche B Term Lender severally agrees to make a term loan (a “ Tranche B Term Loan ”) in Dollars to the Borrower on the Closing Date in an amount not to exceed the amount of the Tranche B Term Loan Commitment of such Lender.  The Term Loans may from time to time be Eurocurrency Loans or ABR Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 2.13.

 

2.2           Procedure for Term Loan Borrowing .  The Borrower shall give the Administrative Agent irrevocable notice substantially in the form of Exhibit K-1 (which notice must be received by the Administrative Agent prior to 1:00 P.M., New York City time, on the Business Day prior to the anticipated Closing Date) requesting that the Tranche A Term Lenders make the Tranche A Term Loans and the Tranche B Lenders make the Tranche B Term Loans, in each case on the Closing Date and specifying the amount to be borrowed.  The Term Loans made on the Closing Date shall initially be ABR Loans.  Upon receipt of such notice the Administrative Agent shall promptly notify each such Term Lender thereof.  Not later than 3:00 P.M., New York City time, on the Closing Date each such Term Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the Term Loan or Term Loans to be made by such Lender.  The Administrative Agent shall credit the account designated in writing by the Borrower to the Administrative Agent with the aggregate of the amounts made available to the Administrative Agent by such Term Lenders in immediately available funds.

 

2.3           Repayment of Term Loans .  (a)  The Tranche A Term Loan of each Tranche A Term Lender shall be payable on each date set forth below in an amount set forth opposite such date (expressed as a percentage of the stated principal amount of the Tranche A Term Loans funded on the Closing Date) (as adjusted to reflect any prepayments thereof), with the remaining balance thereof payable on the Tranche A Term Maturity Date.

 

Date

 

Amount

 

September 30, 2011

 

1.25%

 

December 31, 2011

 

1.25%

 

March 31, 2012

 

1.25%

 

June 30, 2012

 

1.25%

 

September 30, 2012

 

1.25%

 

December 31, 2012

 

1.25%

 

March 31, 2013

 

1.25%

 

June 30, 2013

 

1.25%

 

September 30, 2013

 

1.875%

 

December 31, 2013

 

1.875%

 

 

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March 31, 2014

 

1.875%

 

June 30, 2014

 

1.875%

 

September 30, 2014

 

2.50%

 

December 31, 2014

 

2.50%

 

March 31, 2015

 

2.50%

 

June 30, 2015

 

2.50%

 

September 30, 2015

 

3.75%

 

December 31, 2015

 

3.75%

 

March 31, 2016

 

3.75%

 

Tranche A Term Maturity Date

 

Remaining Balance

 

 

(b)           The Tranche B Term Loan of each Tranche B Term Lender shall be payable in equal consecutive quarterly installments, commencing on September 30, 2011, on the last Business Day of each March, June, September and December following the Closing Date in an amount equal to one quarter of one percent (0.25%) of the stated principal amount of the Tranche B Term Loans funded on the Closing Date (as adjusted to reflect any prepayments thereof), with the remaining balance thereof payable on the Tranche B Term Maturity Date.

 

2.4           Revolving Commitments .  (a)  Subject to the terms and conditions hereof, each Dollar Revolving Lender severally agrees to make revolving credit loans (“ Dollar Revolving Loans ”) in Dollars to the Borrower from time to time during the Revolving Commitment Period in an aggregate principal amount at any one time outstanding which when added to such Lender’s Dollar Revolving Percentage of the sum of (x) the Dollar L/C Obligations then outstanding and (y) the aggregate principal amount of the Dollar Swingline Loans then outstanding, does not exceed the amount of such Lender’s Dollar Revolving Commitment.  During the Revolving Commitment Period the Borrower may use the Dollar Revolving Commitments by borrowing, prepaying the Dollar Revolving Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof.  The Dollar Revolving Loans may from time to time be Eurocurrency Loans or ABR Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.5 and 2.13.

 

(b)           Subject to the terms and conditions hereof, each Multicurrency Revolving Lender severally agrees to make revolving credit loans (“ Multicurrency Revolving Loans ”) in Dollars or any Agreed Foreign Currency to the Borrower from time to time during the Revolving Commitment Period in an aggregate principal amount at any one time outstanding which when added to such Lender’s Multicurrency Revolving Percentage of the sum of (x) Multicurrency L/C Obligations then outstanding and (y) the aggregate principal amount of the Multicurrency Swingline Loans then outstanding, does not exceed the amount of such Lender’s Multicurrency Revolving Commitment.  During the Revolving Commitment Period the Borrower may use the Multicurrency Revolving Commitments by borrowing, prepaying the Multicurrency Revolving Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof.  The Multicurrency Revolving Loans denominated in Dollars may from time to time be Eurocurrency Loans or ABR Loans and the Revolving Loans denominated in any Agreed Foreign Currency shall be Eurocurrency Loans, in each case, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.5 and 2.13.

 

(c)           The Borrower shall repay all outstanding Revolving Loans of each Class made to it on the Revolving Termination Date.

 

2.5           Procedure for Revolving Loan Borrowing .  The Borrower may borrow under the Revolving Commitments of either Class during the Revolving Commitment Period on any Business Day;

 

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  provided that the Borrower shall give the Administrative Agent irrevocable notice substantially in the form of Exhibit K-2 (which notice must be received by the Administrative Agent (i)in the case of Eurocurrency Loans, prior to 12:00 Noon, New York City time, three Business Days prior to the requested Borrowing Date or (ii) in the case of ABR Loans, prior to 12:00 Noon, New York City time, one Business Day prior to the requested Borrowing Date), specifying (v) whether such borrowing is to be made under the Dollar Revolving Commitments or the Multicurrency Revolving Commitments; (w) the amount, Currency (in the case of Multicurrency Revolving Loans) and Type of Revolving Loans to be borrowed, (x) the requested Borrowing Date, (y) in the case of Revolving Loans denominated in Dollars, whether such Revolving Loan is to be an ABR Loan or a Eurocurrency Loan and (z) in the case of Eurocurrency Loans, the respective amounts of each such Type of Loan and the respective lengths of the initial Interest Period therefor.  Each borrowing by the Borrower under the Revolving Commitments of either Class shall be in an amount equal to (x) in the case of ABR Loans, $500,000 or a whole multiple of $50,000 in excess thereof (or, if the then aggregate Available Revolving Commitments of the respective Class are less than $500,000, such lesser amount) and (y) in the case of Eurocurrency Loans, $1,000,000 or a whole multiple of $250,000 in excess thereof; provided that the Swingline Lender may request, on behalf of the Borrower, borrowings under the Revolving Commitments of either Class that are ABR Loans in other amounts pursuant to Section 2.7(a).  Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Revolving Lender of the applicable Class thereof.  Each Revolving Lender of such Class will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of the Borrower at the Funding Office prior to 9:00 A.M., Local Time, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent.  Such borrowing will then be made available to the Borrower by the Administrative Agent crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by such Revolving Lenders and in like funds as received by the Administrative Agent.

 

If no election as to the Class of Revolving Loans is requested, and the Loans requested are in Dollars, such election shall be deemed to be made under the Dollar Revolving Commitments.  In the case of Multicurrency Revolving Loans, if no election as to the Currency of such Loan is specified, then the requested Loan shall be denominated in Dollars.  If no election as to the Type of a Revolving Loan is specified, then the requested Loan shall be an ABR Loan, unless an Agreed Foreign Currency has been specified, in which case the requested Loan shall be a Eurocurrency Loan denominated in such Agreed Foreign Currency.  If no Interest Period is specified with respect to any requested Eurocurrency Loan, (i) if the Currency specified for such Loan is Dollars (or if no Currency has been so specified), the requested Loan shall be made instead as an ABR Loan, and (ii) if the Currency specified for such Loan is an Agreed Foreign Currency, the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

 

2.6           Swingline Commitment .  (a)  Subject to the terms and conditions hereof, the Swingline Lender with respect to the Dollar Revolving Commitments agrees to make a portion of the credit otherwise available to the Borrower under the Dollar Revolving Commitments from time to time during the Revolving Commitment Period by making swing line loans (“ Dollar Swingline Loans ”) in Dollars to the Borrower; provided that (i) the aggregate principal amount of Swingline Loans outstanding at any time shall not exceed the Swingline Commitment then in effect (notwithstanding that the Swingline Loans outstanding at any time, when aggregated with the Swingline Lender’s other outstanding Revolving Loans, may exceed the Swingline Commitment then in effect) and (ii) the Borrower shall not request, and such Swingline Lender shall not make, any Dollar Swingline Loan if, after giving effect to the making of such Dollar Swingline Loan, the aggregate amount of the Available Revolving Commitments under the Dollar Revolving Commitments would be less than zero.  During the Revolving Commitment Period, the Borrower may use the Swingline Commitment by borrowing, repaying and

 

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reborrowing, all in accordance with the terms and conditions hereof.  Dollar Swingline Loans shall be ABR Loans only.

 

(b)           Subject to the terms and conditions hereof, the Swingline Lender with respect to the Multicurrency Revolving Commitments agrees to make a portion of the credit otherwise available to the Borrower under the Multicurrency Revolving Commitments from time to time during the Revolving Commitment Period by making swing line loans (“ Multicurrency Swingline Loans ”) in Dollars to the Borrower; provided that (i) the aggregate principal amount of Swingline Loans outstanding at any one time shall not exceed the Swingline Commitment then in effect (notwithstanding that the Swingline Loans outstanding at any time, when aggregated with the Swingline Lender’s other outstanding Revolving Loans, may exceed the Swingline Commitment then in effect) and (ii) the Borrower shall not request, and such Swingline Lender shall not make, any Multicurrency Swingline Loan if, after giving effect to the making of such Multicurrency Swingline Loan, the aggregate amount of the Available Revolving Commitments under the Multicurrency Revolving Commitments would be less than zero.  During the Revolving Commitment Period, the Borrower may use the Swingline Commitment by borrowing, repaying and reborrowing, all in accordance with the terms and conditions hereof.  Multicurrency Swingline Loans shall be ABR Loans only.

 

(c)           The Borrower shall repay to the Swingline Lender of the applicable Class the then unpaid principal amount of each Swingline Loan of such Class on the Revolving Termination Date.

 

2.7           Procedure for Swingline Borrowing; Refunding of Swingline Loans .  (a)  Whenever the Borrower desires that the Swingline Lender make Swingline Loans it shall give the Swingline Lender of the applicable Class and the Administrative Agent irrevocable written notice (which notice must be received by the Swingline Lender and the Administrative Agent not later than 12:00 Noon, New York City time, on the proposed Borrowing Date), specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date (which shall be a Business Day during the Revolving Commitment Period) and (iii) whether such borrowing is to be made under the Dollar Revolving Commitments or the Multicurrency Revolving Commitments.  Each borrowing under the Swingline Commitment shall be in an amount equal to $100,000 or a whole multiple of $50,000 in excess thereof.  Not later than 3:00 P.M., New York City time, on the Borrowing Date specified in a notice in respect of Swingline Loans, the applicable Swingline Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the amount of the Swingline Loan to be made by such Swingline Lender.  The Administrative Agent shall make the proceeds of such Swingline Loan available to the Borrower on such Borrowing Date by depositing such proceeds in the account of the Borrower with the Administrative Agent or as otherwise directed by the Borrower on such Borrowing Date in immediately available funds.

 

(b)           The Swingline Lender with respect to each Class, at any time and from time to time in its sole and absolute discretion may, on behalf of the Borrower (which hereby irrevocably directs such Swingline Lender to act on its behalf), on one Business Day’s notice given by such Swingline Lender no later than 12:00 Noon, New York City time, request each Revolving Lender of the applicable Class to make, and each such Revolving Lender hereby agrees to make, a Revolving Loan, in an amount equal to such Revolving Lender’s Dollar Revolving Percentage or Revolving Lender’s Multicurrency Revolving Percentage, as applicable, of the aggregate amount of the Swingline Loans (the “ Refunded Swingline Loans ”) outstanding on the date of such notice, to repay such Swingline Lender.  Each Revolving Lender of the applicable Class shall make the amount of Revolving Loan available to the Administrative Agent at the Funding Office in immediately available funds, not later than 10:00 A.M., New York City time, one Business Day after the date of such notice.  The proceeds of such Revolving Loans shall be immediately made available by the Administrative Agent to the Swingline Lender for application by the Swingline Lender to the repayment of the Refunded Swingline Loans.

 

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(c)           If prior to the time a Revolving Loan would have otherwise been made pursuant to Section 2.7(b), one of the events described in Section 8(f) shall have occurred and be continuing with respect to the Borrower or if for any other reason, as determined by the Swingline Lender of the applicable Class, in its sole discretion, Revolving Loans may not be made as contemplated by Section 2.7(b), each Revolving Lender of the applicable Class shall, on the date such Revolving Loan was to have been made pursuant to the notice referred to in Section 2.7(b), purchase for cash an undivided participating interest in the then outstanding Swingline Loans of the applicable Class by paying to the Swingline Lender an amount (the “ Swingline Participation Amount ”) equal to the product of (A) such Revolving Lender’s Dollar Revolving Percentage or Revolving Lender’s Multicurrency Revolving Percentage, as applicable, times (B) the sum of the aggregate principal amount of Swingline Loans of the applicable Class then outstanding that were to have been repaid with such Revolving Loans.

 

(d)           Whenever, at any time after the Swingline Lender has received from any Revolving Lender such Lender’s Swingline Participation Amount with respect to any Swingline Loans, the Swingline Lender receives any payment on account of such Swingline Loans (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by the Swingline Lender), the Swingline Lender will distribute to such Lender its Swingline Participation Amount with respect thereto (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s participating interest was outstanding and funded and, in the case of principal and interest payments, to reflect such Lender’s pro rata portion of such payment if such payment is not sufficient to pay the principal of and interest on all such Swingline Loans then due); provided , however , that in the event that such payment received by the Swingline Lender is required to be returned, such Lender will return to the Swingline Lender any portion thereof previously distributed to it by the Swingline Lender.

 

(e)           Each Revolving Lender’s obligation to make the Loans referred to in Section 2.7(b) and to purchase participating interests pursuant to Section 2.7(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or other right that such Revolving Lender or the Borrower may have against the Swingline Lender, the Borrower or any other Person for any reason whatsoever, (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Section 5, (iii) any adverse change in the condition (financial or otherwise) of the Borrower, (iv) any breach of this Agreement or any other Loan Document by the Borrower, any other Loan Party or any other Lender or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.

 

(f)            Notwithstanding anything to the contrary contained in this Agreement, in the event there is a Defaulting Lender, then such Defaulting Lender’s Revolving Percentage with respect to all outstanding Swingline Loans will automatically be reallocated among the Revolving Lenders that are Non-Defaulting Lenders pro rata in accordance with each Non-Defaulting Lender’s Revolving Percentage (calculated without regard to the Revolving Commitment of the Defaulting Lender) but only to the extent that no Default or Event of Default shall have occurred and be continuing at the time of such reallocation (provided, that such amounts shall be automatically reallocated upon the cure or waiver of such Default or Event of Default) and that such reallocation does not cause the Revolving Extensions of Credit of any Non-Defaulting Lender to exceed the Revolving Commitment of such Non-Defaulting Lender.  No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.  If such reallocation cannot, or can only partially, be effected, the Borrower shall, upon five Business Days’ written notice from the Swingline Lender, prepay such Defaulting Lender’s Revolving Percentage (calculated as in effect immediately prior to it becoming a Defaulting Lender) of any Swingline Loans (after giving effect to any partial reallocation pursuant to the first sentence of this

 

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Section 2.7(f)).  So long as there is a Defaulting Lender, the Swingline Lender shall not be obligated to make a Swingline Loan to the extent that the sum of the Revolving Extensions of Credit of the Non-Defaulting Lenders after giving effect to such Swingline Loan would exceed the aggregate Revolving Commitments of such Non-Defaulting Lenders.

 

2.8           Repayment of Loans .  (a)  The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of the appropriate Revolving Lender or Term Lender, as the case may be, (i) the then unpaid principal amount of each Revolving Loan of such Revolving Lender made to the Borrower outstanding on the Revolving Termination Date (or on such earlier date on which the Loans become due and payable pursuant to Section 8) and (ii) the principal amount of each outstanding Term Loan of such Term Lender made to the Borrower in installments according to the amortization schedule set forth in Section 2.3 (or on such earlier date on which the Loans become due and payable pursuant to Section 8).  The Borrower hereby further agrees to pay interest on the unpaid principal amount of the Loans made to the Borrower from time to time outstanding from the date hereof until payment in full thereof at the rates per annum, and on the dates, set forth in Section 2.15.

 

(b)           Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of the Borrower to such Lender resulting from each Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

 

(c)           The Administrative Agent, on behalf of the Borrower, shall maintain the Register pursuant to Section 10.6(b)(iv), and a subaccount therein for each Lender, in which shall be recorded (i) the amount and Currency of each Loan made hereunder and any Note evidencing such Loan, the Type of such Loan and each Interest Period applicable thereto, (ii) the amount of and Currency of any principal, interest and fees, as applicable, due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) both the amount and Currency of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

 

(d)           (d) The entries made in the Register and the accounts of each Lender maintained pursuant to Section 2.8(c) shall, to the extent permitted by applicable law, be presumptively correct absent demonstrable error of the existence and amounts of the obligations of the Borrower therein recorded; provided , however , that the failure of the Administrative Agent or any Lender to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement.

 

2.9           Commitment Fees, etc .  (a)  The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a commitment fee for the period from and including the Closing Date to the last day of the Revolving Commitment Period, computed at the Applicable Commitment Fee Rate on the average daily amount of the Available Revolving Commitment of such Lender during the period for which payment is made, payable quarterly in arrears on each Fee Payment Date; provided that (i) for purposes of calculating any fees owing in accordance with this Section 2.9(a), the Available Revolving Commitment for the Swingline Lender shall exclude any outstanding Swingline Loans and (ii) the Swingline Lender shall not be entitled to any commitment fee with respect to its Swingline Commitment separate from that to which it is entitled with respect to its Available Revolving Commitment; provided , further , that (i) any commitment fee accrued with respect to any of the Available Revolving Commitments of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender except to the extent that such commitment fee shall otherwise have been due and payable by the Borrower prior to such time and (ii) no commitment fee shall accrue on any of the

 

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Available Revolving Commitments of a Defaulting Lender so long as such Lender shall be a Defaulting Lender.

 

(b)           The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the dates as set forth in any fee agreements with the Administrative Agent.

 

2.10         Termination or Reduction of Revolving Commitments .  The Borrower shall have the right, upon not less than two Business Days’ notice to the Administrative Agent, to terminate the Revolving Commitments of either Class or, from time to time, to reduce the amount of the Revolving Commitments of such Class; provided that no such termination or reduction of such Revolving Commitments of a Class shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Loans of such Class made on the effective date thereof, the total Revolving Extensions of Credit of such Class would exceed the total Revolving Commitments of such Class.  Any such partial reduction shall be in an amount equal to $1,000,000, or a whole multiple of $500,000 in excess thereof, and shall reduce permanently the Revolving Commitments of such Class then in effect.  Notwithstanding anything to the contrary contained in this Agreement, the Borrower may rescind any notice of termination under this Section 2.10 if such termination would have resulted from a replacement of all of the Revolving Commitments outstanding at such time, which replacement shall not be consummated or shall otherwise be delayed.

 

2.11         Optional Prepayments .  (a) The Borrower may at any time and from time to time prepay the Revolving Loans, the Swingline Loans or the Term Loans, in whole or in part, without premium or penalty except as provided in Section 2.11(b), upon irrevocable notice delivered to the Administrative Agent no later than 12:00 Noon, Local Time, three Business Days prior thereto, in the case of Eurocurrency Loans, and no later than 12:00 Noon, New York City time, one Business Day prior thereto, in the case of ABR Loans, which notice shall specify (i) the date and amount of prepayment, (ii) whether the prepayment is of Revolving Loans, Swingline Loans, Tranche A Term Loans, Tranche B Term Loans or New Term Loans of any Tranche, and if such prepayment is of Revolving Loans or Swingline Loans, the Class of Revolving Loans to be prepaid and (iii) whether the prepayment is of Eurocurrency Loans or ABR Loans; provided that if a Eurocurrency Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.21.  Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.  If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein ( provided that such notice may be conditioned on receiving the proceeds of any refinancing), together with (except in the case of Revolving Loans that are ABR Loans and Swingline Loans) accrued interest to such date on the amount prepaid.  Partial prepayments of Term Loans of a Class and of Revolving Loans of a Class shall be in an aggregate principal amount of (i) $1,000,000 or a whole multiple of $100,000 in excess thereof (in the case of prepayments of ABR Loans) or (ii) $1,000,000 or a whole multiple of $500,000 in excess thereof (in the case of prepayments of Eurocurrency Loans), and in each case shall be subject to the provisions of Section 2.18.  Partial prepayments of Swingline Loans of a Class shall be in an aggregate principal amount of $50,000 or a whole multiple of $50,000 in excess thereof.

 

(b)           Any optional prepayment of the Tranche B Term Loans as a result of a Repricing Transaction shall be accompanied by a prepayment fee, which shall initially be 1% of the aggregate principal amount prepaid and shall decline to 0% on and after the first anniversary of the Closing Date.

 

2.12         Mandatory Prepayments .  (a) Unless the Required Prepayment Lenders shall otherwise agree, if any Indebtedness (excluding any Indebtedness incurred in accordance with Section 7.2) shall be incurred by Holdings or any of its Restricted Subsidiaries, an amount equal to 100%

 

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of the Net Cash Proceeds thereof shall be applied not later than one Business Day after the date of receipt of such Net Cash Proceeds toward the prepayment of the Term Loans as set forth in Section 2.12(d).

 

(b)           Unless the Required Prepayment Lenders shall otherwise agree, if on any date any Loan Party shall for its own account receive Net Cash Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment Notice shall be delivered in respect thereof, such Net Cash Proceeds shall be applied not later than five Business Days after such date toward the prepayment of the Term Loans as set forth in Section 2.12(d); provided that notwithstanding the foregoing, (x) on each Reinvestment Prepayment Date, the Term Loans shall be prepaid as set forth in Section 2.12(d) by an amount equal to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event and (y) on the date (the “ Trigger Date ”) that is one year after any such Reinvestment Prepayment Date, the Term Loans shall be prepaid as set forth in Section 2.12(d) by an amount equal to the portion of any Committed Reinvestment Amount with respect to the relevant Reinvestment Event not actually expended by such Trigger Date.

 

(c)           Unless the Required Prepayment Lenders shall otherwise agree, if, for any fiscal year of Holdings commencing with the fiscal year ending September 30, 2012, there shall be Excess Cash Flow, Holdings shall, on the relevant Excess Cash Flow Application Date, apply an amount equal to (i) the Excess Cash Flow Percentage of such Excess Cash Flow minus (ii) the aggregate amount of all prepayments of Revolving Loans and Swingline Loans during such fiscal year to the extent accompanied by permanent optional reductions of the Revolving Commitments and all optional prepayments of the Term Loans during such fiscal year, in each case other than to the extent any such prepayment is funded with the proceeds of new long-term Indebtedness, toward the prepayment of the Term Loans as set forth in Section 2.12(d).  Each such prepayment shall be made on a date (an “ Excess Cash Flow Application Date ”) no later than ten days after the date on which the financial statements of Holdings referred to in Section 6.1(a), for the fiscal year with respect to which such prepayment is made, are required to be delivered to the Lenders.

 

(d)           Amounts to be applied in connection with prepayments pursuant to Section 2.12 shall be applied to the prepayment of the Term Loans in accordance with Section 2.18(b) until paid in full.  The application of any prepayment pursuant to Section 2.12 shall be made, first , to ABR Loans and, second , to Eurocurrency Loans.  Each prepayment of the Term Loans under Section 2.12 shall be accompanied by accrued interest to the date of such prepayment on the amount prepaid.

 

(e)           If as of the last Business Day of each calendar month (computed by the Administrative Agent using the current exchange rate as of such Business Day and promptly notified to the Multicurrency Revolving Lenders and the Borrower) the Dollar Amount of the aggregate outstanding principal amount of the Revolving Loans shall exceed 105% of the aggregate Revolving Commitments, the Borrower shall, within five Business Days after the Borrower’s receipt of such notice, prepay Multicurrency Revolving Loans in such amounts as shall be necessary so that after giving effect thereto the aggregate outstanding principal amount of such Revolving Loans does not exceed the Revolving Commitments as of such Business Day.

 

(f)            Notwithstanding anything to the contrary in Sections 2.12(d) or 2.18, with respect to the amount of any mandatory prepayment pursuant to this Section 2.12 that is allocated to Tranche B Term Loans and each Tranche of New Term Loans (such amount for such Class, the “ Prepayment Amount ”, and each such Class, an “ Applicable Class ”), at any time when Tranche A Term Loans remain outstanding, the Borrower will, in lieu of applying such Prepayment Amount to the Applicable Class of Term Loans as provided in paragraph (d) above, on the date specified in this Section 2.12 for such prepayment, give the Administrative Agent telephonic notice (promptly confirmed in writing) requesting that the Administrative Agent prepare and provide to each Tranche B Term Lender

 

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and each New Term Lender a notice substantially in the form of Exhibit L (each, a “ Prepayment Option Notice ”) as described below.  As promptly as practicable after receiving such notice from the Borrower, the Administrative Agent will send to each Tranche B Term Lender and each New Term Lender a Prepayment Option Notice, which shall be in a form reasonably satisfactory to the Administrative Agent, and shall include an offer by the Borrower to prepay, on the date (each a “ Mandatory Prepayment Date ”) that is ten Business Days after the date of the Prepayment Option Notice, each Applicable Class of Loans of such Lender by an amount equal to the portion of the Prepayment Amount for such Class indicated in such Lender’s Prepayment Option Notice as being applicable to such Lender’s Applicable Class of Term Loans.  Each Tranche B Term Lender and each New Term Lender may reject all or a portion of its Prepayment Amount of the Applicable Class by providing written notice to the Administrative Agent and the Borrower no later than 5:00 p.m. (New York time) one Business Day after such Lender’s receipt of the Prepayment Option Notice (which notice shall specify the principal amount of the Prepayment Amount for each Applicable Class to be rejected by such Lender); provided that any Lender’s failure to so reject such Prepayment Amount for any Applicable Class shall be deemed an acceptance by such Term Lender of such Prepayment Option Notice for such Applicable Class and the amount to be prepaid in respect of Term Loans of such Applicable Class held by such Lender.  On the Mandatory Prepayment Date, the Borrower shall (i) pay to the relevant Lenders the aggregate amount necessary to prepay that portion of the outstanding Term Loans of the Applicable Class in respect of which such Lenders have (or are deemed to have) accepted prepayment as described above and (ii) prepay outstanding Tranche A Term Loans in an aggregate amount equal to the amounts declined by Lenders as described above; provided that, upon the making of such prepayments, any amount remaining unapplied (i.e., after the payment in full of the Tranche A Term Loans) shall be returned to the Borrower.

 

2.13         Conversion and Continuation Options .  (a)  The Borrower may elect from time to time to convert Eurocurrency Loans made to the Borrower to ABR Loans by giving the Administrative Agent prior irrevocable notice substantially in the form of Exhibit M of such election no later than 12:00 Noon, New York City time, on the second Business Day preceding the proposed conversion date; provided that (i) a borrowing of a Class of Loans may not be converted into a borrowing of a different Class of Loans, (ii) a borrowing denominated in one Currency may not be converted to a borrowing of a different Currency, (iii) no Eurocurrency Loan denominated in an Agreed Foreign Currency may be converted to a borrowing of a different Type and (iv) if any Eurocurrency Loan is so converted on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.21.  The Borrower may elect from time to time to convert ABR Loans made to the Borrower to Eurocurrency Loans by giving the Administrative Agent prior irrevocable notice of such election no later than 12:00 Noon, New York City time, on the third Business Day preceding the proposed conversion date (which notice shall specify the length of the initial Interest Period therefor); provided that (i) a borrowing of a Class of Loans may not be converted into a borrowing of a different Class of Loans, (ii) a borrowing denominated in one Currency may not be converted to a borrowing of a different Currency and (iii) no ABR Loan under a particular Facility may be converted into a Eurocurrency Loan when any Event of Default has occurred and is continuing and the Administrative Agent or the Majority Facility Lenders in respect of such Facility have determined in its or their sole discretion not to permit such conversions.  Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

 

(b)           Any Eurocurrency Loan may be continued as such by the Borrower giving irrevocable notice to the Administrative Agent, in accordance with the applicable provisions of the term “Interest Period” set forth in Section 1.1 and no later than 1:00 P.M., New York City time, on the third Business Day preceding the proposed continuation date, of the length of the next Interest Period to be applicable to such Loans; provided that (i) a borrowing of a Class of Loans may not be continued as a borrowing of a different Class of Loans, (ii) a borrowing denominated in one Currency may not be continued as a borrowing of a different Currency, (iii) no Eurocurrency Loan denominated in a Foreign

 

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Currency may be continued if, after giving effect thereto, the Revolving Multicurrency Exposure would exceed the aggregate Multicurrency Revolving Commitments and (iv) if any Eurocurrency Loan is so continued on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.21 and; provided , further , that no Eurocurrency Loan under a particular Facility may be continued as such when any Event of Default has occurred and is continuing and the Administrative Agent has or the Majority Facility Lenders in respect of such Facility have determined in its or their sole discretion not to permit such continuations and; provided , further , that if the Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Loans denominated (i) in Dollars shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period or (ii) in another Currency shall be automatically converted to Eurocurrency Loans having an Interest Period of one month’s duration on the last day of such then expiring Interest Period.  Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

 

2.14         Minimum Amounts and Maximum Number of Eurocurrency Tranches .  Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions, continuations and optional prepayments of Eurocurrency Loans and all selections of Interest Periods shall be in such amounts and be made pursuant to such elections so that (a) after giving effect thereto, the aggregate principal amount of the Eurocurrency Loans comprising each Eurocurrency Tranche shall be equal to a minimum of $1,000,000 or a whole multiple of $500,000 in excess thereof and (b) no more than fifteen Eurocurrency Tranches shall be outstanding at any one time.

 

2.15         Interest Rates and Payment Dates .  (a)  (i) Each Eurocurrency Loan that is a Revolving Loan or a Tranche A Term Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurocurrency Rate determined for such day plus the Applicable Margin and (ii) each Eurocurrency Loan that is a Tranche B Term Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to (A) the greater of (x) the Eurocurrency Rate determined for such day and (y) 1.25% plus (B) the Applicable Margin.

 

(b)           (i) Each ABR Loan that is a Revolving Loan or a Tranche A Term Loan shall bear interest at a rate per annum equal to the ABR plus the Applicable Margin and (ii) each ABR Loan that is a Tranche B Term Loan shall bear interest at a rate per annum equal to (A) the greater of (x) the ABR and (y) 1.25% plus (B) the Applicable Margin.

 

(c)           (i) If all or a portion of the principal amount of any Loan or Reimbursement Obligation shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to (x) in the case of the Loans, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus 2% or (y) in the case of Reimbursement Obligations, the rate applicable to ABR Loans under the Revolving Facility plus 2%, and (ii) if all or a portion of any interest payable on any Loan or Reimbursement Obligation or any commitment fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to ABR Loans under the relevant Facility plus 2% (or, in the case of any such other amounts that do not relate to a particular Facility, the rate then applicable to ABR Loans under the Revolving Facility plus 2%), in each case, with respect to clauses (i) and (ii) above, from the date of such non-payment until such amount is paid in full (as well after as before judgment); provided that no amount shall be payable pursuant to this Section 2.15(c) to a Defaulting Lender so long as such Lender shall be a Defaulting Lender; provided further no amounts shall accrue pursuant to this Section 2.15(c) on any overdue Loan, Reimbursement Obligation, commitment or other amount payable to a Defaulting Lender so long as such Lender shall be a Defaulting Lender.

 

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(d)           Interest shall be payable by the Borrower in arrears on each Interest Payment Date; provided that interest accruing pursuant to paragraph (c) of this Section 2.15 shall be payable from time to time on demand.

 

2.16         Computation of Interest and Fees .  (a)  Interest and fees payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed, except that, with respect to ABR Loans the rate of interest on which is calculated on the basis of the Prime Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed.  The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of each determination of a Eurocurrency Rate.  Any change in the interest rate on a Loan resulting from a change in the ABR or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective.  The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of the effective date and the amount of each such change in interest rate.

 

(b)           Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be presumptively correct in the absence of manifest error.  The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Section 2.15(a) and Section 2.15(b).

 

2.17         Inability to Determine Interest Rate .  If prior to the first day of any Interest Period for any Eurocurrency Loan (the Currency of such Loan herein called the “ Affected Currency ”):

 

(a)           the Administrative Agent shall have determined (which determination shall be presumptively correct absent manifest error) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurocurrency Rate for the Affected Currency for such Interest Period, or

 

(b)           the Administrative Agent shall have received notice from the Majority Facility Lenders in respect of the relevant Facility that by reason of any changes arising after the date of this Agreement the Eurocurrency Rate for the Affected Currency determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as certified by such Lenders) of making or maintaining their affected Loans during such Interest Period,

 

the Administrative Agent shall give telecopy notice thereof to the Borrower and the relevant Lenders as soon as practicable thereafter.  If such notice is given (i) if the Affected Currency is Dollars (x) any Eurocurrency Loans denominated in Dollars under the relevant Facility requested to be made on the first day of such Interest Period shall be made as ABR Loans, (y) any Loans denominated in Dollars under the relevant Facility that were to have been converted on the first day of such Interest Period to Eurocurrency Loans shall be continued as ABR Loans and (z) any outstanding Eurocurrency Loans denominated in Dollars under the relevant Facility shall be converted, on the last day of the then-current Interest Period with respect thereto, to ABR Loans, or (ii) if the Affected Currency is an Agreed Foreign Currency, any Eurocurrency Loans denominated in the Affected Currency under the relevant Facility requested to be made on the first day of such Interest Period shall be ineffective.  Until such notice has been withdrawn by the Administrative Agent (which action the Administrative Agent will take promptly after the conditions giving rise to such notice no longer exist), no further Eurocurrency Loans denominated in the Affected Currency (including the Eurocurrency Rate component of ABR Loans) under the relevant Facility shall be made or continued as such, nor shall the Borrower have the right to convert Loans under the relevant Facility to Eurocurrency Loans denominated in the Affected Currency.

 

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2.18         Pro Rata Treatment and Payments .  (a)  Each borrowing by the Borrower from the Lenders of a Class hereunder and each payment by the Borrower on account of any commitment fee and any reduction of the Revolving Commitments of a Class shall be made pro rata according to the respective Tranche A Term Percentages, Tranche B Term Percentages, New Tranche Term Percentages or Revolving Percentages of the respective Class, as the case may be, of the relevant Lenders, except (i) for payments in respect of any differences in the Applicable Commitment Fee Rate of Accepting Lenders pursuant to a Loan Modification Agreement, (ii) for payments to Defaulting Lenders as otherwise herein provided and (iii) reductions of Revolving Commitments pursuant to Section 2.24.

 

(b)           Each payment (including prepayments) by the Borrower on account of principal of and interest on the Term Loans of a Class shall be made pro rata according to the respective outstanding principal amounts of the Term Loans of such Class then held by the Term Lenders of such Class, except (i) as otherwise provided in Section 2.12(f) and Section 10.6, (ii) for payments in respect of any differences in the Applicable Margin of Accepting Lenders pursuant to a Loan Modification Agreement and (iii) for payments to Defaulting Lenders as otherwise herein provided.  Each mandatory and optional prepayment of the Term Loans shall be allocated among the Tranche A Term Loans, the Tranche B Term Loans and each Tranche of New Term Loans, if any, pro rata according to the according to the respective outstanding principal amounts of the Term Loans of such Class, except (i) as otherwise provided in Section 2.12(f) and Section 10.6, (ii) for payments in respect of any differences in the Applicable Margin of Accepting Lenders pursuant to a Loan Modification Agreement and (iii) for payments to Defaulting Lenders as otherwise herein provided.  Each mandatory and optional prepayment of Term Loans shall be applied to the remaining installments thereof as specified by the Borrower.  Amounts repaid or prepaid on account of the Term Loans may not be reborrowed.

 

(c)           Each payment (including prepayments) by the Borrower on account of principal of and interest on the Revolving Loans of a Class shall be made pro rata according to the respective outstanding principal amounts of the Revolving Loans of such Class then held by the Revolving Lenders of such Class, except (i) as otherwise provided in Section 2.12(f) and Section 10.6, (ii) for payments in respect of any differences in the Applicable Margin of Accepting Lenders pursuant to a Loan Modification Agreement, (iii) for payments to Defaulting Lenders as otherwise herein provided and (iv) reductions of Revolving Commitments pursuant to Section 2.24.  Each payment in respect of Reimbursement Obligations in respect of any Letter of Credit of a Class shall be made to the Issuing Lender that issued such Letter of Credit.

 

(d)           All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 2:00 P.M., Local Time, on the due date thereof to the Administrative Agent, for the account of the relevant Lenders, at the Funding Office, in immediately available funds.  The Administrative Agent shall distribute such payments to the relevant Lenders promptly upon receipt in like funds as received.  If any payment hereunder (other than payments on the Eurocurrency Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day.  If any payment on a Eurocurrency Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day.  In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension.

 

(e)           Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such

 

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Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent on demand, such amount with interest thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, for the period until such Lender makes such amount immediately available to the Administrative Agent.  A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this paragraph shall be presumptively correct in the absence of manifest error.  If such Lender’s share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days after such Borrowing Date, the Administrative Agent shall give notice of such fact to the Borrower and the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Loans under the relevant Facility, on demand, from the Borrower.  Nothing herein shall be deemed to limit the rights of the Administrative Agent or the Borrower against any Defaulting Lender.

 

(f)            Unless the Administrative Agent shall have been notified in writing by the Borrower prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in reliance upon such assumption, make available to the relevant Lenders their respective pro rata shares of a corresponding amount.  If such payment is not made to the Administrative Agent by the Borrower within three Business Days after such due date, the Administrative Agent shall be entitled to recover, on demand, from each relevant Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate.  Nothing herein shall be deemed to limit the rights of the Administrative Agent or any Lender against the Borrower.

 

(g)           Each obligation of the Loan Parties under the Loan Documents related to any Loans or Letter of Credit denominated in Dollars shall be paid in Dollars.  Each obligation of the Loan Parties related to any Loans denominated in an Agreed Foreign Currency shall be paid in such Agreed Foreign Currency; provided that fees payable pursuant to Section 3.3 shall be payable in Dollars.  All commitment fees payable pursuant to Section 2.9 shall be calculated and payable in Dollars.  Notwithstanding the foregoing, if the Borrower shall fail to pay any principal of any Loan when due (whether at stated maturity, by acceleration, by mandatory prepayment or otherwise), the unpaid portion of such Loan shall, if such Loan is not denominated in Dollars, automatically be redenominated in Dollars on the due date thereof (or, if such due date is a day other than the last day of the Interest Period therefor, on the last day of such Interest Period) in an amount equal to the Dollar Equivalent thereof on the date of such redenomination and such principal shall be payable on demand (provided that no Event of Default shall occur until the expiration of applicable grace periods); and if the Borrower shall fail to pay any interest on any Loan that is not denominated in Dollars, such interest shall automatically be redenominated in Dollars on the due date therefor (or, if such due date is a day other than the last day of the Interest Period therefor, on the last day of such Interest Period) in an amount equal to the Dollar Equivalent thereof on the date of such redenomination and such interest shall be payable on demand (provided that no Event of Default shall occur until the expiration of applicable grace periods).

 

2.19         Requirements of Law .  (a)  Except with respect to Taxes, which shall be governed solely by Section 2.20, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority first made, in each case, subsequent to the date hereof:

 

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(i)            shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the Eurocurrency Rate hereunder; or

 

(ii)           shall impose on such Lender any other condition not otherwise contemplated hereunder;

 

and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender reasonably deems to be material, of making, converting into, continuing or maintaining Eurocurrency Loans or issuing or participating in Letters of Credit (in each case hereunder), or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender, in Dollars, within ten Business Days after the Borrower’s receipt of a reasonably detailed invoice therefor (showing with reasonable detail the calculations thereof), any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable.  If any Lender becomes entitled to claim any additional amounts pursuant to this Section, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled.

 

(b)           If any Lender shall have reasonably determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority first made, in each case, subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender’s or such corporation’s capital as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a reasonably detailed written request therefor (consistent with the detail provided by such Lender to similarly situated borrowers), the Borrower shall pay to such Lender, in Dollars, such additional amount or amounts as will compensate such Lender or such corporation for such reduction.

 

(c)           A certificate prepared in good faith as to any additional amounts payable pursuant to this Section submitted by any Lender to the Borrower (with a copy to the Administrative Agent) shall be presumptively correct in the absence of manifest error.  Notwithstanding anything to the contrary in this Section, the Borrower shall not be required to compensate a Lender pursuant to this Section for any amounts incurred more than six months prior to the date that such Lender notifies the Borrower of such Lender’s intention to claim compensation therefor; provided that if the circumstances giving rise to such claim have a retroactive effect, then such six-month period shall be extended to include the period of such retroactive effect.  The obligations of the Borrower pursuant to this Section shall survive the termination of this Agreement and the payment of the Obligations.  Notwithstanding the foregoing, the Borrower shall not be obligated to make payment to the Administrative Agent or any Lender with respect to penalties, interest and expenses if written demand therefore was not made by the Administrative Agent or such Lender within 180 days from the date on which such party makes payment for such penalties, interest and expenses.

 

(d)           Notwithstanding anything in this Section 2.19 to the contrary, solely for purposes of this Section 2.19, the Dodd Frank Wall Street Reform and Consumer Protection Act, and all requests,

 

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rules, regulations, guidelines and directives promulgated thereunder or issued in connection therewith, shall be deemed to have been enacted, adopted or issued, as applicable, subsequent to the Closing Date.

 

2.20         Taxes .  (a)   Except as otherwise provided in this Agreement or as required by applicable law, all payments made by the Borrower under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future Taxes, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding (i) net income taxes, net profits or capital taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the Administrative Agent or any Lender as a result of a present or former connection between the Administrative Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document);  (ii) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction described in clause (i), above; (iii) taxes that are attributable to such Lender’s failure to comply with the requirements of paragraph (d) or (e), as applicable, of this Section; (iv) in the case of a Non-U.S. Lender (as defined below), (A) any withholding tax that is imposed under the law applicable as of the date such Lender becomes a party to this Agreement (or where the Non-U.S. Lender is a partnership for U.S. federal income tax purposes, under the law applicable on the date on which the affected partner(s) became a partner of such Non-U.S. Lender) or designate a new lending office, except to the extent that such Lender’s assignor (if any) was entitled (or where the Non-U.S. Lender is a partnership for U.S. federal income tax purposes, to the extent that the person(s) from which the affected partner(s) acquired their partnership interest was entitled), at the time of assignment or at the time of the designation of a new lending office, to receive additional amounts from the Borrower with respect to such withholding tax pursuant to this paragraph; or (B) any withholding tax imposed on amounts payable to such Non-U.S. Lender that would not have been imposed but for a failure by such Non-U.S. Lender or any other legal or beneficial holder of a Loan under this Agreement or any foreign financial institution through which payments on the Loans under this Agreement are made to comply with any applicable certification, documentation, information or other reporting requirements under FATCA as a precondition to relief or exemption from such withholding tax; and (v) penalties and interest on the foregoing amounts  (all such taxes referred to in clauses (i) , (ii), (iii), (iv) and (v) hereof hereinafter referred to as “ Excluded Taxes ” and all such other Taxes hereinafter referred to as “ Non-Excluded Taxes ”).  If any Non-Excluded Taxes or Other Taxes are required to be withheld from any amounts payable by the Borrower to the Administrative Agent or any Lender hereunder, the amounts so payable to the Administrative Agent or such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such Lender (after deduction or withholding of all Non-Excluded Taxes and Other Taxes, including deductions or withholdings applicable to additional sums payable under this Section) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement.

 

(b)           The Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c)           Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Administrative Agent for the account of the Administrative Agent or Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof if such receipt is obtainable, or, if not, such other evidence of payment as may reasonably be required by the Administrative Agent or such Lender.  If the Borrower fails to pay any Non-Excluded Taxes or Other Taxes that the Borrower is required to pay pursuant to this Section 2.20 (or in respect of which the Borrower would be required to pay increased amounts pursuant to Section 2.20(a) if such Non-Excluded Taxes or Other Taxes were withheld) when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts

 

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or other required documentary evidence, the Borrower shall indemnify the Administrative Agent and the Lenders for any payments by them of such Non-Excluded Taxes or Other Taxes (including any Non-Excluded Taxes or Other Taxes imposed on amounts payable under this Section 2.20), other than any amounts arising as a result of such Administrative Agent’s or such Lender’s gross negligence or willful misconduct, within thirty (30) days after written demand therefor.  A certificate as to any amounts payable under this Section submitted by the Administrative Agent or by any Lender (with a copy to the Administrative Agent) shall be presumptively correct in the absence of manifest error.

 

(d)           Each Lender that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) (a “ Non-US Lender ”) shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Borrower and to the Lender from which the related participation shall have been purchased) (i) two accurate and complete originals of IRS Form W-8ECI or W-8BEN, or, (ii) in the case of a Non-US Lender claiming exemption from United States federal withholding tax under Sections 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statement substantially in the form of Exhibit F and two accurate and complete originals of IRS Form W-8BEN, or any subsequent versions or successors to such forms, in each case properly completed and duly executed by such Non-US Lender claiming complete exemption from, or a reduced rate of, United States federal withholding tax on all payments by the Borrower or any Loan Party under this Agreement and the other Loan Documents.  Such forms shall be delivered by each Non-US Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation).  In addition, each Non-US Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-US Lender.  Each Non-US Lender shall (i) promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the United States taxing authorities for such purpose) and (ii) take such steps as shall not be disadvantageous to it, in its reasonable judgment, and as may be reasonably necessary (including the re-designation of its lending office pursuant to Section 2.23) to avoid any requirement of applicable laws of any such jurisdiction that the Borrower make any deduction or withholding for taxes from amounts payable to such Lender.  Notwithstanding any other provision of this paragraph, a Non-US Lender shall not be required to deliver any form pursuant to this paragraph that such Non-US Lender is not legally able to deliver.

 

(e)           Each Lender that is a United States person (as such term is defined in Section 7701(a)(30) of the Code) (a “ US Lender ”) shall deliver to the Borrower and the Administrative Agent two accurate and complete originals of IRS Form W-9, or any subsequent versions or successors to such form.  Such forms shall be delivered by each US Lender on or before the date it becomes a party to this Agreement.  In addition, each US Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such US Lender.  Each US Lender shall promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certifications to the Borrower (or any other form of certification adopted by the United States taxing authorities for such purpose).

 

(f)            If a payment made to any Lender hereunder or under any other Loan Document would be subject to United States federal withholding Tax imposed pursuant to FATCA if such Lender fails to comply with applicable reporting and other requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall use commercially reasonable efforts to deliver any documentation reasonably requested by the Borrower or the Administrative Agent sufficient for the Borrower and the Administrative Agent to comply with their obligations under FATCA.

 

(g)           If the Administrative Agent or any Lender determines, in good faith, that it has received a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by the

 

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Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.20, it shall promptly pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.20 with respect to the Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority; provided , further , that the Borrower shall not be required to repay to the Administrative Agent or the Lender an amount in excess of the amount paid over by such party to the Borrower pursuant to this Section.  This paragraph shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.  The agreements in this Section shall survive the termination of this Agreement and the payment of the Obligations.

 

2.21         Indemnity .  Except with respect to Taxes, which shall be governed solely by Section 2.20, the Borrower agrees to indemnify each Lender for, and to hold each Lender harmless from, any loss or expense (other than lost profits, including the loss of Applicable Margin) that such Lender may actually sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurocurrency Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment of or conversion from Eurocurrency Loans after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment, conversion or continuation of Eurocurrency Loans on a day that is not the last day of an Interest Period with respect thereto.  A reasonably detailed certificate as to (showing in reasonable detail the calculation of) any amounts payable pursuant to this Section submitted to the Borrower by any Lender shall be presumptively correct in the absence of manifest error.  This covenant shall survive the termination of this Agreement and the payment of the Obligations.

 

2.22         Illegality .  Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof, in each case, first made after the date hereof, shall make it unlawful for any Lender to make or maintain Eurocurrency Loans as contemplated by this Agreement, such Lender shall promptly give notice thereof (a “ Rate Determination Notice ”) to the Administrative Agent and the Borrower, and (a) the commitment of such Lender hereunder to make Eurocurrency Loans, continue Eurocurrency Loans as such and convert ABR Loans to Eurocurrency Loans shall be suspended during the period of such illegality, (b) such Lender’s Loans then outstanding as Eurocurrency Loans denominated in Dollars, if any, shall be converted automatically to ABR Loans denominated in Dollars on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law and (c) (i) such Lender’s Loans then outstanding as Eurocurrency Loans denominated in any Agreed Foreign Currency, if any, shall be converted automatically on the respective last days of the then current Interest Periods with respect to such Loans (an “ Affected Interest Period ”) to Eurocurrency Loans denominated in such Agreed Foreign Currency having the next shortest Interest Period which is not affected by such adoption of or change in any Requirement of Law and (ii) if all Interest Periods are Affected Interest Periods in respect of such Eurocurrency Loans denominated in any Agreed Foreign Currency, during the 30-day period following any such Rate Determination Notice (the “ Negotiation Period ”) the Administrative Agent and the Borrower shall negotiate in good faith with a view to agreeing upon a substitute interest rate basis which shall reflect the cost to the applicable Lenders of funding such Loans from alternative sources (a “ Substitute Basis ”), and if such Substitute Basis is so agreed upon during the Negotiation Period, such Substitute Basis shall apply in lieu of the Eurocurrency Rate to all Interest Periods for the Eurocurrency

 

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Loans denominated in such Agreed Foreign Currency of the applicable Lenders commencing on or after the first day of an Affected Interest Period, until the circumstances giving rise to such Rate Determination Notice have ceased to apply.  If a Substitute Basis is not agreed upon during the Negotiation Period, each affected Lender shall determine (and shall certify from time to time in a certificate delivered by such Lender to the Administrative Agent setting forth in reasonable detail the basis of the computation of such amount) the rate basis reflecting the cost to such Lender of funding its Eurocurrency Loan denominated in such Agreed Foreign Currency for any Interest Period commencing on or after the first day of an Affected Interest Period, until the circumstances giving rise to such Rate Determination Notice have ceased to apply, and such rate basis shall be binding upon the Borrower and such Lender and shall apply in lieu of the Eurocurrency Rate for the relevant Interest Periods.  If a Rate Determination Notice has been given, then until such Rate Determination Notice has been withdrawn by the Administrative Agent, no Eurocurrency Loans of the applicable Lenders denominated in such Agreed Foreign Currency shall have an Interest Period having a duration equal to an Affected Interest Period.  The Borrower may elect to prepay the Eurocurrency Loans denominated in such Agreed Foreign Currency of the applicable Lenders pursuant to Section 2.11 at any time.

 

If any such conversion or prepayment of a Eurocurrency Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to Section 2.21.

 

2.23         Change of Lending Office .  Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Sections 2.19, 2.20(a) or 2.22 with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided that such designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no material economic, legal or regulatory disadvantage and; provided , further , that nothing in this Section shall affect or postpone any of the obligations of the Borrower or the rights of any Lender pursuant to Sections 2.19, 2.20(a) or 2.22.

 

2.24         Replacement of Lenders .  The Borrower shall be permitted to replace with a financial entity or financial entities, any Lender that (i) requests reimbursement for amounts owing pursuant to Sections 2.19, 2.20 or 2.21 or gives a notice of illegality pursuant to Section 2.22, (ii) is a Defaulting Lender, or (iii) has refused to consent to any waiver or amendment with respect to any Loan Document that requires such Lender’s consent and has been consented to by the Required Lenders; provided that (A) such replacement does not conflict with any Requirement of Law, (B) the replacement financial entity or financial entities shall purchase, at par, all Loans and other amounts owing to such replaced Lender on or prior to the date of replacement, (C) the Borrower shall be liable to such replaced Lender under Section 2.21 (as though Section 2.21 were applicable) if any Eurocurrency Loan owing to such replaced Lender shall be purchased other than on the last day of the Interest Period relating thereto, (D) the replacement financial entity or financial entities, (x) if not already a Lender, shall be reasonably satisfactory to the Administrative Agent to the extent that an assignment to such replacement financial institution of the rights and obligations being acquired by it would otherwise require the consent of the Administrative Agent pursuant to Section 10.6(b)(i)(B) and (y) shall pay (unless otherwise paid by the Borrower) any processing and recordation fee required under Section 10.6(b)(ii)(B), (E) the Administrative Agent and any replacement financial entity or entities shall execute and deliver, and such replaced Lender shall thereupon be deemed to have executed and delivered, an appropriately completed Assignment and Assumption to effect such substitution, (F) the Borrower shall pay all additional amounts (if any) required pursuant to Sections 2.19 or 2.20, as the case may be, in respect of any period prior to the date on which such replacement shall be consummated, (G) if applicable, the replacement financial entity or financial entities shall consent to such amendment or waiver, (H) any such replacement shall not

 

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be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender and (I) if such replacement is in connection with a Repricing Transaction prior to the first anniversary of the Closing Date, the Borrower or the replacement Lender shall pay the replaced Lender a fee equal to 1% of the aggregate principal amount of its Tranche B Term Loans required to be assigned pursuant to this Section 2.24, but such replacement shall not be subject to the provisions of Section 2.18.

 

Each Lender hereby grants to the Administrative Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of such Lender as assignor, any Assignment and Assumption necessary to effectuate any assignment of such Lender’s interests hereunder in respect of the circumstances contemplated by this Section and to be made in accordance with the terms and conditions of this Section 2.24.

 

In addition, the Borrower shall be permitted to prepay or terminate, without duplication or penalty (but subject to Section 2.21), the Loans and Commitments of any Defaulting Lender.  The prepayment of Loans or termination of the Revolving Commitments of any Lender pursuant to this paragraph shall not be subject to the provisions of Section 2.18.

 

2.25         Incremental Loans .  (a) The Borrower may by written notice to the Administrative Agent elect to request the establishment of one or more new term loans (the “ New Term Loan Commitments ”) or the increase of the Dollar Revolving Commitments hereunder, in an aggregate amount for all such New Term Loan Commitments and increases of the Dollar Revolving Commitments not in excess of (i) $150,000,000 plus (ii) an additional $150,000,000 if the pro forma Consolidated Total Leverage Ratio is less than 2.75:1.00 as of the end of the most recently ended Test Period.  Each such notice shall specify the date (each, an “ Increased Amount Date ”) on which the Borrower proposes that the New Term Loan Commitments or increase of the Dollar Revolving Commitments shall be effective, which shall be a date not less than 10 Business Days after the date on which such notice is delivered to the Administrative Agent; provided that any Lender offered or approached to provide all or a portion of any New Term Loan Commitments or increase of the Dollar Revolving Commitments may elect or decline, in its sole discretion, to provide such New Term Loan Commitments or increase of the Dollar Revolving Commitments.

 

(b)           Such New Term Loan Commitments or increase of the Dollar Revolving Commitments shall become effective as of such Increased Amount Date; provided that (i) the conditions set forth in Section 5.2 were satisfied or waived on such Increased Amount Date before or after giving effect to such New Term Loan Commitments and to the making of any Tranche of New Term Loans pursuant thereto or to such increase of the Dollar Revolving Commitments and after giving effect to any transaction consummated in connection therewith; (ii) the Borrower shall be in pro forma compliance with the financial covenants set forth in Section 7.1 as of the end of the most recently ended Test Period; (iii) the proceeds of any New Term Loans shall be used for general corporate purposes of the Borrower and its Subsidiaries (including Permitted Acquisitions and Investments permitted under Section 7.8); (iv) the New Term Loans shall share ratably in the Collateral and shall benefit ratably from the guarantees under the Guarantee and Collateral Agreement; (v) the New Term Loans shall share ratably in any mandatory prepayments of the existing Term Loans; (vi) the maturity date of New Term Loans thereof shall not be earlier than the Tranche B Term Maturity Date and the weighted average life to maturity shall be equal to or greater than the weighted average life to maturity of the Tranche B Term Loans; provided that up to $150.0 million of the New Term Loans may mature earlier than and have an average life to maturity shorter than that of the Tranche B Term Loans so long as such New Term Loans mature no earlier than, and will have a weighted average life to maturity no shorter than, that of the Tranche A Term Loans; (vii) all terms and documentation with respect to any New Term Loans which differ from those with respect to the Tranche B Term Loans shall be reasonably satisfactory to the Administrative Agent

 

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(except to the extent permitted by clauses (vi) and (x) of this Section and the last sentence of this paragraph); (viii) such New Term Loans or New Term Loan Commitments or increase of the Dollar Revolving Commitments shall be effected pursuant to one or more Joinder Agreements executed and delivered by the Borrower, the Administrative Agent and one or more New Lenders; (ix) the Borrower shall deliver or cause to be delivered any customary legal opinions or other documents reasonably requested by Administrative Agent in connection with any such transaction, including any supplements or amendments to the Security Documents providing for such New Term Loans to be secured thereby; and (x) if the initial “spread” (for purposes of this Section 2.25, the “spread” with respect to any Loan shall be calculated as the sum of the Eurodollar Loan margin on the relevant Loan plus any original issue discount or upfront fees in lieu of original issue discount (other than any arranging fees, underwriting fees and commitment fees) (based on an assumed four-year average life for the applicable Facilities (e.g., 100 basis points in original issue discount or upfront fees equals 25 basis points of interest rate margin))) relating to the New Term Loans exceeds the spread then in effect with respect to the Tranche B Term Loans by more than 0.50%, the Applicable Margin relating to the existing Tranche B Term Loans shall be adjusted so that the spread relating to such New Term Loans does not exceed the spread applicable to the existing Tranche B Term Loans by more than 0.50%; provided that if the New Term Loans include an interest rate floor greater than the interest rate floor applicable to the Tranche B Term Loans, such increased amount shall be equated to the applicable interest rate margin for purposes of determining whether an increase to the Applicable Margin for the Tranche B Term Loans shall be required, to the extent an increase in the interest rate floor for the Tranche B Term Loans would cause an increase in the interest rate then in effect thereunder, and in such case the interest rate floor (but not the Applicable Margin) applicable to the Tranche B Term Loans shall be increased by such amount.  Any New Term Loans made on an Increased Amount Date that have terms and provisions that differ from those of the Term Loans outstanding on the date on which such New Term Loans are made shall be designated as a separate tranche (a “ Tranche ”) of Term Loans for all purposes of this Agreement, except as the relevant Joinder Agreement otherwise provides.  For the avoidance of doubt, the rate of interest and the amortization schedule (if applicable) of any New Term Loan shall be determined by the Borrower and the applicable lenders of New Term Loans (each, a “ New Term Lender ”) and shall be set forth in the applicable Joinder Agreement.

 

(c)           On any Increased Amount Date on which any New Term Loan Commitments or increase of the Dollar Revolving Commitments becomes effective, subject to the foregoing terms and conditions, each lender with a New Term Loan Commitment or an increase of the Dollar Revolving Commitments (each, a “ New Lender ”) shall become a Lender hereunder with respect to such New Term Loan Commitment or such increase of the Dollar Revolving Commitments, as the case may be.

 

(d)           The terms and provisions of the New Term Loan Commitments of any Tranche shall be, except as otherwise set forth in the relevant Joinder Agreement, identical to those of the applicable Term Loans and for purposes of this Agreement, any New Term Loans or New Term Loan Commitments shall be deemed to be Term Loans.  Each Joinder Agreement may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to effect the provisions of this Section 2.25.

 

2.26         Defaulting Lenders .  (a) Defaulting Lender Cure.  If the Borrower, the Administrative Agent and each Swingline Lender and Issuing Lender agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded

 

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participations in Letters of Credit and Swingline Loans to be held pro rata by the Lenders in accordance with the Commitments under the applicable Facility (without giving effect to Sections 2.7(f) and 3.4(d)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

 

(b)           Defaulting Lender Waterfall.  Any payment of principal, interest or other amounts received by the Administrative Agent for the account of any Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 8 or otherwise and other than the payment of (i) any commitment fees under Section 2.9, (ii) default interest pursuant to Section 2.15(c) and (iii) Letter of Credit fees pursuant to Section 3.3, which in each case shall be applied pursuant to the provisions of those Sections) shall be applied by the Administrative Agent as follows:  first , to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent pursuant to Section 9.7; second , to the payment on a pro rata basis of any amounts owing by such Defaulting Lender (without duplication of any prepayments of Swingline Loans by the Borrower pursuant to Section 2.7(f) or the application of any cash collateral provided by the Borrower pursuant to Section 3.4(d)) to any Issuing Lender or Swingline Lender hereunder; third , to be held as security for any L/C Shortfall (without duplication of any cash collateral provided by the Borrower pursuant to Section 3.4(d)) in a cash collateral account to be established by, and under the sole dominion and control of, the Administrative Agent; fourth , as the Borrower may request (so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement; fifth , if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released in order to satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement; sixth , to the payment of any amounts owing to the Lenders, the Issuing Lenders or Swingline Lenders as a result of any final non-appealable judgment of a court of competent jurisdiction obtained by any Lender, the Issuing Lenders or Swingline Lenders against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh , so long as no Default exists, to the payment of any amounts owing to the Borrower as a result of any final non-appealable judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth , to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or L/C Disbursements in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 5.2 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Disbursements owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Disbursements owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in L/C Obligations and Swingline Loans are held by the Lenders pro rata in accordance with the Commitments under the applicable Facility without giving effect to Sections 2.7(f) and 3.4(d).  Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to be held as security in a cash collateral account pursuant to this Section 2.26(b) shall be deemed paid to and redirected by such Defaulting Lender and shall satisfy the Borrower’s payment obligation in respect thereof in full, and each Lender irrevocably consents hereto.

 

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SECTION 3.           LETTERS OF CREDIT

 

3.1           L/C Commitment .  (a)  Subject to the terms and conditions hereof, each Issuing Lender of a Class, in reliance on the agreements of the other Revolving Lenders of such Class set forth in Section 3.4(a), agrees to issue letters of credit (“ Letters of Credit ”) under the Revolving Commitments of such Class for the account of the Borrower or any Guarantor on any Business Day during the Revolving Commitment Period in such form as may be approved from time to time by such Issuing Lender; provided that no Issuing Lender shall have any obligation to issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations of both Classes taken together would exceed the L/C Commitment or (ii) the aggregate amount of the Available Revolving Commitments of such Class would be less than zero.  Each Letter of Credit shall (i) be denominated, in the case of the Dollar Revolving Commitments, in Dollars, or in the case of the Multicurrency Revolving Commitments, in Dollars or in any Agreed Foreign Currency and (ii) expire no later than the earlier of (x) the first anniversary of its date of issuance and (y) the date that is three Business Days prior to the Revolving Termination Date (unless cash collateralized or backstopped, in each case in a manner agreed to by the Borrower and the Issuing Lender); provided that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (y) above).

 

(b)           No Issuing Lender shall at any time be obligated to issue any Letter of Credit (or amend, renew or extend an outstanding Letter of Credit) if such issuance (or such amendment, renewal or extension) would conflict with, or cause such Issuing Lender to exceed any limits imposed by, any applicable Requirement of Law.

 

3.2           Procedure for Issuance of Letter of Credit .  The Borrower may from time to time request that the relevant Issuing Lender issue a Letter of Credit (or amend, renew or extend an outstanding Letter of Credit) by delivering to such Issuing Lender at its address for notices specified to the Borrower by such Issuing Lender an Application therefor, completed to the reasonable satisfaction of such Issuing Lender, and such other certificates, documents and other papers and information as such Issuing Lender may reasonably request.  Upon receipt of any Application, the relevant Issuing Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue (or amend, renew or extend, as the case may be) the Letter of Credit requested thereby (but in no event without the consent of the applicable Issuing Lender shall any Issuing Lender be required to issue (or amend, renew or extend, as the case may be) any Letter of Credit earlier than three Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit (or such amendment, renewal or extension, as the case may be) to the beneficiary thereof or as otherwise may be agreed to by such Issuing Lender and the Borrower.  Such Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower promptly following the issuance (or such amendment, renewal or extension, as the case may be) thereof.  Each Issuing Lender shall promptly furnish to the Administrative Agent, which shall in turn promptly furnish to the relevant Lenders, notice of the issuance (or such amendment, renewal or extension, as the case may be) of each Letter of Credit issued by it (including the amount and Currency thereof).

 

3.3           Fees and Other Charges .  (a) The Borrower will pay a fee on each outstanding Letter of Credit of each Class requested by it, at a per annum rate equal to the Applicable Margin then in effect with respect to Eurocurrency Loans under the Revolving Facility (minus the fronting fee referred to below), on the face amount of such Letter of Credit, which fee shall be shared ratably among the Revolving Lenders of such Class and payable quarterly in arrears on each Fee Payment Date after the issuance date; provided that, with respect to any Defaulting Lender, such Lender’s ratable share of any

 

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letter of credit fee accrued on the aggregate amount available to be drawn on any outstanding Letters of Credit during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender except to the extent that such Lender’s ratable share of any letter of credit fee shall otherwise have been due and payable by the Borrower prior to such time; provided further that any Defaulting Lender’s ratable share of any letter of credit fee accrued on the aggregate amount available to be drawn on any outstanding Letters of Credit shall accrue for the account of each Non-Defaulting Lender with respect to such Defaulting Lender’s participation in Letters of Credit which has been reallocated to such Non-Defaulting Lender pursuant to Section 3.4(d) and with respect to any L/C Shortfall either (i) if the Borrower has paid to the Administrative Agent, an amount of cash or Cash Equivalent equal to the amount of the L/C Shortfall to be held as security for all obligations of the Borrower to the Issuing Lenders hereunder in a cash collateral account to be established by, and under the sole dominion and control of, the Administrative Agent, for the account of the Borrower or (ii) otherwise, for the account of the Issuing Lenders, in each case so long as such Lender shall be a Defaulting Lender.  In addition, the Borrower shall pay to each Issuing Lender of a Class for its own account a fronting fee on the aggregate face amount of all outstanding Letters of Credit of such Class issued by it to the Borrower of 0.25% per annum, payable quarterly in arrears on each Fee Payment Date after the issuance date.

 

(b)           In addition to the foregoing fees, the Borrower shall pay or reimburse each Issuing Lender for such normal and customary costs and expenses agreed to by the Borrower and such Issuing Lender in issuing, negotiating, effecting payment under, amending or otherwise administering any Letter of Credit requested by the Borrower.

 

3.4           L/C Participations .  (a) Each Issuing Lender of a Class irrevocably agrees to grant and hereby grants to each L/C Participant of such Class, and, to induce such Issuing Lender to issue Letters of Credit of such Class, each L/C Participant of such Class irrevocably agrees to accept and purchase and hereby accepts and purchases from such Issuing Lender, on the terms and conditions set forth below, for such L/C Participant’s own account and risk an undivided interest equal to such L/C Participant’s Dollar Revolving Percentage or Multicurrency Revolving Percentage, as the case may be, in such Issuing Lender’s obligations and rights under and in respect of each Letter of Credit of the applicable Class issued by it and the amount of each draft paid by such Issuing Lender thereunder.  Each L/C Participant of a Class agrees with each Issuing Lender of such Class that, if a draft is paid under any Letter of Credit of such Class issued by it for which such Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to the Administrative Agent for the account of such Issuing Lender upon demand an amount equal to such L/C Participant’s Dollar Revolving Percentage or Multicurrency Revolving Percentage, as the case may be, of the amount of such draft, or any part thereof, that is not so reimbursed (“ L/C Disbursements ”); provided that nothing in this paragraph shall relieve the Issuing Lender of any liability resulting from gross negligence or willful misconduct of such Issuing Lender.  Each L/C Participant’s obligation to pay such amount shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or other right that such L/C Participant may have against any Issuing Lender, the Borrower or any other Person for any reason whatsoever, (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Section 5, (iii) any adverse change in the financial condition of the Borrower, (iv) any breach of this Agreement or any other Loan Document by the Borrower, any other Loan Party or any other L/C Participant or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing

 

(b)           If any amount required to be paid by any L/C Participant to the Administrative Agent for the account of any Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion of any payment made by such Issuing Lender under any Letter of Credit is paid to the

 

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Administrative Agent for the account of such Issuing Lender within three Business Days after the date such payment is due, such L/C Participant shall pay to the Administrative Agent for the account of such Issuing Lender on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Effective Rate during the period from and including the date such payment is required to the date on which such payment is immediately available to such Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360.  If any such amount required to be paid by any L/C Participant pursuant to Section 3.4(a) is not made available to the Administrative Agent for the account of the relevant Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, such Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to ABR Loans under the Revolving Facility.  A certificate of the relevant Issuing Lender submitted to any relevant L/C Participant with respect to any amounts owing under this Section shall be presumptively correct in the absence of manifest error.

 

(c)           Whenever, at any time after any Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with Section 3.4(a) such Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by such Issuing Lender), or any payment of interest on account thereof, such Issuing Lender will distribute to the Administrative Agent for the account of such L/C Participant its pro rata share thereof; provided , however , that in the event that any such payment received by such Issuing Lender shall be required to be returned by such Issuing Lender, such L/C Participant shall return to the Administrative Agent for the account of such Issuing Lender the portion thereof previously distributed by such Issuing Lender to it.

 

(d)           Notwithstanding anything to the contrary contained in this Agreement, in the event an L/C Participant becomes a Defaulting Lender, then such Defaulting Lender’s Revolving Percentage in all outstanding Letters of Credit will automatically be reallocated among the L/C Participants that are Non-Defaulting Lenders pro rata in accordance with each Non-Defaulting Lender’s Revolving Percentage (calculated without regard to the Revolving Commitment of the Defaulting Lender) but only to the extent that no Default or Event of Default shall have occurred and be continuing at the time of such reallocation (provided, that such amounts shall be automatically reallocated upon the cure or waiver of such Default or Event of Default) and that such reallocation does not cause the Revolving Extensions of Credit of any Non-Defaulting Lender to exceed the Revolving Commitment of such Non-Defaulting Lender.  If such reallocation cannot, or can only partially be effected, the Borrower shall, within five Business Days after written notice from the Administrative Agent, pay to the Administrative Agent, an amount of cash equal to such Defaulting Lender’s Revolving Percentage (calculated as in effect immediately prior to it becoming a Defaulting Lender) of the L/C Obligations (after giving effect to any partial reallocation pursuant to the first sentence of this Section 3.4(d)) to be held as security for all obligations of the Borrower to the Issuing Lenders hereunder in a cash collateral account to be established by, and under the sole dominion and control of, the Administrative Agent.  So long as there is a Defaulting Lender, an Issuing Lender shall not be required to issue any Letter of Credit where the sum of the Non-Defaulting Lenders’ Revolving Percentage, as applicable, of the outstanding Revolving Loans, Swingline Loans and their participations in Letters of Credit after giving effect to any such requested Letter of Credit would exceed (such excess, the “ L/C Shortfall ”) the aggregate Revolving Commitments of the Non-Defaulting Lenders, unless the Borrower shall pay to the Administrative Agent, an amount of cash or Cash Equivalents equal to the amount of the L/C Shortfall, such cash or Cash Equivalents to be held as security for all obligations of the Borrower to the Issuing Lenders hereunder in a cash collateral account to be established by, and under the sole dominion and control of, the Administrative Agent.

 

3.5           Reimbursement Obligation of the Borrower .  The Borrower agrees to reimburse each Issuing Lender on the Business Day following the date on which such Issuing Lender notifies the

 

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Borrower of the date and amount of a draft presented under any Letter of Credit issued by such Issuing Lender at the Borrower’s request and paid by such Issuing Lender for the amount of (a) such draft so paid and (b) any taxes, fees, charges or other costs or expenses incurred by such Issuing Lender in connection with such payment (the amounts described in the foregoing clauses (a) and (b) in respect of any drawing, collectively, the “ Payment Amount ”); provided that if such notice is given to the Borrower before 11:00 A.M., New York City time, the Borrower agrees to reimburse such Issuing Lender on the Business Day when such notification was given.  Each such payment shall be made to such Issuing Lender at its address for notices specified to the Borrower and in immediately available funds.  Interest shall be payable on any such amounts from the date on which the relevant draft is paid until payment in full at a rate equal to (i) until the second Business Day next succeeding the date of the relevant notice, the rate applicable to ABR Loans under the Revolving Facility and (ii) thereafter, the rate set forth in Section 2.15(c).

 

3.6           Obligations Absolute .  The Borrower’s obligations under this Section 3 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that the Borrower may have or have had against any Issuing Lender, any beneficiary of a Letter of Credit or any other Person.  The Borrower also agrees with each Issuing Lender that such Issuing Lender shall not be responsible for, and the Borrower’s Reimbursement Obligations under Section 3.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of such Borrower against any beneficiary of such Letter of Credit or any such transferee, or any other events or circumstances that, pursuant to applicable law or the applicable customs and practices promulgated by the International Chamber of Commerce, are not within the responsibility of such Issuing Lender, except for errors, omissions, interruptions or delays resulting from the gross negligence or willful misconduct of such Issuing Lender or its employees or agents.  No Issuing Lender shall be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors, omissions, interruptions or delays resulting from the gross negligence or willful misconduct of such Issuing Lender or its employees or agents.  The Borrower agrees that any action taken or omitted by any Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards or care specified in the Uniform Commercial Code of the State of New York, shall be binding on the Borrower and shall not result in any liability of such Issuing Lender to the Borrower.

 

3.7           Letter of Credit Payments .  If any draft shall be presented for payment under any Letter of Credit, the relevant Issuing Lender shall promptly notify the Borrower of the date and amount thereof.  The responsibility of such Issuing Lender to the Borrower in connection with any draft presented for payment under any Letter of Credit issued by such Issuing Lender shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are substantially in conformity with such Letter of Credit.

 

3.8           Applications .  To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Section 3, the provisions of this Section 3 shall apply.

 

SECTION 4.           REPRESENTATIONS AND WARRANTIES

 

To induce the Agents and the Lenders to enter into this Agreement and to make the Loans and issue or participate in the Letters of Credit, Holdings and the Borrower hereby jointly represent and

 

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warrant (as to itself and each of its Subsidiaries) to the Agents and each Lender, which representations and warranties shall be deemed made on the Closing Date and on the date of each borrowing of Loans or issuance of a Letter of Credit hereunder that:

 

4.1           Financial Condition .  The audited consolidated balance sheet of Holdings and its Subsidiaries as at September 30, 2008, September 30, 2009 and September 30, 2010, and the related statements of income and of cash flows for the fiscal years ended on such dates, reported on by and accompanied by an unqualified report from PricewaterhouseCoopers LLP, present fairly in all material respects the financial condition of Holdings and its Subsidiaries, as at such date, and the results of, their operations, their cash flows and their changes in stockholders’ equity for the respective fiscal years then ended.  The unaudited consolidated balance sheet of Holdings and its Subsidiaries as at December 31, 2010, and the related unaudited statements of income and of cash flows for the three-months ended on such date present fairly in all material respects the financial condition of Holdings and its Subsidiaries, as at such date, and the results of, their operations, their cash flows and their changes in stockholders’ equity for the three-month period then ended (subject to normal year-end audit adjustments and the lack of footnotes).  All such financial statements, including the related schedules and notes thereto and year end adjustments, have been prepared in accordance with GAAP (except as otherwise noted therein).

 

4.2           No Change .  There has been no event, development or circumstance since September 30, 2010 that has had or will have a Material Adverse Effect.

 

4.3           Existence; Compliance with Law .  Each of Holdings and its Restricted Subsidiaries (other than any Immaterial Subsidiaries) (a) (i) is duly organized (or incorporated), validly existing and in good standing (or, only where if applicable, the equivalent status in any foreign jurisdiction) under the laws of the jurisdiction of its organization or incorporation, (ii) has the corporate or organizational power and authority, and the legal right, to own and operate its Property, to lease the Property it operates as lessee and to conduct the business in which it is currently engaged except where the failure to do so would not reasonably be expected to have a Material Adverse Effect and (iii) is duly qualified as a foreign corporation or limited liability company and in good standing (where such concept is relevant) under the laws of each jurisdiction where its ownership, lease or operation of Property or the conduct of its business requires such qualification except, in each case, to the extent that the failure to be so qualified or in good standing (where such concept is relevant) would not have a Material Adverse Effect and (b) is in compliance with all Requirements of Law except to the extent that any such failure to comply therewith would not have a Material Adverse Effect.

 

4.4           Corporate Power; Authorization; Enforceable Obligations .  Each Loan Party has the corporate power and authority to make, deliver and perform the Loan Documents to which it is a party and, in the case of the Borrower, to borrow or have Letters of Credit issued hereunder.  Each Loan Party has taken all necessary corporate or other action to authorize the execution, delivery and performance of the Loan Documents to which it is a party and, in the case of the Borrower, to authorize the extensions of credit on the terms and conditions of this Agreement.  Except as would not have a Material Adverse Effect, no consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority is required in connection with the extensions of credit hereunder or the execution, delivery, performance, validity or enforceability of this Agreement or any of the other Loan Documents, except (i) consents, authorizations, filings and notices described in Schedule 4.4, which consents, authorizations, filings and notices have been obtained or made and are in full force and effect or the failure to obtain which would not reasonably be expected to have a Material Adverse Effect and (ii) the filings referred to in Section 4.17.  Each Loan Document has been duly executed and delivered on behalf of each Loan Party that is a party thereto.  This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal, valid and binding obligation of each Loan Party that is a party thereto, enforceable against each such Loan Party in accordance with its terms, except as

 

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enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law) and the implied covenants of good faith and fair dealing.

 

4.5           No Legal Bar .  The execution, delivery and performance of this Agreement and the other Loan Documents, the issuance of Letters of Credit, the borrowings hereunder and the use of the proceeds thereof will not (a) violate the organizational or governing documents of any of the Loan Parties, (b) except as would not have a Material Adverse Effect, violate any Requirement of Law or any Contractual Obligation of Holdings or any of its Restricted Subsidiaries or (c) except as would not have a Material Adverse Effect, result in, or require, the creation or imposition of any Lien on any of their respective properties or revenues pursuant to any Requirement of Law or any such Contractual Obligation (other than the Liens permitted by Section 7.3).

 

4.6           No Material Litigation .  No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of Holdings and the Borrower, likely to be commenced within a reasonable time period against Holdings or any of its Restricted Subsidiaries or against any of their Properties or revenues which, taken as a whole, (a) are material and adverse with respect to any of the Loan Documents or (b) would reasonably be expected to have a Material Adverse Effect.

 

4.7           No Default .  No Default or Event of Default has occurred and is continuing.

 

4.8           Ownership of Property; Liens .  Except as set forth in Schedule 4.8A, each of Holdings and its Restricted Subsidiaries has title in fee simple to, or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold interest in, all its other Property (other than Intellectual Property), in each case, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect, and none of such Property is subject to any Lien except as permitted by the Loan Documents.  Schedule 4.8B lists all real property which is owned or leased by any Loan Party as of the Closing Date.

 

4.9           Intellectual Property .  Each of Holdings and its Restricted Subsidiaries owns, or has a valid license to use, all Intellectual Property necessary for the conduct of its business as currently conducted free and clear of all Liens except as permitted by the Loan Documents, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.  To Holdings’ or the Borrower’s knowledge, no holding, injunction, decision or judgment has been rendered by any Governmental Authority against Holdings or any of its Restricted Subsidiaries and neither Holdings nor any of its Restricted Subsidiaries has entered into any settlement stipulation or other agreement (except license agreements in the ordinary course of business) which would limit, cancel or question the validity of, Holdings’ or any Restricted Subsidiary’s rights in, any Intellectual Property in any respect that would reasonably be expected to have a Material Adverse Effect.  To Holdings’ or the Borrower’s knowledge, no claim has been asserted or threatened or is pending by any Person challenging or questioning the use by Holdings or its Restricted Subsidiaries of any Intellectual Property owned by the Borrower or any of its Restricted Subsidiaries or the validity or effectiveness of any Intellectual Property, except as would not reasonably be expected to have a Material Adverse Effect.  To the Borrower’s knowledge, the use of Intellectual Property by Holdings and its Restricted Subsidiaries does not infringe on the rights of any Person in a manner that would reasonably be expected to have a Material Adverse Effect.  Holdings and its Restricted Subsidiaries take all reasonable actions that in the exercise of their reasonable business judgment should be taken to protect their Intellectual Property, including Intellectual Property that is confidential in nature, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

 

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4.10         Taxes .  Each of Holdings and its Restricted Subsidiaries (i) has filed or caused to be filed all federal, state, provincial and other tax returns that are required to be filed and (ii) has paid all taxes shown to be due and payable on said returns and all other taxes, fees or other charges imposed on it or any of its Property by any Governmental Authority (other than any amounts the validity of which are currently being contested in good faith by appropriate proceedings and with respect to which any reserves required in conformity with GAAP have been provided on the books of Holdings or such Restricted Subsidiary, as the case may be), except in each case where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

 

4.11         Federal Regulations .  No part of the proceeds of any Loans, and no other extensions of credit hereunder, will be used for “buying” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U as now and from time to time hereafter in effect or for any purpose that violates the provisions of the regulations of the Board.  If requested by any Lender (through the Administrative Agent) or the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in Regulation U.

 

4.12         ERISA .  (a)  Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect:  neither a Reportable Event nor an “accumulated funding deficiency” (within the meaning of Section 412(a) of the Code or Section 302(a)(2) of ERISA) has occurred during the five-year period prior to the date on which this representation is made with respect to any Plan, and each Plan has complied with the applicable provisions of ERISA and the Code; no termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such five-year period; the present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits; neither Holdings nor any of its Restricted Subsidiaries has had a complete or partial withdrawal from any Multiemployer Plan that has resulted or would reasonably be expected to result in a liability under ERISA; neither Holdings nor any of its Restricted Subsidiaries would become subject to any liability under ERISA if Holdings or such Restricted Subsidiary were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made; and no Multiemployer Plan is in Reorganization or Insolvent.

 

(b)           Holdings and its Restricted Subsidiaries have not incurred, and do not reasonably expect to incur, any liability under ERISA or the Code with respect to any plan within the meaning of Section 3(3) of ERISA which is subject to Title IV of ERISA that is maintained by a Commonly Controlled Entity (other than Holdings and its Restricted Subsidiaries) (a “ Commonly Controlled Plan ”) merely by virtue of being treated as a single employer under Title IV of ERISA with the sponsor of such plan that would reasonably be likely to have a Material Adverse Effect and result in a direct obligation of Holdings and its Restricted Subsidiaries to pay money.

 

4.13         Investment Company Act .  No Loan Party is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.

 

4.14         Subsidiaries .  (a)  The Subsidiaries listed on Schedule 4.14 constitute all the Subsidiaries of Holdings at the Closing Date.  Schedule 4.14 sets forth as of the Closing Date the name and jurisdiction of incorporation of each Subsidiary and, as to each Subsidiary, the percentage of each class of Capital Stock owned by any Loan Party and the designation of such Subsidiary as a Restricted Subsidiary or an Unrestricted Subsidiary.

 

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(b)           As of the Closing Date, except as set forth on Schedule 4.14, there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than stock options granted to officers, employees or directors and directors’ qualifying shares) of any nature relating to any Capital Stock of Borrower or any of Holdings’ Restricted Subsidiaries.

 

4.15         Environmental Matters .  Other than exceptions to any of the following that would not reasonably be expected to have a Material Adverse Effect:  none of Holdings or any of its Restricted Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law for the operation of the Business; or (ii) has become subject to any Environmental Liability.

 

4.16         Accuracy of Information, etc.   As of the Closing Date, no statement or information (excluding the projections and pro forma financial information referred to below) contained in this Agreement, any other Loan Document or any certificate furnished to the Administrative Agent or the Lenders or any of them, by or on behalf of any Loan Party for use in connection with the transactions contemplated by this Agreement or the other Loan Documents when taken as a whole, contained as of the date such statement, information, or certificate was so furnished, any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not materially misleading.  As of the Closing Date, the projections and pro forma financial information contained in the materials referenced above are based upon good faith estimates and assumptions believed by management of Holdings to be reasonable at the time made, in light of the circumstances under which they were made, it being recognized by the Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount.

 

4.17         Security Documents .  (a)  The Guarantee and Collateral Agreement is effective to create in favor of the Collateral Agent for the benefit of the Secured Parties, a legal, valid and enforceable first priority security interest in the Collateral described therein ( including any proceeds of any item of Collateral); provided that for purposes of this Section 4.17(a), Collateral shall be deemed to exclude any Property expressly excluded from the definition of “Collateral” as set forth in the Guarantee and Collateral Agreement, including, without limitation, Deposit Accounts (as defined in the Guarantee and Collateral Agreement).  In the case of (i) the Pledged Securities described in the Guarantee and Collateral Agreement, when any stock certificates or notes, as applicable, representing such Pledged Securities are delivered to the Collateral Agent and (ii) the other Collateral described in the Guarantee and Collateral Agreement, when financing statements in appropriate form are filed in the offices specified on Schedule 4.17 (which financing statements have been duly completed and executed (as applicable) and delivered to the Collateral Agent) and such other filings as are specified on Schedule 3 to the Guarantee and Collateral Agreement are made, the Collateral Agent shall have a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral (including any proceeds of any item of Collateral) (to the extent a security interest in such Collateral can be perfected through the filing of financing statements in the offices specified on Schedule 4.17 and the filings specified on Schedule 3 to the Guarantee and Collateral Agreement, and through the delivery of the Pledged Securities required to be delivered on the Closing Date), as security for the Obligations, in each case prior and superior in right to any other Person (except (i) in the case of Collateral other than Pledged Stock, Liens permitted by Section 7.3 and (ii) Liens having priority by operation of law) to the extent required by the Guarantee and Collateral Agreement.

 

(b)           Upon the execution and delivery of any Mortgage to be executed and delivered pursuant to Section 6.8(b), such Mortgage shall be effective to create in favor of the Collateral Agent for the benefit of the Secured Parties a legal, valid and enforceable Lien on the mortgaged property described

 

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therein and proceeds thereof, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law) and the implied covenants of good faith and fair dealing; and when such Mortgage is filed in the recording office designated by the Borrower, such Mortgage shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such mortgaged property and the proceeds thereof, as security for the Obligations (as defined in the relevant Mortgage), in each case prior and superior in right to any other Person (other than Liens permitted by Section 7.3 or other encumbrances or rights permitted by the relevant Mortgage).

 

4.18         Solvency .  As of the Closing Date, the Loan Parties, taken as a whole, and after giving effect to the incurrence of all Indebtedness and obligations being incurred in connection herewith and therewith will be, Solvent.

 

SECTION 5.           CONDITIONS PRECEDENT

 

5.1           Conditions to Initial Extension of Credit .  The agreement of each Lender to make the initial extension of credit requested to be made by it is subject to the satisfaction (or waiver), prior to or concurrently with the making of such extension of credit on the Closing Date, of the following conditions precedent:

 

(a)           Credit Agreement; Security Documents .  The Administrative Agent shall have received (i) this Agreement, executed and delivered by the Administrative Agent, the Collateral Agent, Holdings, the Borrower, the Joint Lead Arrangers and the initial Lenders party hereto, (ii) the Guarantee and Collateral Agreement, executed and delivered by Holdings, the Borrower and each Subsidiary Guarantor and (iii) an Acknowledgement and Consent in the form attached to the Guarantee and Collateral Agreement executed and delivered by each Issuer (as defined therein), if any, that is not a Loan Party.

 

(b)           Fees .  The Agents, the Joint Lead Arrangers and the Joint Bookrunners shall have received all fees required to be paid (including those to be passed on to the Lenders), and all reasonable out-of-pocket expenses of the Agents for which reasonably detailed invoices have been presented (including reasonable fees, disbursements and other charges of counsel to the Administrative Agent), on or before the Closing Date.

 

(c)           Solvency Certificate .  The Administrative Agent shall have received a solvency certificate signed by the chief financial officer on behalf of Holdings, substantially in the form of Exhibit G hereto.

 

(d)           Lien Searches .  The Collateral Agent shall have received the results of a recent lien search in each of the jurisdictions in which Uniform Commercial Code financing statements or other filings or recordations should be made to evidence or perfect security interests in all assets of the Loan Parties, and such search shall reveal no liens on any of the assets of the Loan Party, except for Liens permitted by Section 7.3 or liens to be discharged on or prior to the Closing Date.

 

(e)           Closing Certificate .  The Administrative Agent shall have received a certificate of each of the Loan Parties, dated the Closing Date, substantially in the form of Exhibit C, with appropriate insertions and attachments.

 

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(f)            Legal Opinions .  The Administrative Agent shall have received an executed legal opinion of Latham & Watkins LLP, counsel to Holdings and its Subsidiaries, substantially in the form of Exhibit E.

 

(g)           Pledged Stock; Stock Powers .  The Collateral Agent shall have received the certificates representing the shares, if any, of Capital Stock of the Borrower pledged pursuant to the Guarantee and Collateral Agreement, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof.

 

(h)           Filings, Registrations and Recordings .  Each Security Document (including, without limitation, any Uniform Commercial Code financing statement) required by the Security Documents to be filed, registered or recorded in order to create in favor of the Collateral Agent for the benefit of the Secured Parties, a perfected Lien on the Collateral described therein with the priority provided for in the Security Documents, shall have been delivered to the Collateral Agent in proper form for filing, registration or recordation.  To the extent the perfection of the Collateral Agent’s security interest in real property may not be accomplished on or prior to the Closing Date after the Borrower’s use of commercially reasonable efforts to do so, then the perfection of the security interest in such real property shall not constitute a condition precedent to the availability of the Facilities on the Closing Date, but, instead, may be accomplished within a period after the Closing Date reasonably acceptable to the Borrower and the Collateral Agent.

 

(i)            Insurance .  The Administrative Agent shall have received insurance certificates satisfying the requirements of Section 6.5(c).

 

(j)            First Lien Credit Agreement and Second Lien Credit Agreement .  The Administrative Agent shall have received evidence reasonably satisfactory that the First Lien Credit Agreement and the Second Lien Credit Agreement have been or concurrently with the Closing Date are being repaid in full and all commitments to lend or make other extensions of credit thereunder have been terminated and all liens securing such indebtedness or other obligations thereunder have been released and/or terminated.

 

(k)           KYC Information .  At least five Business Days prior to the Closing Date, the Administrative Agent shall have received all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001) the “ PATRIOT Act ”); provided that such information has been reasonably requested in writing by the Administrative Agent at least ten Business Days prior to the Closing Date.

 

5.2           Conditions to Each Extension of Credit .  The agreement of each Lender to make any Loan or to issue or participate in any Letter of Credit hereunder on any date (including, without limitation, its initial extension of credit) is subject to the satisfaction of the following conditions precedent:

 

(a)           Representations and Warranties .  (i) Each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects, in each case on and as of such date as if made on and as of such date except to the extent that such representations and warranties relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date.

 

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(b)           No Default .  No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date.

 

Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower hereunder shall constitute a representation and warranty by Holdings as of the date of such extension of credit that the conditions contained in this Section 5.2 have been satisfied.

 

SECTION 6.           AFFIRMATIVE COVENANTS

 

Each of Holdings and the Borrower (on behalf of itself and each of its Restricted Subsidiaries) hereby agrees that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding (that has not been cash collateralized or backstopped) or any Loan or other amount is owing to any Lender or any Agent hereunder (other than (i) contingent or indemnification obligations not then due and (ii) obligations in respect of Specified Hedge Agreements), Holdings and the Borrower shall and shall cause each of its Restricted Subsidiaries to:

 

6.1           Financial Statements .  Furnish to the Administrative Agent for delivery to each Lender (which may be delivered via posting on Intralinks or another similar electronic platform):

 

(a)           Within 120 days after the end of each fiscal year of Holdings, commencing with the fiscal year ended September 31, 2011, a copy of the audited consolidated balance sheet of Holdings and its consolidated Subsidiaries as at the end of such year and the related audited consolidated statements of income and of cash flows for such year, setting forth in each case in comparative form the figures as of the end of and for the previous year, reported on without qualification arising out of the scope of the audit, by PricewaterhouseCoopers LLP or other independent certified public accountants of nationally recognized standing; and

 

(b)           as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of Holdings, commencing with the fiscal quarter ended March 31, 2011, the unaudited consolidated balance sheet of Holdings and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and of cash flows for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures as of the end of and for the corresponding period in the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments and the absence of footnotes);

 

all such financial statements to be complete and correct in all material respects and to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein and except in the case of the financial statements referred to in clause (b), for customary year-end adjustments and the absence of footnotes).

 

The Borrower may satisfy its obligations under Section 6.1(a) in respect of any fiscal year of Holdings by furnishing Holdings’ annual report on Form 10-K for such year and under Section 6.1(b) in respect of any fiscal quarter of any fiscal year of Holdings by furnishing Holdings’ quarterly report on Form 10-Q for such quarter, in each case, as filed with the SEC.

 

Documents required to be delivered pursuant to this Section 6.1 may be delivered by posting such documents electronically with notice of such posting to the Administrative Agent and each

 

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Lender and if so posted, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at www.wescoair.com (or such other website as the Borrower shall designate in writing to the Administrative Agent), or (ii) on which such documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent).

 

6.2           Certificates; Other Information .  Furnish to the Administrative Agent for delivery to each Lender, or, in the case of clause (f), to the relevant Lender:

 

(a)           to the extent permitted by the internal policies of such independent certified public accountants, concurrently with the delivery of the financial statements referred to in Section 6.1(a), a certificate of the independent certified public accountants in customary form reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default, except as specified in such certificate;

 

(b)           concurrently with the delivery of each set of consolidated financial statements pursuant to Sections 6.1(a) and 6.1(b), (i) a certificate of a Responsible Officer on behalf of Holdings stating that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate.  (ii) (x) if applicable for such period, a Compliance Certificate containing all information and calculations necessary for determining compliance by Holdings and its Subsidiaries with the provisions of Section 7.1 as of the last day of the fiscal quarter or fiscal year of Holdings, as the case may be, and (y) to the extent not previously disclosed to the Administrative Agent, a description of any new Subsidiary and of any change in the jurisdiction of organization of any other Loan Party and a listing of any material United States Intellectual Property filings by any Loan Party since the date of the most recent list delivered pursuant to this clause (y) (or, in the case of the first such list so delivered, since the Closing Date) and (iii) the related consolidating financial statements reflecting the adjustments necessary to eliminate the accounts of Unrestricted Subsidiaries (if any) from such consolidated financial statements;

 

(c)           as soon as available, but in any event not later than 60 days after the end of each fiscal year of Holdings, a detailed consolidated budget for the following fiscal year (including a projected consolidated balance sheet of Holdings and its Subsidiaries as of the end of the following fiscal year and the related consolidated statements of projected cash flow and projected income;

 

(d)           promptly after the same are sent, copies of all financial statements and material reports that Holdings or the Borrower sends to the holders of any class of its debt securities or public equity securities (except for Permitted Investors) and, promptly after the same are filed, copies of all financial statements and reports that Holdings or the Borrower may make to, or file with, the SEC, in each case to the extent not already provided pursuant to Section 6.1 or any other clause of this Section 6.2;

 

(e)           promptly upon delivery thereof to Holdings or the Borrower and to the extent permitted, copies of any accountants’ letters addressed to its Board of Directors (or any committee thereof); and

 

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(f)            promptly, such additional financial and other information as the Administrative Agent (for its own account or upon the request from any Lender) may from time to time reasonably request.

 

Notwithstanding anything to the contrary in this Section 6.2, (a) none of Holdings, the Borrower or any of the Restricted Subsidiaries will be required to disclose any document, information or other matter that (i) constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by Requirements of Law or any binding agreement, (iii) is subject to attorney-client or similar privilege or constitutes attorney work product or (iv) constitutes classified information and (b) unless such material is identified in writing by the Borrower as “Public Side” information, the Administrative Agent shall deliver such information only to “private-side” Lenders (i.e., Lenders that have affirmatively requested to receive material non-public information with respect to any Loan Party or its securities for purposes of United States federal or state securities laws); provided that there is no requirement that the Borrower identify any such information as “Public Side.”

 

Documents required to be delivered pursuant to this Section 6.2 may be delivered by posting such documents electronically with notice of such posting to the Administrative Agent and each Lender and if so posted, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at www.wescoair.com (or such other website as the Borrower shall designate in writing to the Administrative Agent), or (ii) on which such documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent).

 

6.3           Payment of Obligations .  Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its material taxes, governmental assessments and governmental charges (other than Indebtedness), except (a) where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves required in conformity with GAAP with respect thereto have been provided on the books of Holdings or its Subsidiaries, as the case may be, or (b) to the extent that failure to pay or satisfy such obligations would not reasonably be expected to have a Material Adverse Effect.

 

6.4           Conduct of Business and Maintenance of Existence, etc.; Compliance .  (a) Preserve, renew and keep in full force and effect its corporate or other existence and take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business, except, in each case, as otherwise permitted by Section 7.4 or except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (b) comply with all Requirements of Law except to the extent that failure to comply therewith would not reasonably be expected to have a Material Adverse Effect.

 

6.5           Maintenance of Property; Insurance .  (a) Keep all Property useful and necessary in its business in reasonably good working order and condition, ordinary wear and tear excepted, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

 

(b)           Take all reasonable and necessary steps, including, without limitation, in any proceeding before the United States Patent and Trademark Office or the United States Copyright Office, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of the material United States Intellectual Property owned by the Borrower or its Restricted Subsidiaries, including, without limitation, filing of applications for renewal, affidavits of use and

 

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affidavits of incontestability, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

 

(c)           Maintain insurance with financially sound and reputable insurance companies on all its material Property in at least such amounts and against at least such risks (but including in any event public liability, product liability and business interruption) as are usually insured against in the same general area by companies engaged in the same or a similar business.  All such insurance shall, to the extent customary (but in any event, not including business interruption insurance and personal injury insurance) (i) provide that no cancellation thereof shall be effective until at least 10 days after receipt by the Administrative Agent of written notice thereof and (ii) name the Administrative Agent as insured party or loss payee.

 

6.6           Inspection of Property; Books and Records; Discussions .  (a)  Keep proper books of records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all material financial dealings and transactions in relation to its business and activities, (b) permit representatives of any Lender to visit and inspect any of its properties and examine and make abstracts from any of its books and records upon reasonable notice and during normal business hours ( provided that such visits shall be coordinated by the Administrative Agent, and in no event shall there be more than one such visit per year except during the continuance of an Event of Default), (c) permit representatives of any Lender to have reasonable discussions regarding the business, operations, properties and financial and other condition of Holdings and its Restricted Subsidiaries with officers and employees of Holdings and its Restricted Subsidiaries and (d) permit representatives of the Administrative Agent to have reasonable discussions regarding the business, operations, properties and financial and other condition of Holdings and its Restricted Subsidiaries with its independent certified public accountants; provided that a Responsible Officer of Holdings shall be present during such discussion and any such discussions with Holdings’ independent certified public accountants at Holdings’ expense shall, except while an Event of Default has occurred and is continuing, be limited to one meeting per calendar year.

 

6.7           Notices .  Promptly upon a Responsible Officer of Holdings or any Loan Party obtaining knowledge thereof, give notice to the Administrative Agent (who shall promptly notify each Lender) of:

 

(a)           the occurrence of any Default or Event of Default;

 

(b)           any litigation, investigation or proceeding which may exist at any time between Holdings or any of its Restricted Subsidiaries and any other Person, that in either case, could reasonably be expected to have a Material Adverse Effect;

 

(c)           the following events, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, as soon as possible and in any event within 30 days after Holdings or any Restricted Subsidiary knows thereof:  (i) the occurrence of any Reportable Event with respect to any Plan, a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan, (ii) the institution of proceedings or the taking of any other action by the PBGC or Holdings or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any Plan or (iii) the occurrence of any similar events with respect to a Commonly Controlled Plan, that would reasonably be likely to result in a direct obligation of Holdings or any of its Restricted Subsidiaries to pay money;

 

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(d)           any development or event that has had or could reasonably be expected to have a Material Adverse Effect; and

 

(e)           the acquisition of any Property after the Closing Date in which the Collateral Agent does not already have a perfected security interest and in which a security interest is required to be created or perfected pursuant to Section 6.8.

 

Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action Holdings or the relevant Restricted Subsidiary proposes to take with respect thereto.

 

6.8           Additional Collateral, etc .  (a) With respect to any Property (other than Vehicles, bank accounts, cash, Cash Equivalents, Foreign Cash Equivalents and other assets expressly excluded from the Collateral pursuant to the Security Documents) located in the United States having a value, individually or in the aggregate of at least $5,000,000 acquired after the Closing Date by any Loan Party (other than (x) any interests in real property and any Property described in paragraph (c) of this Section, (y) any Property subject to a Lien expressly permitted by Section 7.3(g) or (bb) and (z) Instruments, Certificated Securities, Securities and Chattel Paper, which are referred to in the last sentence of this paragraph (a)) as to which the Collateral Agent for the benefit of the Secured Parties does not have a perfected Lien, promptly (i) give notice of such Property to the Collateral Agent and execute and deliver to the Collateral Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Collateral Agent reasonably requests to grant to the Collateral Agent for the benefit of the Secured Parties a security interest in such Property and (ii) take all actions reasonably requested by the Collateral Agent to grant to the Collateral Agent for the benefit of the Secured Parties a perfected security interest (to the extent required by the Security Documents and with the priority required by Section 4.17) in such Property (with respect to Property of a type owned by a Loan Party as of the Closing Date to the extent the Collateral Agent for the benefit of the Secured Parties, has a perfected security interest in such Property as of the Closing Date), including, without limitation, the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be reasonably requested by the Collateral Agent.  If any amount in excess of $5,000,000 payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument, Certificated Security, Security or Chattel Paper (or, if more than $5,000,000 in the aggregate payable under or in connection with the Collateral shall become evidenced by Instruments, Certificated Securities, Securities or Chattel Paper), such Instrument, Certificated Security, Security or Chattel Paper shall be promptly delivered to the Collateral Agent indorsed in a manner reasonably satisfactory to the Collateral Agent to be held as Collateral pursuant to this Agreement.

 

(b)           With respect to any fee interest in any real property located in the United States having a value (together with improvements thereof) of at least $5,000,000 acquired after the Closing Date by any Loan Party (other than any such real property subject to a Lien expressly permitted by Section 7.3(g) or (bb)), (i) give notice of such acquisition to the Collateral Agent and, if requested by the Collateral Agent execute and deliver a first priority Mortgage (subject to liens permitted by Section 7.3) in favor of the Collateral Agent for the benefit of the Secured Parties, covering such real property ( provided that no Mortgage nor survey shall be obtained if the Collateral Agent determines in consultation with the Borrower that the costs of obtaining such Mortgage or survey are excessive in relation to the value of the security to be afforded thereby), (ii) if reasonably requested by the Collateral Agent (A) provide the Lenders with a lenders’ title insurance policy with extended coverage covering such real property in an amount at least equal to the purchase price of such real property (or such other amount as shall be reasonably specified by the Collateral Agent) as well as a current ALTA survey thereof, together with a surveyor’s certificate unless the title insurance policy referred to above shall not

 

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contain an exception for any matter shown by a survey (except to the extent an existing survey has been provided and specifically incorporated into such title insurance policy), each in form and substance reasonably satisfactory to the Collateral Agent, and (B) use commercially reasonable efforts to obtain any consents or estoppels reasonably deemed necessary by the Collateral Agent, in connection with such Mortgage, each of the foregoing in form and substance reasonably satisfactory to the Collateral Agent and (iii) if requested by the Collateral Agent deliver to the Collateral Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Collateral Agent.

 

(c)           Except as otherwise contemplated by Section 7.7(p), with respect to any new Domestic Subsidiary that is a Material Subsidiary (and is not an Excluded Subsidiary) created or acquired after the Closing Date (which, for the purposes of this paragraph, shall include (x) any previously non-wholly owned Domestic Subsidiary that becomes wholly owned and is a Material Subsidiary (and is not an Excluded Subsidiary) and (y) any Domestic Subsidiary that was previously an Immaterial Subsidiary or an Unrestricted Subsidiary and becomes a Material Subsidiary (and is not an Excluded Subsidiary) or a Restricted Subsidiary, as applicable) by any Loan Party, promptly (i) give notice of such acquisition or creation to the Collateral Agent and, if requested by the Collateral Agent, execute and deliver to the Collateral Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Collateral Agent reasonably deems necessary to grant to the Collateral Agent for the benefit of the Secured Parties a perfected security interest (to the extent required by the Security Documents and with the priority required by Section 4.17) in the Capital Stock of such new Subsidiary that is owned by such Loan Party, (ii) deliver to the Collateral Agent the certificates, if any, representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of such Loan Party, and (iii) if such new Subsidiary is a wholly owned Domestic Subsidiary (and is not an Excluded Subsidiary), cause such new Subsidiary (A) to become a party to the Guarantee and Collateral Agreement and (B) to take such actions necessary or advisable to grant to the Collateral Agent for the benefit of the Secured Parties a perfected security interest (to the extent required by the Security Documents and with the priority required by Section 4.17) in the Collateral described in the Guarantee and Collateral Agreement with respect to such new Subsidiary (to the extent the Collateral Agent, for the benefit of the Secured Parties, has a perfected security interest in the same type of Collateral as of the Closing Date), including, without limitation, the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be reasonably requested by the Collateral Agent.

 

(d)           With respect to any new first tier Foreign Subsidiary that is a Material Subsidiary (and is not an Excluded Subsidiary other than by reason of being a Foreign Subsidiary) created or acquired after the Closing Date (which, for the purposes of this paragraph, shall include any first-tier Foreign Subsidiary that previously was an Immaterial Subsidiary or an Unrestricted Subsidiary and becomes a Material Subsidiary or a Restricted Subsidiary, as applicable, and is not an Excluded Subsidiary other than by reason of being a Foreign Subsidiary) by any Loan Party, and with respect to any Subsidiary that was an Excluded Subsidiary but has ceased to be an Excluded Subsidiary, promptly (i) give notice of such acquisition or creation to the Collateral Agent and, if requested by the Collateral Agent, execute and deliver to the Collateral Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Collateral Agent deems necessary or reasonably advisable in order to grant to the Collateral Agent, for the benefit of the Secured Parties, a perfected security interest (to the extent required by the Security Documents and with the priority required by Section 4.17) in the Capital Stock (other than Excluded Capital Stock as defined in the Guarantee and Collateral Agreement) of such Subsidiary that is owned by such Loan Party ( provided that in no event shall more than 65% of the total outstanding voting Capital Stock of any Foreign Subsidiary be required to be so pledged), and (ii) to the extent permitted by applicable law, deliver to the Collateral Agent the certificates, if any, representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by

 

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a duly authorized officer of such Loan Party, and take such other action as may be necessary or, in the reasonable opinion of the Collateral Agent, necessary to perfect or ensure appropriate priority the Lien of the Collateral Agent thereon.

 

(e)           Notwithstanding anything in this Section 6.8 to the contrary, neither Holdings nor any of its Restricted Subsidiaries shall be required to take any actions in order to perfect the security interest granted to the Collateral Agent for the ratable benefit of the Secured Parties under the laws of any jurisdiction outside the United States.

 

6.9           Further Assurances .  Maintain the security interest created by the Security Documents as a perfected security interest having at least the priority described in Section 4.17 (to the extent such security interest can be perfected through the filing of UCC-1 financing statements, the Intellectual Property filings to be made pursuant to Schedule 3 of the Guarantee and Collateral Agreement or the delivery of Pledged Securities required to be delivered under the Guarantee and Collateral Agreement), subject to the rights of the Loan Parties under the Loan Documents to dispose of the Collateral.  From time to time the Loan Parties shall execute and deliver, or cause to be executed and delivered, such additional instruments, certificates or documents, and take all such actions, as the Collateral Agent may reasonably request for the purposes of implementing or effectuating the provisions of this Agreement and the other Loan Documents, or of renewing the rights of the Secured Parties with respect to the Collateral as to which the Collateral Agent, for the ratable benefit of the Secured Parties, has a perfected Lien pursuant hereto or thereto, including, without limitation, filing any financing or continuation statements or financing change statements under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby.

 

6.10         Use of Proceeds .  The proceeds of the Tranche A Term Loans and the Tranche B Term Loans shall be used to repay the loans outstanding and other amounts owing under the First Lien Credit Agreement and the Second Lien Credit Agreement, to pay related fees and expenses and for other general corporate purposes of the Borrower and its Subsidiaries not prohibited by this Agreement.  The proceeds of the Revolving Loans, the Swingline Loans and the Letters of Credit shall be used to finance Permitted Acquisitions and Investments permitted hereunder and for other general corporate purposes of Holdings and its Subsidiaries not prohibited by this Agreement.

 

6.11         Changes in Jurisdictions of Organization; Name .  In the case of any change to the name or jurisdiction of organization of any Loan Party, promptly deliver to the Collateral Agent a written notice and any additional executed financing statements, financing change statements and other documents reasonably requested by the Collateral Agent to maintain the validity, perfection and priority of the security interests provided for in the Security Documents.

 

SECTION 7.           NEGATIVE COVENANTS

 

Each of Holdings and the Borrower (on behalf of itself and each of its Restricted Subsidiaries) hereby agrees that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding (that has not been cash collateralized or backstopped) or any Loan or other amount is owing to any Lender or any Agent hereunder (other than (i) contingent or indemnification obligations not then due and (ii) obligations in respect of Specified Hedge Agreements), neither Holdings nor the Borrower shall, and shall not permit any of their respective Restricted Subsidiaries to:

 

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7.1                                  Financial Condition Covenants .

 

(a)                                   Consolidated Total Leverage Ratio .  Permit the Consolidated Total Leverage Ratio of Holdings as at the last day of any period of four consecutive fiscal quarters of Holdings ending during any period set forth below to exceed the ratio set forth below opposite such period:

 

 

Period

 

Consolidated Total
Leverage Ratio

 

 

March 31, 2011 — March 31, 2013

 

4.00:1.00

 

 

June 30, 2013 — March 31, 2014

 

3.75:1.00

 

 

June 30, 2014 and thereafter

 

3.50:1.00

 

 

(b)                                  Consolidated Net Interest Coverage Ratio .  Permit the Consolidated Net Interest Coverage Ratio of Holdings to be less than 2.25:  1.00.

 

7.2                                  Indebtedness .  Create, issue, incur, assume, or suffer to exist any Indebtedness, except:

 

(a)                                   Indebtedness of any Loan Party pursuant to any Loan Document or Hedge Agreements;

 

(b)                                  Indebtedness (i) of Holdings or the Borrower to any of its Restricted Subsidiaries, (ii) of any Subsidiary Guarantor to Holdings or any Restricted Subsidiary and (iii) of any Non-Guarantor Subsidiary to any other Non-Guarantor Subsidiary and any refinancings, refundings, renewals or extensions thereof (without any increase (excluding accrued interest) in the principal amount thereof or any shortening of the maturity of any principal amount thereof);

 

(c)                                   Indebtedness (including, without limitation, Capital Lease Obligations) secured by Liens permitted by Section 7.3(g) in an aggregate principal amount not to exceed the greater of (a) $37,500,000 and (b) 4% of consolidated total assets of Holdings and its Restricted Subsidiaries at any one time outstanding;

 

(d)                                  Indebtedness outstanding on the date hereof and listed on Schedule 7.2(d) and any refinancings, replacements, refundings, renewals or extensions thereof (without any increase (excluding accrued interest and the amount of reasonable fees and expenses incurred and premiums paid in connection therewith) in the principal amount thereof or any shortening of the maturity of any principal amount thereof);

 

(e)                                   Guarantee Obligations (i) by Holdings or any of its Restricted Subsidiaries of obligations of any Loan Party, (ii) by any Non-Guarantor Subsidiary of obligations of any other Non-Guarantor Subsidiary;

 

(f)                                     Indebtedness of Non-Guarantor Subsidiaries in respect of local lines of credit, letters of credit, bank guarantees, factoring arrangements, sale/leaseback transactions and similar extensions of credit in the ordinary course of business not to exceed at any one time outstanding an aggregate principal amount equal to the sum of $45,000,000;

 

(g)                                  Indebtedness of Holdings or any of its Restricted Subsidiaries arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn by Holdings or such Restricted Subsidiary in the ordinary course of business against insufficient funds, so long as such Indebtedness is promptly repaid;

 

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(h)                                  (i) Indebtedness of any Non-Guarantor Subsidiary to a Loan Party and (ii) Guarantee Obligations of the Loan Parties of Indebtedness for Borrowed Money of any joint venture or Non-Guarantor Subsidiaries, in an aggregate principal amount for all such Indebtedness and, without duplication, Guarantee Obligations not to exceed the greater of (a) (i) $45,000,000 and (ii) 4% of consolidated total assets of Holdings and its Restricted Subsidiaries at any one time outstanding plus (b) an amount equal to the Available Amount;

 

(i)                                      Indebtedness in the form of earn-outs, indemnification, incentive, non-compete, consulting or other similar arrangements and other contingent obligations in respect of acquisitions or Investments permitted by Section 7.8 (both before or after any liability associated therewith becomes fixed).

 

(j)                                      additional Indebtedness of Holdings or any of its Restricted Subsidiaries in an aggregate principal amount (for Holdings and all Restricted Subsidiaries) not to exceed $30,000,000 at any one time outstanding;

 

(k)                                   Indebtedness under a Permitted Seller Note issued as consideration in connection with an acquisition permitted under Section 7.8(f), in an aggregate principal amount not to exceed $45,000,000 at any one time outstanding;

 

(l)                                      Indebtedness of Holdings or any of its Restricted Subsidiaries in respect of workers’ compensation claims, bank guarantees, warehouse receipts or similar facilities, property casualty or liability insurance, take-or-pay obligations in supply arrangements, self-insurance obligations, performance, bid, customs, government, appeal and surety bonds, completion guaranties and other obligations of a similar nature, in each case in the ordinary course of business;

 

(m)                                Indebtedness incurred by Holdings or any of its Restricted Subsidiaries arising from agreements providing for indemnification related to sales of goods or adjustment of purchase price or similar obligations in any case incurred in connection with the disposition of any business, assets or Restricted Subsidiary of Holdings;

 

(n)                                  Indebtedness supported by a Letter of Credit, in a principal amount not in excess of the stated amount of such Letter of Credit;

 

(o)                                  Indebtedness issued in lieu of cash payments of Restricted Payments permitted by Section 7.6(b); provided that such Indebtedness is subordinated to the Obligations on terms reasonably satisfactory to the Administrative Agent;

 

(p)                                  unsecured, senior subordinated or subordinated Indebtedness of the Loan Parties (such Indebtedness and/or guarantees incurred under this clause (p) being collectively referred to as the “ Permitted Subordinated Indebtedness ”); provided that (i) no scheduled principal payments, prepayments, redemptions or sinking fund or like payments of any Permitted Subordinated Indebtedness shall be required prior to the date at least 180 days after the maturity date of the Tranche B Term Loans, (ii) the terms of any Permitted Subordinated Indebtedness shall not be more restrictive in any respect on the Loan Parties than the provisions of this Agreement, (iii) the terms of subordination applicable to any Permitted Subordinated Indebtedness shall be reasonably satisfactory to the Administrative Agent and shall, in any event, define “senior indebtedness” or a similar phrase for purposes thereof to include all of the Obligations of the Loan Parties, (iv) no Default or Event of Default shall have occurred and be continuing at the time of incurrence of such Indebtedness or would result therefrom and (v) the

 

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pro forma Consolidated Total Leverage Ratio, after giving effect to the incurrence of such Permitted Subordinated Indebtedness (as if such Permitted Subordinated Indebtedness had been incurred on the first day of the most recently completed Test Period, shall not exceed 3.50:1.00;

 

(q)                                  Indebtedness of any Loan Party as an account party in respect of trade letters of credit issued in the ordinary course of business;

 

(r)                                     Indebtedness owing to any insurance company in connection with the financing of any insurance premiums permitted by such insurance company in the ordinary course of business;

 

(s)                                   Guarantee Obligations made in the ordinary course of business; provided that such Guarantees are not of Indebtedness for Borrowed Money and such Guarantee Obligations would not otherwise in the aggregate reasonably be expected to have a Material Adverse Effect;

 

(t)                                     Indebtedness of any Person that becomes a Restricted Subsidiary as part of a Permitted Acquisition or other permitted Investment after the Closing Date, and extensions, renewals, refinancings and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof or shorten maturity (other than by an amount not greater than accrued interest, fees and expenses, including premium and defeasance costs, associated therewith), add Holdings or any Restricted Subsidiary as a new obligor or new property of Holdings or any Restricted Subsidiary as security therefor or result in a decreased average weighted life thereof during the term of this Agreement; provided that (A) such acquired Indebtedness exists at the time such Person becomes a Restricted Subsidiary and is not created in contemplation of or in connection with such Person becoming a Restricted Subsidiary (except to the extent such acquired Indebtedness refinanced (and did not increase principal (except for accrued interest premium or fees) or shorten maturity during the term of this Agreement) other Indebtedness to facilitate such entity becoming a Restricted Subsidiary), (B) the aggregate principal amount of Indebtedness permitted by this clause (t) shall not at any one time outstanding exceed the greater of (a) $30,000,000 and (b) 2.5% of the consolidated total assets of Holdings and its Restricted Subsidiaries and (C) neither Holdings nor any Restricted Subsidiary shall be a new obligor therefor and no new property of Holdings or any Restricted Subsidiary shall provide security therefor;

 

(u)                                  Indebtedness of Holdings or any other Loan Party incurred to finance any acquisition or other Investment permitted under Section 7.8(f) in an aggregate amount for all such Indebtedness not to exceed the greater of (i) $75,000,000 and (ii) 6.5% of consolidated total assets

 

(v)                                  (i) Indebtedness representing deferred compensation or stock-based compensation to employees of Holdings or any Restricted Subsidiary incurred in the ordinary course of business and (ii) Indebtedness consisting of obligations of Holdings or any Restricted Subsidiary under deferred compensation or other similar arrangements incurred in connection with any Investment permitted hereunder;

 

(w)                                Indebtedness issued by Holdings or any Restricted Subsidiary to the officers, directors and employees of Holdings or any Restricted Subsidiary, in lieu of or combined with cash payments to finance the purchase of Capital Stock of Holdings or the Borrower, in each case, to the extent such purchase is permitted by Section 7.6(b);

 

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(x)                                    Indebtedness in respect of overdraft facilities, employee credit card programs, netting services, automatic clearinghouse arrangements and other cash management and similar arrangements in the ordinary course of business; and

 

(y)                                  any accretion of interest paid in kind on obligations described in clauses (a) through (x) above.

 

7.3                                  Liens .  Create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, except for:

 

(a)                                   Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings; provided that adequate reserves with respect thereto are maintained on the books of Holdings or its Restricted Subsidiaries, as the case may be, to the extent required by GAAP;

 

(b)                                  landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or that are being contested in good faith by appropriate proceedings;

 

(c)                                   pledges, deposits or statutory trusts in connection with workers’ compensation, unemployment insurance and other social security legislation;

 

(d)                                  deposits and other Liens to secure the performance of bids, trade and other similar contracts (other than for borrowed money), leases, subleases, statutory obligations, surety judgment and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

 

(e)                                   easements, zoning restrictions, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business that, in the aggregate, do not materially detract from the value of the Property subject thereto or materially interfere with the ordinary conduct of the business of Holdings or any of its Restricted Subsidiaries;

 

(f)                                     Liens in existence on the date hereof listed on Schedule 7.3(f) (or to the extent not listed on such Schedule 7.3(f), where the fair market value of the Property to which such Lien is attached is less than $2,000,000), securing Indebtedness permitted by Section 7.2(d) and Liens created after the date hereof in connection with any refinancing, refundings, or renewals or extensions thereof permitted by Section 7.2(d); provided that no such Lien is spread to cover any additional Property of Holdings or any Restricted Subsidiary after the Closing Date and that the amount of Indebtedness secured thereby is not increased;

 

(g)                                  (i) Liens securing Indebtedness of Holdings or any Restricted Subsidiary incurred pursuant to Sections 7.2(c), 7.2(f), 7.2(h), 7.2(j), 7.2(k), 7.2(n), 7.2(r), 7.2(t), or 7.2(u); provided that (A) in the case of any such Liens securing Indebtedness incurred pursuant to Sections 7.2(c), 7.2(k) or 7.2(u) to the extent incurred to finance Permitted Acquisitions or Investments permitted under Section 7.8, (x) such Liens shall be created substantially concurrently with the acquisition of the assets financed by such Indebtedness, (y) such Liens do not at any time encumber any Property of Holdings or any Restricted Subsidiary other than the Property financed by such Indebtedness and the proceeds thereof and (z) the principal amount of Indebtedness secured thereby is not increased, (B) in the case of any such Liens securing Indebtedness incurred pursuant to Section 7.2(r), such Liens do not encumber any Property other than cash paid to any such insurance company in respect of such insurance and (ii) any extension, refinancing, renewal

 

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or replacement of the Liens described in clause (i) of this Section and (C) in the case of any such Liens securing Indebtedness incurred pursuant to Section 7.2(j), the principal amount of Indebtedness secured thereby shall not exceed $20,000,000;

 

(h)                                  Liens created pursuant to the Security Documents;

 

(i)                                      any interest or title of a lessor under any lease entered into by Holdings or any Restricted Subsidiary in the ordinary course of its business and covering only the assets so leased, and any financing statement filed in connection with any such lease;

 

(j)                                      (i) Liens arising from judgments in circumstances not constituting an Event of Default under Section 8(h);

 

(k)                                   Liens on property or assets acquired pursuant to an acquisition permitted under Section 7.8(f) (and the proceeds thereof) or assets of a Loan Party in existence at the time such Loan Party is acquired pursuant to an acquisition permitted under Section 7.8(f) and not created in contemplation thereof;

 

(l)                                      (i) Liens on Property of Non-Guarantor Subsidiaries securing Indebtedness or other obligations not prohibited by this Agreement to be incurred by such Non-Guarantor Subsidiaries and (ii) Liens securing Indebtedness or other obligations of Holdings or any Subsidiary in favor of any Loan Party;

 

(m)                                receipt of progress payments and advances from customers in the ordinary course of business to the extent same creates a Lien on the related inventory and proceeds thereof;

 

(n)                                  Liens in favor of customs and revenue authorities arising as a matter of law to secure the payment of customs duties in connection with the importation of goods;

 

(o)                                  Liens arising out of consignment or similar arrangements for the sale by Holdings and its Restricted Subsidiaries of goods through third parties in the ordinary course of business;

 

(p)                                  Liens solely on any cash earnest money deposits made by Holdings or any of its Restricted Subsidiaries in connection with an Investment permitted by Section 7.8;

 

(q)                                  Liens deemed to exist in connection with Investments permitted by Section 7.8(b) that constitute repurchase obligations;

 

(r)                                     Liens upon specific items of inventory or other goods and proceeds of Holdings or any of its Restricted Subsidiaries arising in the ordinary course of business securing such Person’s obligations in respect of bankers’ acceptances and letters of credit issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

 

(s)                                   (i) cash deposits in favor of any Lender or any of their respective Affiliates securing any Hedge Agreement permitted hereunder and (ii) any other cash deposits in favor of any other party securing any Hedge Agreement permitted hereunder in an aggregate amount not to exceed $30,000,000 at any one time outstanding;

 

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(t)                                     any interest or title of a lessor under any leases or subleases entered into by Holdings or any Restricted Subsidiary in the ordinary course of business and any financing statement filed in connection with any such lease;

 

(u)                                  Liens on cash and Cash Equivalents used to defease or satisfy and discharge Indebtedness; provided that such defeasance or satisfaction and discharge is not prohibited hereunder;

 

(v)                                  (i) Liens that are contractual rights of set-off (A) relating to the establishment of depository relations with banks not given in connection with the issuance of Indebtedness, (B) relating to pooled deposit or sweep accounts of Holdings or any Restricted Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower and the Subsidiaries or (C) relating to purchase orders and other agreements entered into with customers of Holdings or any Restricted Subsidiary in the ordinary course of business and (ii) other Liens securing cash management obligations (that do not constitute Indebtedness) in the ordinary course of business;

 

(w)                                Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights;

 

(x)                                    Liens on Capital Stock in joint ventures securing obligations of such joint venture;

 

(y)                                  Liens on securities that are the subject of repurchase agreements constituting Cash Equivalents;

 

(z)                                    Liens securing obligations in respect of trade-related letters of credit incurred in the ordinary course of business permitted under Section 7.2 and covering the goods (or the documents of title in respect of such goods) financed by such letters of credit and the proceeds and products thereof;

 

(aa)                             encumbrances shown as exceptions in the title insurance policies insuring the Mortgages that don’t materially impair the use or value of the Property subject thereto; and

 

(bb)                           other Liens with respect to obligations that do not exceed $20,000,000 at any one time outstanding.

 

7.4                                  Fundamental Changes .  Consummate any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of all or substantially all of its Property or business, except that:

 

(a)                                   (i) any Restricted Subsidiary (other than the Borrower) may be merged, amalgamated or consolidated with or into Holdings or the Borrower ( provided that Holdings or the Borrower, as applicable, shall be the continuing or surviving corporation) or (ii) any Restricted Subsidiary (other than the Borrower) may be merged, amalgamated or consolidated with or into any Subsidiary Guarantor ( provided that (x) a Subsidiary Guarantor shall be the continuing or surviving corporation or (y) simultaneously with such transaction, the continuing or surviving corporation shall become a Subsidiary Guarantor and Holdings shall comply with Section 6.8 in connection therewith);

 

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(b)                                  any Non-Guarantor Subsidiary may be merged or consolidated with or into, or be liquidated into, any other Non-Guarantor Subsidiary that is a Restricted Subsidiary;

 

(c)                                   Holdings or any Restricted Subsidiary (other than the Borrower) may Dispose of all or substantially all of its assets upon voluntary liquidation or otherwise (other than, in the case of Holdings, the Capital Stock of the Borrower) to any Loan Party; provided that, with respect to any such Dispositions by any Non-Guarantor Subsidiary to any Loan Party for consideration in excess of the fair value of such assets (such excess, the “ Excess Amount ”), the sum of, without duplication, (A) the aggregate amount of all such Excess Amounts, (B) the aggregate book value of all Property transferred pursuant to Section 7.5(h) to a Person other than a Loan Party, (C) the aggregate amount of all Differential Amounts in respect of Dispositions made pursuant to Section 7.5(l) and (D) the aggregate amount of all Investments made pursuant to Sections 7.8(h) and 7.8(q), shall not at any time while this Agreement is in effect exceed 4% of consolidated total assets of Holdings and its Restricted Subsidiaries (at the time of any transfer giving rise to any such amount or any such Investment);

 

(d)                                  any Non-Guarantor Subsidiary may Dispose of all or substantially all of its assets (upon voluntary liquidation, dissolution, winding-up or otherwise) to any other Non-Guarantor Subsidiary that is a Restricted Subsidiary;

 

(e)                                   Dispositions permitted by Section 7.5 may be consummated;

 

(f)                                     any Investment expressly permitted by Section 7.8 may be structured as a merger, consolidation or amalgamation; and

 

(g)                                  any Restricted Subsidiary may liquidate or dissolve if (i) Holdings determines in good faith that such liquidation or dissolution is in the best interest of Holdings and is not materially disadvantageous to the Lenders and (ii) to the extent such Restricted Subsidiary is a Loan Party, any assets or business of such Restricted Subsidiary not otherwise disposed of or transferred in accordance with Sections 7.4 or 7.5 or, in the case of any such business, discontinued, shall be transferred to, or otherwise owned or conducted by, a Loan Party after giving effect to such liquidation or dissolution.

 

7.5                                  Dispositions of Property .  Dispose of any of its owned Property (including, without limitation, receivables) whether now owned or hereafter acquired, or, in the case of any Restricted Subsidiary, issue or sell any shares of such Restricted Subsidiary’s Capital Stock to any Person, except:

 

(a)                                   (i) the Disposition of surplus, obsolete or worn out property in the ordinary course of business, (ii) the sale of defaulted receivables in the ordinary course of business, (iii) abandonment, cancellation or disposition of any Intellectual Property in the ordinary course of business and (iv) sales, leases or other dispositions of inventory determined by the management of the Borrower to be no longer useful or necessary in the operation of the business;

 

(b)                                  (i) the sale of inventory or other property in the ordinary course of business (including, without limitation, Dispositions to Flintbrook and Wesco Europe in accordance with past practices), (ii) the cross-licensing or non-exclusive licensing of Intellectual Property, in the ordinary course of business and (iii) the contemporaneous exchange, in the ordinary course of business, of Property for Property of a like kind (other than as set forth in clause (ii) above), to the extent that the Property received in such exchange is of a value equivalent to the value of the Property exchanged ( provided that after giving effect to such exchange, the value of the Property

 

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of the Loan Parties subject to perfected first priority Liens in favor of the Collateral Agent under the Security Documents is not materially reduced);

 

(c)                                   Dispositions permitted by Section 7.4;

 

(d)                                  the sale or issuance of (i) any Subsidiary’s Capital Stock to any Loan Party; provided that the sale or issuance of Capital Stock of an Unrestricted Subsidiary to a Loan Party is otherwise permitted by Section 7.8 and (ii) the Capital Stock of any Non-Guarantor Subsidiary that is a Restricted Subsidiary to any other Non-Guarantor that is a Restricted Subsidiary, in each case, including, without limitation, in connection with any tax restructuring activities not otherwise prohibited hereunder;

 

(e)                                   the Disposition of other assets having a fair market value not to exceed 5% of consolidated total assets of Holdings and its Restricted Subsidiaries in the aggregate; provided that the requirements of Section 2.12(b), to the extent applicable, are complied with in connection therewith;

 

(f)                                     (i) any Recovery Event; provided that the requirements of Section 2.12(b) are complied with in connection therewith and (ii) any event that would constitute a Recovery Event but for the Dollar threshold set forth in the definition thereof;

 

(g)                                  the leasing, occupancy agreements or sub-leasing of Property that would not materially interfere with the required use of such Property by Holdings or its Restricted Subsidiaries;

 

(h)                                  Holdings and any Restricted Subsidiary may transfer for fair value Property (including Capital Stock of Subsidiaries (other than the Borrower)) to another Person in connection with a joint venture arrangement with respect to the transferred Property; provided that the sum of, without duplication, (A) the aggregate book value of all Property so transferred to any Person other than a Loan Party, (B) the aggregate amount of all Excess Amounts in respect of Dispositions made pursuant to Section 7.4(c), (C) the aggregate amount of all Differential Amounts in respect of Dispositions made pursuant to Section 7.5(l) and (D) the aggregate amount of all Investments made pursuant to Sections 7.8(h) and 7.8(q), shall not at any one time outstanding exceed 4% of consolidated total assets of Holdings and its Restricted Subsidiaries (at the time of any transfer giving rise to any such amount or any such Investment);

 

(i)                                      the sale or discount, in each case without recourse and in the ordinary course of business, of overdue accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof consistent with customary industry practice (and not as part of any bulk sale or financing of receivables);

 

(j)                                      transfers of condemned property as a result of the exercise of “eminent domain” or other similar policies to the respective Governmental Authority or agency that has condemned same (whether by deed in lieu of condemnation or otherwise), and transfers of properties that have been subject to a casualty to the respective insurer of such property as part of an insurance settlement;

 

(k)                                   the Disposition of any Immaterial Subsidiary or any Unrestricted Subsidiary;

 

(l)                                      Holdings and any Restricted Subsidiary may transfer Property (including Capital Stock of Subsidiaries (other than the Borrower)) for less than fair value (such difference, the

 

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Differential Amount ”) of any Loan Party to any Non-Guarantor Subsidiary; provided that the sum of, without duplication, (A) the aggregate amount of all such Differential Amounts, (B) the aggregate amount of all Excess Amounts in respect of Dispositions made pursuant to Section 7.4(c), (C) the aggregate book value of all Property transferred to a Person other than a Loan Party pursuant to Section 7.5(h) and (D) the aggregate amount of all Investments made pursuant to Sections 7.8(h) and 7.8(q), shall not at any one time outstanding exceed 4% of consolidated total assets of Holdings and its Restricted Subsidiaries (at the time of any transfer giving rise to any such amount or any such Investment); provided , further , that any sale or issuance of Capital Stock of an Unrestricted Subsidiary to a Loan Party is otherwise permitted by Section 7.8;

 

(m)                                the transfer of Property (i) by any Loan Party to any other Loan Party or (ii) from a Non-Guarantor Subsidiary to (A) any Loan Party for no more than fair market value or (B) any other Non-Guarantor Subsidiary that is a Restricted Subsidiary; provided that any sale or issuance of Capital Stock of an Unrestricted Subsidiary to a Loan Party is otherwise permitted by Section 7.8;

 

(n)                                  the sale of Cash Equivalents and Foreign Cash Equivalents in the ordinary course of business;

 

(o)                                  sale and leaseback transactions permitted by Section 7.11;

 

(p)                                  Liens permitted by Section 7.3;

 

(q)                                  Restricted Payments permitted by Section 7.6;

 

(r)                                     Investments permitted by Section 7.8;

 

(s)                                   the factoring of receivables by Holdings or any of its Restricted Subsidiaries in accordance with past practice;

 

(t)                                     the sale or issuance of the Capital Stock of (i) any Foreign Subsidiary that is a Restricted Subsidiary to any other Foreign Subsidiary that is a Restricted Subsidiary or (ii) any Foreign Subsidiary that is an Unrestricted Subsidiary to any other Foreign Subsidiary that is an Unrestricted Subsidiary, in each case, including, without limitation, in connection with any tax restructuring activities not otherwise prohibited hereunder;

 

(u)                                  the sale or issuance of the Capital Stock of Holdings to the Permitted Investors; and

 

(v)                                  Dispositions of Investments in joint ventures to the extent required by, or made pursuant to, customary buy/sell arrangements between the joint venture parties set forth in joint venture agreements and similar binding arrangements; provided that the requirement of Section 2.12(b), to the extent applicable, are complied in connection therewith.

 

7.6                                  Restricted Payments .  Declare or pay any dividend on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of Holdings or any Restricted Subsidiary, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Holdings or any Restricted Subsidiary, or enter into any derivatives or other transaction with any financial institution, commodities

 

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or stock exchange or clearinghouse (a “ Derivatives Counterparty ”) obligating Holdings or any Restricted Subsidiary to make payments to such Derivatives Counterparty as a result of any change in market value of any such Capital Stock (collectively, “ Restricted Payments ”), except that:

 

(a)                                   any Restricted Subsidiary may make Restricted Payments to any Loan Party;

 

(b)                                  Restricted Payments in connection with the acquisition by Holdings of Holdings’ common stock or other equity interests relating to Holdings’ common stock from present or former officers, directors, consultants, agents or employees (or their estates, family members or former spouses) of Holdings or any Restricted Subsidiary upon the death, disability, retirement or termination of employment of the applicable officer, director, consultant, agent or employee or pursuant to any equity subscription agreement, stock option or equity incentive award agreement, shareholders’ or members’ agreement or similar agreement, plan or arrangement; provided that the aggregate amount of payments under this clause (b) in any fiscal year of Holdings shall not exceed the sum of (i) $11,250,000, plus (ii) any proceeds received by Holdings subsequent to the date hereof in connection with sales of any common stock or common stock options sold in connection with permitted employee compensation and incentive arrangements, plus (iii) any amounts received by Holdings in such fiscal year and (to the extent not used pursuant to this clause (b)) any prior fiscal years pursuant to key man life insurance policies plus (iv) any Restricted Payments permitted (but not made) pursuant to this clause (b) in the immediately prior fiscal year; provided, that cancellation of Indebtedness owing to Holdings or any Restricted Subsidiary by any member of management of Holdings or its Restricted Subsidiaries in connection with a repurchase of the Capital Stock of the Holdings or any parent company will not be deemed to constitute a Restricted Payment for purposes of this Section 7.6;

 

(c)                                   Non-Guarantor Subsidiaries may make Restricted Payments to other Non-Guarantor Subsidiaries;

 

(d)                                  Holdings may purchase fractional shares of its common stock arising out of stock dividends, splits or combinations or business combinations;

 

(e)                                   Restricted Payments to the extent made with the Available Amount;

 

(f)                                     Restricted Payments to make payments provided for in the Management Agreement;

 

(g)                                  Investments permitted by Section 7.8;

 

(h)                                  provided that no Default or Event of Default is continuing or would result therefrom, Holdings may make Restricted Payments in an aggregate amount not to exceed $20,000,000;

 

(i)                                      noncash repurchases of Capital Stock deemed to occur upon exercise of stock options or similar equity incentive awards if such Capital Stock represents a portion of the exercise price of such options or similar equity incentive awards;

 

(j)                                      to the extent constituting Restricted Payments, Holdings and its Restricted Subsidiaries may enter into and consummate transactions expressly permitted by any provision of Sections 7.4, 7.5, 7.8 and 7.10;

 

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(k)                                   any non-wholly owned Restricted Subsidiary of Holdings may declare and pay cash dividends to its equity holders generally so long as Holdings or its respective Subsidiary which owns the equity interests in the Restricted Subsidiary paying such dividend receives at least its proportional share thereof (based upon its relative holding of the equity interests in the Restricted Subsidiary paying such dividends and taking into account the relative preferences, if any, of the various classes of equity interest of such Restricted Subsidiary); and

 

(l)                                      at any time after a Qualified IPO, provided that no Default or Event of Default is continuing or would result therefrom and the Consolidated Total Leverage Ratio shall not exceed 2.00 to 1.00 on a pro forma basis as of the end of the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.1, both immediately prior to and immediately after giving effect to such Restricted Payment, Holdings may make unlimited Restricted Payments.

 

7.7                                  [Reserved.] .

 

7.8                                  Investments .  Make any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures or other debt securities of, or all or substantially all of the assets constituting an ongoing business from, or make any other investment in, any other Person (all of the foregoing, “ Investments ”), except:

 

(a)                                   extensions of trade credit in the ordinary course of business;

 

(b)                                  Investments in Cash Equivalents and Foreign Cash Equivalents and Investments that were Cash Equivalents or Foreign Cash Equivalents when made;

 

(c)                                   Investments arising in connection with (i) the incurrence of Indebtedness permitted by Sections 7.2(b), (e), (h) and (s) and (ii) guarantees by Holdings or any Restricted Subsidiary of operating leases (other than Capital Lease Obligations) or of other obligations that do not constitute Indebtedness, in each case entered into in the ordinary course of business;

 

(d)                                  loans and advances to employees, consultants or directors of Holdings or any of its Restricted Subsidiaries in the ordinary course of business in an aggregate amount (for Holdings and all Restricted Subsidiaries) not to exceed $4,500,000 (excluding (for purposes of such cap) tuition advances, travel and entertainment expenses, but including relocation expenses) at any one time outstanding;

 

(e)                                   Investments (other than those relating to the incurrence of Indebtedness permitted by Section 7.8(c)) by Holdings or any of its Restricted Subsidiaries in Holdings, the Borrower or any Person that, prior to such Investment, is a Subsidiary Guarantor or is a Domestic Subsidiary that becomes a Subsidiary Guarantor at the time of such Investment;

 

(f)                                     (i) Permitted Acquisitions to the extent that any Person or Property acquired in such acquisition becomes a Loan Party or a part of any Loan Party or becomes (whether or not such Person is a wholly owned Subsidiary) a Subsidiary Guarantor in the manner contemplated by Section 6.8(c) and (ii) other Permitted Acquisitions in an aggregate purchase price (other than purchase price paid through the Available Amount) not to exceed in any fiscal year an amount equal to the greater of (i) $75,000,000 and (ii) 6.5% of consolidated total assets;

 

(g)                                  loans by Holdings or any of its Restricted Subsidiaries to the employees, officers or directors of Holdings or any of its Restricted Subsidiaries in connection with management

 

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incentive plans; provided that such loans represent cashless transactions pursuant to which such employees, officers or directors directly invest the proceeds of such loans in the Capital Stock of Holdings;

 

(h)                                  Investments by Holdings and its Restricted Subsidiaries in joint ventures or similar arrangements; provided , that the sum of, without duplication, (A) the aggregate amount of all such Investments, (B) the aggregate amount of all Excess Amounts in respect of Dispositions made pursuant to Section 7.4(c), (C) the aggregate book value of all Property transferred pursuant to Section 7.5(h), (D) the aggregate amount of all Differential Amounts in respect of Dispositions made pursuant to Section 7.5(l) and (E) the aggregate amount of all Investments made pursuant to Section 7.8(q), shall not at any one time outstanding exceed 4% of consolidated total assets of Holdings and its Restricted Subsidiaries (at the time of any transfer giving rise to any such amount or any such Investment);

 

(i)                                      Investments (including debt obligations) received in the ordinary course of business by Holdings or any Restricted Subsidiary in connection with the bankruptcy or reorganization of suppliers and customers and other Persons and in settlement of delinquent obligations of, and other disputes with, customers and suppliers and other Persons arising out of the ordinary course of business;

 

(j)                                      Investments (i) by any Non-Guarantor Subsidiary in any other Non-Guarantor Subsidiary;

 

(k)                                   Investments in existence on, or pursuant to legally binding written commitments in existence on, the Closing Date and listed on Schedule 7.8, in each case, any extensions or renewals thereof, so long as the amount of any Investment made pursuant to this clause (k) is not increased above the amount of such Investment set forth on Schedule 7.8;

 

(l)                                      Investments of Holdings or any Restricted Subsidiary under Hedge Agreements permitted hereunder;

 

(m)                                Investments of any Person in existence at the time such Person becomes a Restricted Subsidiary of Holdings; provided that such Investment was not made in connection with or in anticipation of such Person becoming a Restricted Subsidiary of Holdings;

 

(n)                                  Investments by the Loan Parties in the form of loans and advances to Non-Guarantor Subsidiaries permitted to be incurred by the Non-Guarantor Subsidiaries under Section 7.2(h);

 

(o)                                  Investments so long as the aggregate amount thereof (determined as the amount originally advanced, loaned or otherwise invested, less any returns on the respective Investment not to exceed the original amount invested) at no time exceeds the greater of:  (i) $37,500,000 and (ii) 4% of the consolidated total assets of Holdings and its Restricted Subsidiaries plus, in the case of clauses (i) and (ii), an amount equal to the Available Amount;

 

(p)                                  Subsidiaries may be established or created, if (i) to the extent such new Subsidiary is a Domestic Subsidiary, Holdings, the Borrower and such Subsidiary comply with the provisions of Section 6.8(c) and (ii) to the extent such new Subsidiary is a Foreign Subsidiary, Holdings complies with the provisions of Section 6.8(d), in each case, to the extent required thereunder; provided that, in each case, to the extent such new Subsidiary is created solely for the purpose of consummating a merger transaction pursuant to an acquisition permitted by

 

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Section 7.8, and such new Subsidiary at no time holds any assets or liabilities other than any merger consideration contributed to it contemporaneously with the closing of such merger transactions, such new Subsidiary shall not be required to take the actions set forth in Sections 6.8(c) or 6.8(d), as applicable, until the respective acquisition is consummated (at which time the surviving entity of the respective merger transaction shall be required to so comply within ten Business Days or such longer period as Administrative Agent shall agree);

 

(q)                                  Investments by any Loan Party in any Non-Guarantor Subsidiary; provided , that the sum of, without duplication, (A) the aggregate amount of all such Investments, (B) the aggregate amount of all Excess Amounts in respect of Dispositions made pursuant to Section 7.4(c), (C) the aggregate book value of all Property transferred to any Person other than a Loan Party pursuant to Section 7.5(h), (D) the aggregate amount of all Differential Amounts in respect of Dispositions made pursuant to Section 7.5(l) and (E) the aggregate amount of all Investments made pursuant to Section 7.8(h), shall not at any time while this Agreement is in effect exceed 4% of consolidated total assets of Holdings and its Restricted Subsidiaries (at the time of any transfer giving rise to any such amount or any such Investment);

 

(r)                                     Investments arising directly out of the receipt by Holdings or any Restricted Subsidiary of non-cash consideration for any sale of assets permitted under Section 7.5; provided that such non-cash consideration shall in no event exceed 25% of the total consideration received for such sale;

 

(s)                                   Investments resulting from pledges and deposits referred to in Sections 7.3(c) and (d);

 

(t)                                     the forgiveness or conversion to equity of any Indebtedness permitted by Section 7.2(b);

 

(u)                                  any Investment in a Foreign Subsidiary to the extent such Investment is substantially contemporaneously repaid in full with a dividend or other distribution from such Foreign Subsidiary;

 

(v)                                  Guarantee Obligations permitted by Section 7.2 and any payments made in respect of such Guarantees Obligations;

 

(w)                                Investments consisting of licensing or contribution of Intellectual Property pursuant to joint marketing arrangements with other persons;

 

(x)                                    Investments in the ordinary course of business consisting of UCC Article 3 endorsements for collection or deposit and UCC Article 4 customary trade arrangements with customers consistent with past practice;

 

(y)                                  advances of payroll payments to employees, or fee payments to directors or consultants, in the ordinary course of business;

 

(z)                                    Investments constituting loans or advances to Holdings or a parent company in lieu of Restricted Payment permitted pursuant to Section 7.6 (and such loans and advances shall be deemed to be a utilization of the applicable baskets under Section 7.6); and

 

(aa)                             provided that (x) no Default or Event of Default is continuing or would result therefrom and (y) the Consolidated Total Leverage Ratio shall not exceed 2.00 to 1.00 as of the

 

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end of the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.1, on a pro forma basis, immediately after giving effect to such Investment, any Investment.

 

It is further understood and agreed that for purposes of determining the value of any Investment outstanding for purposes of this Section 7.8, such amount shall be deemed to be the amount of such Investment when made, purchased or acquired less any returns on such Investment (not to exceed the original amount invested).

 

7.9                                  Optional Payments and Modifications of Certain Debt Instruments .  (a)  Make or offer to make any optional or voluntary payment, prepayment, repurchase or redemption of, or otherwise voluntarily or optionally defease the principal of or interest on, or any other amount owing in respect of, any Permitted Subordinated Indebtedness, except any such payment, prepayment, repurchase, redemption or defeasance made (a) with the Available Amount or (b) so long as (x) the aggregate amount of all such payments, prepayments, repurchases, redemptions or defeasances after the Closing Date shall not exceed $50,000,000 and (y) immediately following each such payment, prepayment, repurchase, redemption or defeasance, the Consolidated Total Leverage Ratio shall not exceed 2.00 to 1.00 as of the end of the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.1, on a pro forma basis.

 

(b)                                  Amend, modify or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the terms of any agreement or instrument governing or evidencing Permitted Subordinated Indebtedness relating to subordination, maturity, amortization or mandatory prepayment, repurchase, redemption or defeasance in any manner that is materially adverse to the Lenders without the prior consent of the Administrative Agent (with the approval of the Required Lenders).

 

7.10                            Transactions with Affiliates .  Enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of Property, the rendering of any service or the payment of any management, advisory or similar fees, with any Affiliate (other than Holdings or its Restricted Subsidiaries) unless such transaction is (a) otherwise not prohibited under this Agreement and (b) upon fair and reasonable terms no less favorable to Holdings or such Restricted Subsidiary, as the case may be, than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate.  Notwithstanding the foregoing, Holdings and its Restricted Subsidiaries may (i) pay to the Sponsor and its Affiliates fees, indemnities and expenses permitted by the Management Agreement; (ii) enter into and perform its obligations under the Management Rights Agreement; (iii) enter into any transaction with an Affiliate that is not prohibited by the terms of this Agreement to be entered into by Holdings or such Restricted Subsidiary with an Affiliate; and (iv) without being subject to the terms of this Section 7.10, enter into any transaction with any Person which is an Affiliate of Holdings only by reason of such Person and Holdings having common directors.  For the avoidance of doubt, this Section 7.10 shall not apply to employment, benefit, compensation, bonus, retention and severance arrangements with, and payments of compensation or benefits to or for the benefit of, current or former employees, officers or directors of Holdings or any of its Restricted Subsidiaries, including, without limitation, Randy Snyder.

 

7.11                            Sales and Leasebacks .  Enter into any arrangement with any Person providing for the leasing by Holdings or any Restricted Subsidiary of real or personal property which is to be sold or transferred by Holdings or such Restricted Subsidiary (a) to such Person or (b) to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of Holdings or such Restricted Subsidiary, except for (i) sales or transfers that do not exceed $30,000,000 in the aggregate at any one time outstanding, (ii) sales or transfers by any Loan Party to any other Loan Party, (iii) sales or transfers by any Non-Guarantor

 

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Subsidiary to any other Non-Guarantor Subsidiary that is a Restricted Subsidiary and (iv) any such arrangement entered into in the ordinary course of business of Holdings and its Restricted Subsidiaries.

 

7.12                            Changes in Fiscal Periods .  Permit the fiscal year of Holdings to end on a day other than September 30.

 

7.13                            Negative Pledge Clauses .  Enter into any agreement that prohibits or limits the ability of Holdings or any of its Restricted Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its Property or revenues, whether now owned or hereafter acquired, to secure the Obligations or, in the case of any Guarantor, its obligations under the Guarantee and Collateral Agreement, other than (a) this Agreement and the other Loan Documents, (b) any agreements governing any purchase money Liens or Capital Lease Obligations otherwise permitted by this Agreement (in which case, any prohibition or limitation shall only be effective against the assets financed thereby and the proceeds thereof), (c) software and other Intellectual Property licenses pursuant to which Holdings or such Restricted Subsidiary is the licensee of the relevant software or Intellectual Property, as the case may be, (in which case, any prohibition or limitation shall relate only to the assets subject of the applicable license), (d) Contractual Obligations incurred in the ordinary course of business and on customary terms which limit Liens on the assets subject of the applicable Contractual Obligation, (e) any agreements regarding Indebtedness or other obligations of any Non-Guarantor Subsidiary not prohibited under Section 7.2 (in which case, any prohibition or limitation shall only be effective against the assets of such Non-Guarantor Subsidiary and its Subsidiaries), (f) prohibitions and limitations in effect on the date hereof and listed on Schedule 7.13, (g) customary provisions contained in joint venture agreements and other similar agreements applicable to joint ventures entered into in the ordinary course of business, (h) customary provisions restricting the subletting or assignment of any lease governing a leasehold interest, (i) customary restrictions and conditions contained in any agreement relating to an asset sale permitted by Sections 7.4 or 7.5, (j) any agreement in effect at the time any Person becomes a Subsidiary, so long as such agreement was not entered into in contemplation of such Person becoming a Subsidiary, (k) restrictions in any agreements or instruments relating to any Indebtedness permitted to be incurred by this Agreement (i) that are consistent with prevailing market practice for similar types of Indebtedness at the time such restrictions are incurred or (ii) to which the Administrative Agent has not objected after having been afforded a period of at least five Business Days to review such restrictions and (l) customary provisions restricting assignment of any agreement entered into in the ordinary course of business.

 

7.14                            Clauses Restricting Subsidiary Distributions .  Enter into any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to (a) make Restricted Payments in respect of any Capital Stock of such Restricted Subsidiary held by, or pay any Indebtedness owed to, Holdings or any other Restricted Subsidiary or (b) make Investments in Holdings or any other Restricted Subsidiary, except for such encumbrances or restrictions existing under or by reason of (i) any restrictions existing under the Loan Documents, (ii) any restrictions with respect to such Restricted Subsidiary imposed pursuant to an agreement that has been entered into in connection with the Disposition of all or substantially all of the Capital Stock or assets of such Restricted Subsidiary, (iii) any restrictions contained in agreements related to Indebtedness of any Non-Guarantor Subsidiary not prohibited under Section 7.2 (in which case such restriction shall relate only to such Indebtedness and/or such Non-Guarantor Subsidiary and its Restricted Subsidiaries) or Indebtedness secured by Liens permitted by Sections 7.3(g) and 7.3(bb), (iv) any restrictions regarding licenses or sublicenses by Holdings and its Restricted Subsidiaries of Intellectual Property in the ordinary course of business (in which case such restriction shall relate only to such Intellectual Property), (v) Contractual Obligations incurred in the ordinary course of business which include customary provisions restricting the assignment of any agreement relating thereto, (vi) customary provisions contained in joint venture agreements and other similar agreements applicable to joint ventures entered into in the ordinary course of business, (vii) customary provisions restricting the subletting or assignment of any lease governing a leasehold

 

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interest, (viii) customary restrictions and conditions contained in any agreement relating to an asset sale permitted by Sections 7.4 or 7.5, (ix) any agreement in effect at the time any Person becomes a Restricted Subsidiary, so long as such agreement was not entered into in contemplation of such Person becoming a Restricted Subsidiary and (x) restrictions on cash or other deposits imposed by customers under contracts entered into in the ordinary course of business.

 

7.15                            Lines of Business .  Enter into any business, either directly or through any of its Restricted Subsidiaries, except for the Business or a business reasonably related thereto or that are reasonable extensions thereof.

 

7.16                            Limitation on Hedge Agreements .  Enter into any Hedge Agreement other than Hedge Agreements entered into in the ordinary course of business, and not for speculative purposes.

 

SECTION 8.                                 EVENTS OF DEFAULT

 

If any of the following events shall occur and be continuing:

 

(a)                                   The Borrower shall fail to pay (i) any principal of or premium on any Loan when due in accordance with the terms hereof, (ii) any principal of any Reimbursement Obligation within three Business Days after any such principal becomes due in accordance with the terms hereof or (iii) any interest owed by it on any Loan or Reimbursement Obligation, or any other amount payable by it hereunder or under any other Loan Document, within five Business Days after any such interest or other amount becomes due in accordance with the terms hereof; or

 

(b)                                  Any representation or warranty made or deemed made by any Loan Party herein or in any other Loan Document or that is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document, shall prove to have been inaccurate in any material respect on or as of the date made or deemed made or furnished; or

 

(c)                                   Any Loan Party shall default in the observance or performance of any covenant contained in Section 6.7(a) or Section 7; or

 

(d)                                  Any Loan Party shall default in the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days after such Loan Party receives from the Administrative Agent or any Lender notice of the existence of such default; or

 

(e)                                   Holdings or any of its Restricted Subsidiaries shall (i) default in making any payment of any principal of any Indebtedness for Borrowed Money (excluding the Loans and Reimbursement Obligations) on the scheduled or original due date with respect thereto; or (ii) default in making any payment of any interest on any such Indebtedness for Borrowed Money beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness for Borrowed Money was created; or (iii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness for Borrowed Money or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event of default shall occur, the effect of which payment or other default or other event of default is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice if required, such Indebtedness for Borrowed Money to become due prior to its stated maturity or to become subject

 

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to a mandatory offer to purchase by the obligor thereunder or to become payable; provided that (A) a default, event or condition described in this paragraph shall not at any time constitute an Event of Default unless, at such time, one or more defaults or events of default of the type described in this paragraph shall have occurred and be continuing with respect to Indebtedness for Borrowed Money the outstanding principal amount of which individually exceeds $25,000,000, and in the case of Indebtedness for Borrowed Money of the types described in clauses (i) and (ii) of the definition thereof, with respect to such Indebtedness which exceeds such amount either individually or in the aggregate and (B) this paragraph (e) shall not apply to (i) secured Indebtedness that becomes due as a result of the sale, transfer, destruction or other disposition of the Property or assets securing such Indebtedness for Borrowed Money if such sale, transfer, destruction or other disposition is not prohibited hereunder and under the documents providing for such Indebtedness or (ii) any Guarantee Obligations except to the extent such Guarantee Obligations shall become due and payable by any Loan Party and remain unpaid after any applicable grace period or period permitted following demand for the payment thereof; or

 

(f)                                     (i) Holdings or any of its Restricted Subsidiaries (other than Immaterial Subsidiaries) shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or Holdings or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against Holdings or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) any case, proceeding or other action of a nature referred to in clause (i) above that (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against Holdings or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against substantially all of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) Holdings or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) shall consent to or approve of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) Holdings or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or

 

(g)                                  (i) Holdings or any of its Restricted Subsidiaries shall incur any liability in connection with any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of Holdings or any of its Restricted Subsidiaries, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is reasonably likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) Holdings or any of its Restricted Subsidiaries shall, or is reasonably likely to, incur any liability as a result of a withdrawal from, or the Insolvency or Reorganization of, a

 

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Multiemployer Plan or (vi) any other event or condition (other than one which could not reasonably be expected to result in a violation of any applicable law or of the qualification requirements of the Code) shall occur or exist with respect to a Plan or a Commonly Controlled Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to result in a direct obligation of Holdings or any of its Restricted Subsidiaries to pay money that could have a Material Adverse Effect; or

 

(h)                                  One or more judgments or decrees shall be entered against Holdings or any of its Material Subsidiaries (which are not Unrestricted Subsidiaries) involving for Holdings and any Material Subsidiaries (which are not Unrestricted Subsidiaries) taken as a whole a liability (not paid or fully covered by insurance or effective indemnity) of $25,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof; or

 

(i)                                      Any of the Security Documents shall cease, for any reason (other than by reason of the express release thereof pursuant to Section 10.16), to be in full force and effect in any material respect, or any Loan Party shall so assert in writing, or any Lien on any material amount of Collateral created by any of the Security Documents shall cease in any material respect to be enforceable and of the same effect and priority purported to be created thereby; provided that there shall be no Event of Default under this clause (i) to the extent such Event of Default arises from (A) the resignation of the Agents or (B) the negligence or willful misconduct of the Agents following a reasonable request from Holdings or the Borrower to execute any document or take any other action relating to such Security Document or the Liens granted thereunder; or

 

(j)                                      (i) Holdings shall cease to own, directly or indirectly, 100% of the Capital Stock of the Borrower; (ii) at any time prior to a Qualified IPO, the Permitted Investors shall cease to own directly or indirectly, free and clear of all Liens, at least 50.1% of the Capital Stock of Holdings or (iii) at any time after a Qualified IPO, (x) a majority of the Board of Directors of Holdings shall not be Continuing Directors or (y) any “person” or “group” (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the Closing Date, but excluding any employee benefit plan of such person and its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of such plan, and excluding the Permitted Investors) shall become the “beneficial owner” (within the meaning of Rule 13d-3 and 13d-5 of the Securities Exchange Act of 1934 as in effect on the Closing Date), directly or indirectly, of more than the greater of (A) 35% of the then outstanding voting securities having ordinary voting power of Holdings and (B) the percentage of the then outstanding voting securities having ordinary voting power of Holdings owned, directly or indirectly, beneficially by the Permitted Investors (it being understood that if any such person or group includes one or more Permitted Investors, the outstanding voting securities having ordinary voting power of Holdings directly or indirectly owned by the Permitted Investors that are part of such person or group shall not be treated as being owned by such person or group for purposes of determining whether this clause (B) is triggered);

 

then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) above with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken:  (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare the Revolving Commitments

 

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to be terminated forthwith, whereupon the Revolving Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable.  In the case of all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit.  Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been backstopped or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the other Loan Documents.  After all such Letters of Credit shall have expired, backstopped or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of the Borrower then due and owing hereunder and under the other Loan Documents shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower (or such other Person as may be lawfully entitled thereto).  Except as expressly provided above in this Section or otherwise in any Loan Document, presentment, demand and protest of any kind are hereby expressly waived by Holdings and the Borrower.

 

SECTION 9.                                 THE AGENTS

 

9.1                                  Appointment .  Each Lender hereby irrevocably designates and appoints each Agent as the agent of such Lender under the Loan Documents and each such Lender irrevocably authorizes each Agent, in such capacity, to take such action on its behalf under the provisions of the applicable Loan Documents and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of the applicable Loan Documents, together with such other powers as are reasonably incidental thereto.

 

9.2                                  Delegation of Duties .  Each Agent may execute any of its duties under the applicable Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  Neither Agent shall be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with reasonable care.

 

9.3                                  Exculpatory Provisions .  Notwithstanding any provision to the contrary elsewhere in this Agreement:

 

(a)                                   Neither Agent shall have any duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, each Agent:

 

(i)                                      shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing;

 

(ii)                                   shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that such Agent is required to exercise as directed in writing by the Required Lenders; provided that neither Agent shall be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is contrary to any Loan Document or applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture,

 

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modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and

 

(iii)                                shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

 

(b)                                  Neither any Agent nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agents under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party a party thereto to perform its obligations hereunder or thereunder.  The Agents shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party.

 

9.4                                  Reliance by the Agents .  The Agents shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Agents also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder that by its terms must be fulfilled to the satisfaction of the Required Lenders (or, if so specified by this Agreement, all Lenders or the Majority Facility Lenders in respect of any Facility), each Agent may presume that such condition is satisfactory to the Required Lenders (or, if so specified by this Agreement, all Lenders or the Majority Facility Lenders in respect of any Facility) unless such Agent shall have received notice to the contrary from the Required Lenders (or, if so specified by this Agreement, all Lenders or the Majority Facility Lenders in respect of any Facility) prior to any such condition being fulfilled.

 

9.5                                  Notice of Default .  Neither Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless such Agent has received notice from a Lender, Holdings or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”.  In the event that an Agent receives such a notice, such Agent shall give notice thereof to the Lenders.  The Agents shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders or the Majority Facility Lenders in respect of any Facility); provided that unless and until such Agent shall have received such directions, such Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.

 

9.6                                  Non-Reliance on Agents and Other Lenders .  Each Lender acknowledges that it has, independently and without reliance upon the Agents or any other Lender and based on such

 

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documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

 

9.7                                  Indemnification .  The Lenders agree to indemnify each Agent in its capacity as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Aggregate Exposure Percentages in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Aggregate Exposure Percentages immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent’s gross negligence or willful misconduct.  The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.

 

9.8                                  Agent in Its Individual Capacity .  Each Agent and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for, and generally engage in any kind of business with, the Borrower or any Subsidiary or other Affiliate thereof as if such Agent were not an Agent hereunder and without any duty to account therefor to the Lenders.  With respect to its Loans made or renewed by it and with respect to any Letter of Credit issued or participated in by it, each Agent shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include each Person serving as an Agent hereunder in its individual capacity.

 

9.9                                  Successor Agents .

 

(a)                                   Any Agent may at any time give notice of its resignation to the Lenders and the Borrower.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with the consent of the Borrower to appoint a successor, which shall be a bank with an office in New York, New York, or an Affiliate of such bank with an office in New York, New York, which successor agent shall (unless an Event of Default under Sections 8.1(a) or 8.1(f) with respect to the Borrower shall have occurred and be continuing) be subject to the approval of the Borrower (which approval shall not be unreasonably withheld or delayed).  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “ Resignation Effective Date ”), then the retiring Agent may (but shall not be obligated to), on behalf of the Lenders, appoint a successor Agent meeting the qualifications set forth above.  Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

 

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(b)                                  If at any time either the Borrower or the Required Lenders determine that any Person serving as an Agent is a Defaulting Lender due to a bankruptcy event, the Borrower by notice to the Lenders and such Person or the Required Lenders by notice to the Borrower and such Person may remove such Person as an Agent.  If such Person is removed as an Agent, the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 8(a) or Section 8(f) with respect to the Borrower shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of such retiring Agent, and the retiring Agent’s rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such retiring Agent or any of the parties to this Agreement or any holders of the Loans.  Such removal will, to the fullest extent permitted by applicable law, be effective on the date a replacement Agent is appointed.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

 

(c)                                   With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (i) the retiring or removed Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any Collateral held by the Collateral Agent on behalf of the Lenders under any of the Loan Documents, the retiring or removed Collateral Agent shall continue to hold such Collateral until such time as a successor Collateral Agent is appointed) and (ii) all payments, communications and determinations provided to be made by, to or through the Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor agent as provided for above.  Upon the acceptance of a successor agent’s appointment as Agent hereunder, such successor agent shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Agent, and the retiring or removed Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents.  The fees payable by the Borrower to a successor agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor agent.  After the retiring or removed Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Section and Section 9.7 shall continue in effect for the benefit of such retiring or removed Agent in respect of any actions taken or omitted to be taken by such Agent while such Agent was acting as an Agent.

 

9.10                            Authorization to Release Liens and Guarantees .  The Agents are hereby irrevocably authorized by each of the Lenders to effect any release or subordination of Liens or Guarantee Obligations contemplated by Section 10.16.

 

9.11                            Joint Lead Arrangers, Joint Bookrunners, Documentation Agent and Syndication Agent .  None of the Joint Lead Arrangers, the Joint Bookrunners,  the Documentation Agent nor the Syndication Agent shall have any duties or responsibilities hereunder in their respective capacities as such.

 

9.12                            Administrative Agent May File Proof of Claims .  In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to the Borrower, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

 

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(a)                                   to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.9 and 9.7, as applicable) allowed in such judicial proceeding; and

 

(b)                                  to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.9 and 9.7, as applicable.

 

SECTION 10.                           MISCELLANEOUS

 

10.1                            Amendments and Waivers .  Neither this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 10.1.  The Required Lenders and each Loan Party party to the relevant Loan Document may, or, with the written consent of the Required Lenders, the Agents and each Loan Party to the relevant Loan Document may, from time to time, (a) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights or obligations of the Agents, the Swingline Lender, the Issuing Lenders, the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Agents may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided , however , that no such waiver and no such amendment, supplement or modification shall (i) forgive or reduce the principal amount or extend the final scheduled date of maturity of any Loan, extend the scheduled date of any amortization payment in respect of any Term Loan, reduce the stated rate of any interest, fee or premium payable hereunder (except (A) in connection with the waiver of applicability of any post default increase in interest rates and (B) that any amendment or modification of defined terms used in the financial covenants in this Agreement shall not constitute a reduction in the rate of interest or fees for purposes of this clause (i)) or extend the scheduled date of any payment thereof, or increase the amount or extend the expiration date of any Lender’s Revolving Commitment, in each case without the written consent of each Lender directly and adversely affected thereby; (ii) eliminate or reduce the voting rights of any Lender under this Section 10.1 without the written consent of such Lender; (iii) reduce any percentage specified in the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents, release all or substantially all of the Collateral or release all or substantially all of the Guarantors from their obligations under the Guarantee and Collateral Agreement (other than in connection with Dispositions permitted hereunder), in each case without the written consent of all Lenders; (iv) amend, modify or waive any provision of paragraph (a), (b) or (c) of Section 2.18 without the written consent of the Majority Facility Lenders in respect of each Facility adversely affected thereby; (v) reduce the percentage specified in the definition of Majority Facility Lenders with respect to any Facility without the written consent of all Lenders under such Facility; (vi) amend, modify or waive any provision of Section 9 without the written consent of the Agents; (vii) amend, modify or waive any provision of Sections 2.6 or 2.7 with respect to Swingline

 

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Loans of any Class without the written consent of the Swingline Lender with respect to such Class; or (viii) amend, modify or waive any provision of Section 3 without the written consent of the Issuing Lenders.  Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Loan Parties, the Lenders, the Agents and all future holders of the Loans.  In the case of any waiver, the Loan Parties, the Lenders and the Agents shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing unless limited by the terms of such waiver; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon.  Notwithstanding anything to the contrary herein, no Defaulting Lender or Affiliate Lender (other than any Debt Fund Affiliate) shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders or Affiliate Lenders (other than Debt Fund Affiliates)), except that (x) the Commitment of any Defaulting Lender or Affiliate Lender may not be increased or extended, the maturity of any of its Loans may not be extended, the rate of interest on any of its Loans may not be reduced and the principal amount of any of its Loans may not be forgiven, in each case without the consent of such Defaulting Lender or Affiliate Lender and (y) any waiver, amendment or modification that by its terms affects any Defaulting Lender or Affiliate Lender in its capacity as a Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender or Affiliate Lender.

 

Notwithstanding the foregoing, this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Agents, Holdings and the Borrower (a) to add one or more additional credit facilities to this Agreement (it being understood that no Lender shall have any obligation to provide or to commit to provide all or any portion of any such additional credit facility) and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Term Loans and Revolving Extensions of Credit and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders and Majority Facility Lenders.

 

In addition, notwithstanding the foregoing, this Agreement may be amended with the written consent of the Agents, Holdings, the Borrower and the Lenders providing the relevant Replacement Term Loans (as defined below) to permit the refinancing of all or a portion of the outstanding Term Loans of any Class (“ Refinanced Term Loans ”) with a replacement term loan tranche hereunder (“ Replacement Term Loans ”); provided that (a) the aggregate principal amount of such Replacement Term Loans shall not exceed the aggregate principal amount of such Refinanced Term Loans plus accrued interest, fees, discounts, premiums and expenses, (b) the Applicable Margin for such Replacement Term Loans shall not be higher than the Applicable Margin for such Refinanced Term Loans, (c) the weighted average life to maturity of such Replacement Term Loans shall not be shorter than the weighted average life to maturity of such Refinanced Term Loans at the time of such refinancing and (d) all other terms applicable to such Replacement Term Loans shall be substantially identical to, or less favorable to the Lenders providing such Replacement Term Loans than, those applicable to such Refinanced Term Loans, except to the extent necessary to provide for covenants and other terms applicable to any period after the latest final maturity of the Term Loans in effect immediately prior to such refinancing.

 

In addition, notwithstanding the foregoing, this Agreement may be amended with the written consent of the Agents, Holdings, the Borrower and the Lenders providing the relevant Replacement Revolving Commitments (as defined below) to permit the refinancing of all or a portion of the outstanding Revolving Commitments of either Class (“ Refinanced Revolving Commitments ”) with a

 

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replacement revolving tranche hereunder (“ Replacement Revolving Commitments ”); provided that (i) the aggregate amount of such Replacement Revolving Commitments shall not exceed the aggregate amount of such Refinanced Revolving Commitments, (ii) the maturity date or commitment termination date of such Replacement Revolving Commitments shall not be earlier than the maturity date or commitment termination date of such Refinanced Revolving Commitments at the time of such refinancing and (iii) all other terms applicable to such Replacement Revolving Commitments shall be substantially identical to, or less favorable to the Lenders providing such Replacement Revolving Commitments than, those applicable to such Refinanced Revolving Commitments, except to the extent necessary to provide for covenants and other terms applicable to any period after the final maturity of the Term Loans in effect immediately prior to such refinancing.

 

In addition, notwithstanding anything to the contrary herein (i) The Borrower may, by written notice to the Administrative Agent from time to time, make one or more offers (each, a “ Loan Modification Offer ”) to all of the Lenders of any Class to make one or more amendments or modifications to (A) allow the maturity and scheduled amortization of the Loans and/or Commitments of the Accepting Lenders (as defined below) to be extended and (B) increase the Applicable Margins and/or Applicable Commitment Fee Rate payable with respect to the Loans and Commitments of the Accepting Lenders (“ Permitted Amendments ”) pursuant to procedures reasonably specified by the Administrative Agent and reasonably acceptable to the Borrower.  Such notice shall set forth (i) the terms and conditions of the requested Permitted Amendment and (ii) the date on which such Permitted Amendment is requested to become effective.  Permitted Amendments shall become effective only with respect to the Loans and/or Commitments of the Lenders that accept the applicable Loan Modification Offer (such Lenders, the “ Accepting Lenders ”) and, in the case of any Accepting Lender, only with respect to such Lender’s Loans and/or Commitments as to which such Lender’s acceptance has been made.  The Borrower, each Loan Party and each Accepting Lender shall execute and deliver to the Administrative Agent an agreement containing the terms of the Permitted Amendments (a “ Loan Modification Agreement ”) and such other documentation as the Administrative Agent shall reasonably specify to evidence the acceptance of the Permitted Amendments and the terms and conditions thereof.  The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Loan Modification Agreement.  Each of the parties hereto hereby agrees that, upon the effectiveness of any Loan Modification Agreement, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Permitted Amendment evidenced thereby and only with respect to the Loans and Commitments of the Accepting Lenders as to which such Lenders’ acceptance has been made and (ii) any amendment or waiver of any provision of this Agreement or any other Loan Document, or consent to any departure by any Loan Party therefrom, that by its express terms amends or modifies the rights or duties under this Agreement or such other Loan Document of Lenders under a particular Facility (but not Lenders under any other Facility) and that would require Required Lender approval under Section 10.1 may be effected by an agreement or agreements in writing signed by the Company or the applicable Loan Party, as the case may be, and the Majority Facility Lenders under each affected Facility as if all such affected Lenders under the applicable Facility were the only Lenders hereunder at the time.

 

Furthermore, notwithstanding the foregoing, if following the Closing Date, the Administrative Agent and the Borrower shall have jointly identified an obvious error or any error or omission of a technical or immaterial nature, in each case, in any provision of this Agreement or any other Loan Document, then the Administrative Agent and the Borrower shall be permitted to amend such provision and such amendment shall become effective without any further action or consent of any other party to this Agreement or any other Loan Document if the same is not objected to in writing by the Required Lenders within five Business Days following receipt of notice thereof; it being understood that posting such amendment electronically on IntraLinks/IntraAgency or another relevant website with notice

 

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of such posting by the Administrative Agent to the Required Lenders shall be deemed adequate receipt of notice of such amendment.

 

Notwithstanding anything to the contrary contained herein, in connection with any “Required Lender” or “Majority Facility Lender” votes, Lenders that are Debt Fund Affiliates shall not be permitted, in the aggregate to account for more than 50% of the amounts includable in determining whether the “Required Lenders” or “Majority Facility Lender” have consented to any amendment, modification, waiver, consent or other action that is subject to such vote.  The voting power of each Lender that is a Debt Fund Affiliate shall be reduced, pro rata, to the extent necessary in order to comply with the immediately preceding sentence.

 

10.2                            Notices .  All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in the case of Holdings, the Borrower, the Agents, and as set forth in an administrative questionnaire delivered to the Administrative Agent in the case of the Lenders, or to such other address as may be hereafter notified by the respective parties hereto:

 

 

Holdings:

Wesco Holdings, Inc.

27727 Avenue Scott

Valencia, California 91355
Attention: Greg Hann
Telecopy: (661) 295-1340

Telephone: (661) 775-7200

 

in each case with a copy to:

 

The Carlyle Group

1001 Pennsylvania Avenue, NW

Washington, DC 20004

Attention:  Dayne Baird

Telecopy: (202) 347-9250

Telephone: (202) 729-5463

 

 

 

 

With a copy to:

Latham & Watkins LLP

555 Eleventh Street, NW

Suite 1000

Washington, D.C. 20004

 

 

Attention: Jennifer Van Driesen

 

 

Telecopy: 202-637-2201

 

 

Telephone: 202-637-2252

 

 

 

 

The Borrower:

Wesco Aircraft Hardware Corp.

27727 Avenue Scott

Valencia, California 91355
Attention: Greg Hann
Telecopy: (661) 295-1340

Telephone: (661) 775-7200

 

in each case with a copy to:

 

The Carlyle Group

 

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1001 Pennsylvania Avenue, NW

Washington, DC 20004

Attention:  Dayne Baird

Telecopy: (202) 347-9250

Telephone: (202) 729-5463

 

 

 

 

With a copy to:

Latham & Watkins LLP

555 Eleventh Street, NW

Suite 1000

Washington, D.C. 20004

 

 

Attention: Jennifer Van Driesen

 

 

Telecopy: 202-637-2201

 

 

Telephone: 202-637-2252

 

 

 

 

Agents:

Barclays Bank PLC

745 Seventh Avenue, 26th Floor

New York, NY 10019

 

 

Attention: Michael Mozer

 

 

Telecopy: 212-526-5115

 

With a copy to:

Telephone: 212-526-1456

Email: Michael.mozer@barcap.com

 

Barclays Bank PLC

1301 Avenue of the Americas

New York, NY 10019

 

 

Attention: Patrick Kerner

 

 

Telecopy: 917-522-0569

 

 

Telephone: 212-320-6927

Email: XraUSLoanOps5@barcap.com

 

provided that any notice, request or demand to or upon the Agents, the Lenders, Holdings or the Borrower shall not be effective until received.

 

Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Section 2 unless otherwise agreed by the Administrative Agent and the applicable Lender.  The Agents, Holdings or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

 

10.3                            No Waiver; Cumulative Remedies .  No failure to exercise and no delay in exercising, on the part of any Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

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10.4                            Survival of Representations and Warranties .  All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder.

 

10.5                            Payment of Expenses; Indemnification .  Except with respect to Taxes, which shall be governed by Section 2.20, the Borrower agrees (a) to pay or reimburse each Agent and the Joint Lead Arrangers for all their respective reasonable, documented out-of-pocket costs and expenses incurred in connection with the syndication of the Facilities (other than fees payable to syndicate members) and the development, preparation, execution and delivery of this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith and any amendment, supplement or modification thereto, and, as to the Agents only, the administration of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees and disbursements and other charges of counsel to the Agents (including one primary counsel and such local counsel as the Agents may reasonably require in connection with collateral matters, but no more than one counsel in any jurisdiction) in connection with all of the foregoing, (b) to pay or reimburse each Lender, each Issuing Lender, the Agents and the Joint Lead Arrangers for all their documented out-of-pocket costs and expenses incurred in connection with the enforcement of any rights under this Agreement, the other Loan Documents and any such other documents, including, without limitation, the documented fees and disbursements of counsel to each Lender and of counsel to the Agents, (c) to pay, indemnify, or reimburse each Lender, each Issuing Lender and the Agents for, and hold each Lender, each Issuing Lender and the Agents harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and similar other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents and (d) to pay, indemnify or reimburse each Lender, each Agent, each Joint Lead Arranger and their respective affiliates, and their respective officers, directors, trustees, employees, advisors, agents and controlling Persons (each, an “ Indemnitee ”) for, and hold each Indemnitee harmless from and against any and all other liabilities, obligations, losses, damages, penalties, costs, expenses or disbursements arising out of any actions, judgments or suits of any kind or nature whatsoever, arising out of or in connection with any claim, action or proceeding relating to or otherwise with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents and any such other documents, including, without limitation, any of the foregoing relating to the use of proceeds of the Loans or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of Holdings, any of its Subsidiaries or any of the Properties and the fees and disbursements and other charges of legal counsel in connection with claims, actions or proceedings by any Indemnitee against Holdings or the Borrower hereunder (all the foregoing in this clause (d), collectively, the “ Indemnified Liabilities ”); provided that neither Holdings nor the Borrower shall have any obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence, bad faith or willful misconduct of, material breach of the Loan Documents by, such Indemnitee or its affiliates, officers, directors, trustees, employees, advisors, agents or controlling Persons or any dispute among the indemnified persons (other than any dispute involving any Agent or Arranger in is capacity as such).  All amounts due under this Section 10.5 shall be payable promptly after receipt of a reasonably detailed invoice therefor.  Statements payable by the Borrower pursuant to this Section shall be submitted to the Borrower at the address thereof set forth in Section 10.2, or to such other Person or address as may be hereafter designated by the Borrower in a written notice to the Administrative Agent.  The agreements in this Section 10.5 shall survive repayment of the Obligations.

 

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10.6                            Successors and Assigns; Participations and Assignments .  (a)  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any affiliate of any Issuing Lender that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.

 

(b)                                  (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign (other than to a Defaulting Lender or any Disqualified Institution without the consent of the Borrower or to any natural person) to one or more assignees (each, an “ Assignee ”), all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of:

 

(A)                               the Borrower; provided that (x) no consent of the Borrower shall be required for an assignment of (x) Term Loans to a Lender, an Affiliate of a Lender, an Approved Fund (as defined below), and (y) Revolving Loans to a Revolving Lender (other than a Defaulting Lender), or, in each case, if an Event of Default under Section 8(a) or (f) has occurred and is continuing, any other Person and (y) a consent under this clause (A) shall be deemed given if the Borrower shall not have objected in writing to the proposed assignment within ten Business Days after receipt by it of a written notice thereof from the Administrative Agent; and

 

(B)                                 the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment of all or any portion of a Term Loan to a Lender, an Affiliate of a Lender or an Approved Fund or of a Revolving Loan to a Revolving Lender; and

 

(C)                                 in the case of an assignment under a Revolving Facility, each Issuing Lender and Swingline Lender for such Facility.

 

(ii)                                   Assignments shall be subject to the following additional conditions:

 

(A)                               except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitments or Loans under any Facility, the amount of the Commitments or Loans of the assigning Lender subject to each such assignment (determined as of (I) the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or (II) if earlier, the “trade date” (if any) specified in such Assignment and Assumption) shall not be less than (x) $5,000,000, in the case of a Revolving Facility or (y) $1,000,000, in the case of each other Facility, unless the Borrower and the Administrative Agent otherwise consent; provided that (1) no such consent of the Borrower shall be required if an Event of Default under Section 8(a) or (f) has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its affiliates or Approved Funds, if any;

 

(B)                                 the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; provided that only one such fee shall be payable in the case of contemporaneous assignments to or by two or more related Approved Funds; and

 

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(C)                                 the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire.

 

For the purposes of this Section 10.6, “ Approved Fund ” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) (i) an entity or an Affiliate of an entity that administers or manages a Lender or (ii) an entity or an Affiliate of an entity that is the investment advisor to a Lender.

 

(iii)                                 Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below, from and after the effective date specified in each Assignment and Assumption the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.19, 2.20, 2.21 and 10.5).  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 10.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

 

(iv)                                The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”).  Holdings, the Borrower, the Administrative Agent, the Issuing Lenders and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement (and the entries in the Register shall be conclusive absent manifest error for such purposes), notwithstanding notice to the contrary.  The Register shall be available for inspection by Holdings, the Borrower, the Issuing Lenders and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(v)                                   Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an Assignee, the Assignee’s completed administrative questionnaire (unless the Assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

 

(c)                                   (i) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations (other than to a Defaulting Lender or any Disqualified Institution without the consent of the Borrower or to any natural person) to one or more banks or other entities (a “ Participant ”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent, the Issuing Lenders and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this

 

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Agreement; provided that such agreement may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that (1) requires the consent of each Lender directly and adversely affected thereby pursuant to the proviso to the second sentence of Section 10.1 and (2) directly affects such Participant.  Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.19, 2.20 and 2.21 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section, including for purposes of the definition of Excluded Taxes.

 

(ii)                                    A Participant shall not be entitled to receive any greater payment under Sections 2.19 or 2.20 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent to such greater amounts or such greater payment results from a change in applicable law following the sale of the participation to such Participant.  No Participant shall be entitled to the benefits of Section 2.20 unless such Participant complies with Section 2.20(d) or (e), as (and to the extent) applicable, as if such Participant were a Lender.

 

(iii)                                 Each Lender that sells a participation pursuant to this Section 10.6, acting solely for this purpose as an agent of the Borrower (and such agency being solely for Tax purposes), shall maintain a register comparable to the Register on which it enters the name and address of each Participant and the economic interests of each Participant in all or a portion of the Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitments, Loans and/or Letters of Credit owing to it) (the “ Participant Register ”).  The entries in the Participant Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement, notwithstanding notice to the contrary; provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under any Loan Document) except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

 

(d)                                  Any Lender may, without the consent of or notice to the Administrative Agent or the Borrower, at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or Assignee for such Lender as a party hereto.

 

(e)                                   The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue Notes to any Lender requiring Notes to facilitate transactions of the type described in paragraph (d) above.

 

(f)                                     Notwithstanding anything to the contrary contained herein, except as provided in Sections 10.6(g) and 10.6(h), neither Holdings nor any Affiliate of Holdings may acquire by assignment, participation or otherwise any right to or interest in any of the Commitments or Loans hereunder (and any such attempted acquisition shall be null and void).

 

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(g)                                  So long as no Default or Event of Default has occurred and is continuing or would result therefrom, each Term Lender of any Class shall have the right at any time to sell, assign or transfer all or a portion of its Term Loans of such Class on a non-pro rata basis to Holdings or any of its Subsidiaries, subject to the following limitations:

 

(i)                                      Holdings or any of its Subsidiaries may conduct one or more modified Dutch auctions (each, an “ Auction ”) to repurchase all or any portion of the Term Loans of any Class, provided that, (A) the Auction shall be made to Term Lenders of such Class on a pro rata basis in accordance with their Tranche A Term Percentages, Tranche B Term Percentages or New Tranche Term Percentages, as the case may be, and (B) the Auction shall be conducted pursuant to such procedures as the Auction Manager may establish which are consistent with this Section 10.6(g) and the procedures set forth on Exhibit J hereto and are otherwise reasonably acceptable to the Borrower and the Administrative Agent;

 

(ii)                                   With respect to all repurchases made by Holdings or any of its Subsidiaries pursuant to this Section 10.6(g), (A) Holdings or the applicable Subsidiary shall deliver to the Auction Manager a certificate of a Responsible Officer stating that (1) no Default or Event of Default has occurred and is continuing or would result from such repurchase and (2) it affirms the No Undisclosed Information Representation, (B) Holdings or the applicable Subsidiary shall not use the proceeds of any Revolving Loans to acquire such Term Loans and (C) the assigning Lender and Holdings or the applicable Subsidiary shall execute and deliver to the Auction Manager an Affiliate Assignment Agreement in lieu of an Assignment and Assumption; and

 

(iii)                                Following repurchase by Holdings or any of its Subsidiaries pursuant to this Section 10.6(g), the Term Loans of any Class so repurchased shall, without further action by any Person, be deemed cancelled for all purposes and no longer outstanding (and may not be resold by Holdings or any of its Subsidiaries), for all purposes of this Agreement and all other Loan Documents, including, but not limited to (A) the making of, or the application of, any payments to the Lenders under this Agreement or any other Loan Document, (B) the making of any request, demand, authorization, direction, notice, consent or waiver under this Agreement or any other Loan Document or (C) the determination of Required Lenders, or for any similar or related purpose, under this Agreement or any other Loan Document.  In connection with any Term Loans of any Class, repurchased and cancelled pursuant to this Section 10.6(g), Administrative Agent is authorized to make appropriate entries in the Register to reflect any such cancellation.

 

(h)                                  Each Term Lender of any Class shall have the right at any time to sell, assign or transfer all or a portion of its Term Loans of such Class on a non-pro rata basis to any Other Affiliate (including any Debt Fund Affiliate), subject to the following limitations:

 

(i)                                      Such assignment is made pursuant to an open market purchase;

 

(ii)                                   The assigning Lender and Other Affiliate purchasing such Lender’s Term Loans shall execute and deliver to the Administrative Agent an Affiliate Lender Assignment and Assumption in lieu of an Assignment and Assumption;

 

(iii)                                After giving effect to such assignment, Other Affiliates (other than Debt Fund Affiliates) shall not, in the aggregate, own or hold Term Loans with an aggregate principal amount in excess of 20% of the principal amount of all Loans then outstanding; and

 

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(iv)                               Such Other Affiliate shall at the time of such assignment affirm the No Undisclosed Information Representation and shall at all times thereafter be subject to the voting restrictions specified in Section 10.1.

 

(i)                                      Notwithstanding anything to the contrary contained herein, no Affiliate Lender shall have any right to (i) attend (including by telephone) any meeting or discussions (or portion thereof) among the Administrative Agent or any Lender to which representatives of the Borrower are not then present or (ii) receive any information or material prepared by the Administrative Agent or any Lender or any communication by or among Administrative Agent and one or more Lenders, except to the extent such information or materials have been made available to the Borrower or its representatives.

 

10.7                            Adjustments; Set-off .  (a)  Except to the extent that this Agreement provides for payments to be allocated to a particular Lender or to the Lenders under a particular Facility, if any Lender (a “ Benefitted Lender ”) shall at any time receive any payment of all or part of the Obligations owing to it, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by setoff, pursuant to events or proceedings of the nature referred to in Section 8(f), or otherwise) in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender’s Obligations, such Benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender’s Obligations, or shall provide such other Lenders with the benefits of any such collateral, as shall be necessary to cause such Benefitted Lender to share the excess payment or benefits of such collateral ratably with each of the Lenders; provided , however , that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.

 

(b)                                  In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder (whether at the stated maturity, by acceleration or otherwise) after the expiration of any cure or grace periods, to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final but excluding trust accounts), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (i) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.26(b) and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the Issuing Lenders, and the Lenders, and (ii) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff.  Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such setoff and application.

 

10.8                            Counterparts .  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page of this Agreement or Lender Addendum by facsimile or electronic (i.e., ‘pdf”) transmission shall be effective as delivery of a manually executed counterpart hereof.  A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent.

 

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10.9                            Severability .  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

10.10                      Integration .  This Agreement and the other Loan Documents represent the entire agreement of Holdings, the Borrower, the Agents and the Lenders with respect to the subject matter hereof and thereof.

 

10.11                      GOVERNING LAW .  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

10.12                      Submission To Jurisdiction; Waivers .  Each party to this Agreement hereby irrevocably and unconditionally:

 

(a)                                   submits for itself and its Property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States for the Southern District of New York, and appellate courts from any thereof;

 

(b)                                  consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

 

(c)                                   agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to it at its address set forth in Section 10.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;

 

(d)                                  agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

 

(e)                                   waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

 

10.13                      Judgment Currency .  This is an international loan transaction in which the specification of Dollars or any Agreed Foreign Currency, as the case may be (the “ Specified Currency ”), and payment in New York City or the country of the Specified Currency, as the case may be (the “ Specified Place ”), is of the essence, and the Specified Currency shall be the currency of account in all events relating to Loans denominated in the Specified Currency.  The payment obligations of the Borrower under this Agreement shall not be discharged or satisfied by an amount paid in another currency or in another place, whether pursuant to a judgment or otherwise, to the extent that the amount so paid on conversion to the Specified Currency and transfer to the Specified Place under normal banking procedures does not yield the amount of the Specified Currency at the Specified Place due hereunder.  If for the purpose of obtaining judgment in any court it is necessary to convert a sum due hereunder in the Specified

 

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Currency into another currency (the “ Second Currency ”), the rate of exchange that shall be applied shall be the rate at which in accordance with normal banking procedures the Administrative Agent could purchase the Specified Currency with the Second Currency on the Business Day next preceding the day on which such judgment is rendered.  The obligation of the Borrower in respect of any such sum due from it to the Administrative Agent or any Lender hereunder or under any other Loan Document (in this Section called an “ Entitled Person ”) shall, notwithstanding the rate of exchange actually applied in rendering such judgment, be discharged only to the extent that on the Business Day following receipt by such Entitled Person of any sum adjudged to be due hereunder in the Second Currency such Entitled Person may in accordance with normal banking procedures purchase and transfer to the Specified Place the Specified Currency with the amount of the Second Currency so adjudged to be due; and the Borrower hereby, as a separate obligation and notwithstanding any such judgment, agrees to indemnify such Entitled Person against, and to pay such Entitled Person on demand, in the Specified Currency, the amount (if any) by which the sum originally due to such Entitled Person in the Specified Currency hereunder exceeds the amount of the Specified Currency so purchased and transferred.

 

10.14                      Acknowledgments .  Each of Holdings and the Borrower hereby acknowledges that:

 

(a)                                   it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;

 

(b)                                  neither the Agents nor any Lender has any fiduciary relationship with or duty to either of Holdings or the Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Agents and Lenders, on one hand, and Holdings and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

 

(c)                                   no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among Holdings, the Borrower and the Lenders.

 

10.15                      Confidentiality .  The Agents and the Lenders agree to treat any and all information, regardless of the medium or form of communication, that is disclosed, provided or furnished, directly or indirectly, by or on behalf of Holdings or any of its affiliates, whether in writing, orally, by observation or otherwise and whether furnished before or after the Closing Date (“ Confidential Information ”), strictly confidential and not to use Confidential Information for any purpose other than negotiating, making available, syndicating and administering this Agreement (the “ Agreed Purposes ”).  Without limiting the foregoing, each Agent and each Lender agrees to treat any and all Confidential Information with no less than adequate means to preserve its confidentiality, and each Agent and each Lender agrees not to disclose Confidential Information, at any time, in any manner whatsoever, directly or indirectly, to any other Person whomsoever, except (1) to its Affiliates and to its and its Affiliates’ respective directors, officers, employees, counsel, trustees and other representatives (collectively, the “ Representatives ”), to the extent necessary to permit such Representatives to assist in connection with the Agreed Purposes, (2) to prospective Lenders and participants in connection with the syndication (including secondary trading) of the Facilities and Commitments and Loans hereunder, in each case who are informed of the confidential nature of the information and agree to observe and be bound by standard confidentiality terms, (3) upon the request or demand of any Governmental Authority having jurisdiction over it, (4) in response to any order of any Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (5) to the extent reasonably required or necessary, in connection with any litigation or similar proceeding relating to the Facilities, (6) that has been publicly disclosed other than in breach of this Section 10.15 or has become available to the Administrative Agent or any

 

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Lender or any of their respective Affiliates on a non-confidential basis from a source other than Holdings or any of its affiliates that has been publicly disclosed other than in breach of this Section 10.15 or has become available to the Administrative Agent or any Lender or any of their respective Affiliates on a non-confidential basis from a source other than Holdings or any of its affiliates that, to the knowledge of the Admin Agent or any Lender or their respective affiliates, is not subject to confidentiality obligations owing to Holdings or any of its Affiliates, (7) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender or (8) to the extent reasonably required or necessary, in connection with the exercise of any remedy under the Loan Documents.  Each Agent and each Lender acknowledges that (i) Confidential Information includes information that is not otherwise publicly available and that such non-public information may constitute confidential business information which is proprietary to Holdings and (ii) Holdings has advised the Agents and the Lenders that it is relying on the Confidential Information for its success and would not disclose the Confidential Information to the Agents and the Lenders without the confidentiality provisions of this Agreement.

 

10.16                      Release of Collateral and Guarantee Obligations; Subordination of Liens .  (a)  Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon request of Holdings in connection with any Disposition of Property permitted by the Loan Documents, the Collateral Agent shall (without notice to, or vote or consent of, any Lender, or any affiliate of any Lender that is a party to any Specified Hedge Agreement or contingent or indemnification obligations not then due) take such actions as shall be required to release its security interest in any Collateral being Disposed of in such Disposition, and to release any Guarantee Obligations under any Loan Document of any Person being Disposed of in such Disposition, to the extent necessary to permit consummation of such Disposition in accordance with the Loan Documents.  Any representation, warranty or covenant contained in any Loan Document relating to any such Property so Disposed of (other than Property Disposed of to Holdings or any of its Restricted Subsidiaries) shall no longer be deemed to be repeated once such Property is so Disposed of.

 

(b)                                  Notwithstanding anything to the contrary contained herein or any other Loan Document, when all Obligations (other than (x) obligations in respect of any Specified Hedge Agreement and (y) any contingent or indemnification obligations not then due) have been paid in full, all Commitments have terminated or expired and no Letter of Credit shall be outstanding that is not cash collateralized or backstopped, upon request of Holdings or the Borrower, the Collateral Agent shall (without notice to, or vote or consent of, any Lender, or any affiliate of any Lender that is a party to any Specified Hedge Agreement) take such actions as shall be required to release its security interest in all Collateral, and to release all Guarantee Obligations under any Loan Document, whether or not on the date of such release there may be outstanding Obligations in respect of Specified Hedge Agreements or contingent or indemnification obligations not then due.  Any such release of Guarantee Obligations shall be deemed subject to the provision that such Guarantee Obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payment had not been made.

 

(c)                                   Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon request of Holdings in connection with any Liens permitted by the Loan Documents, the Collateral Agent shall (without notice to, or vote or consent of, any Lender) take such actions as shall be required to subordinate the Lien on any Collateral to any Lien permitted under Section 7.3.

 

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10.17                      Accounting Changes .  In the event that any Accounting Change (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then Holdings and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Changes with the desired result that the criteria for evaluating Holdings’ financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made.  Until such time as such an amendment shall have been executed and delivered by Holdings, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred.  “ Accounting Changes ” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC.

 

10.18                      WAIVERS OF JURY TRIAL .  EACH OF HOLDINGS, THE BORROWER, THE AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

10.19                      USA PATRIOT ACT .  Each Lender hereby notifies the Loan Parties that pursuant to the requirements of the USA Patriot Act (Title III of Publ.  107-56 (signed into law October 26, 2001)) (the “ Act ”), it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Loan Parties in accordance with the Act.

 

10.20                      Delivery of Lender Addenda .  Each initial Lender (other than any Lender whose name appears on the signature pages to this Agreement) shall become a party to this Agreement by delivering to the Administrative Agent a Lender Addendum duly executed by such Lender.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date first above written.

 

 

WESCO AIRCRAFT HARDWARE CORP.

 

 

 

 

 

By:

/s/ Gregory A. Hann

 

Name: Gregory A. Hann

 

Title: Chief Financial Officer

 

 

 

WESCO HOLDINGS, INC.

 

 

 

 

 

By:

/s/ Gregory A. Hann

 

Name: Gregory A. Hann

 

Title: Chief Financial Officer

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

BARCLAYS BANK PLC, as Joint Lead Arranger, Joint Bookrunner, Administrative Agent, Collateral Agent, Issuing Lender, Swingline Lender and as a Lender

 

 

 

 

 

By:

/s/ Craig J. Malloy

 

Name: Craig J. Malloy

 

Title: Director

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as Joint Lead Arranger and Joint Bookrunner

 

 

 

 

 

By:

/s/ William H. Pegler

 

Name: William (“Hutch”) Pegler

 

Title: Managing Director

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

J.P. MORGAN SECURITIES LLC, as Joint Bookrunner

 

 

 

By:

/s/ Karan Rai

 

Name: Karan Rai

 

Title: Vice President

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

MORGAN STANLEY SENIOR FUNDING, INC., as Joint Bookrunner

 

 

 

By:

/s/ Fred [name illegible]

 

Name: Fred [name illegible]

 

Title:   [Title illegible]

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

Sumitomo Mitsui Banking Corporation

 

 

 

 

By:

/s/ Yasuhiko Imai

 

Name: Yasuhiko Imai

 

Title: Group Head

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

ROYAL BANK OF CANADA, as Joint Bookrunner and as a Lender

 

 

 

 

 

 

 

By:

/s/ Richard Smith

 

Name: Richard Smith

 

Title: Authorized Signatory

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

BANK OF AMERICA, N.A., as Syndication Agent and as a Lender

 

 

 

 

 

 

 

By:

/s/ William H. Pegler

 

Name: William (“Hutch”) Pegler

 

Title: Managing Director

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

JPMORGAN CHASE BANK, N.A.

 

 

 

 

 

 

 

By:

/s/ Matthew H. Massie

 

Name: Matthew H. Massie

 

Title: Managing Director

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

MORGAN STANLEY BANK, N.A.

 

 

 

 

 

 

 

By:

/s/ Ryan Vetsch

 

Name: Ryan Vetsch

 

Title: Authorized Signatory

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

CT BANK

 

 

 

 

 

 

 

By:

/s/ Daniel A. Burnett

 

Name: Daniel A. Burnett

 

Title: Vice President

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

EAST WEST BANK

 

 

 

 

 

 

 

By:

/s/ Nancy Moore

 

Name: Nancy Moore

 

Title: Senior Vice President

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

KEYBANK NATIONAL ASSOCIATION

 

 

 

 

 

 

 

By:

/s/ Marcel Fournier

 

Name: Marcel Fournier

 

Title: Vice President

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

CITIZENS BANK & TRUST COMPANY

 

 

 

 

 

 

 

By:

/s/ Aileen O. Cartwright

 

Name: Aileen O. Cartwright

 

Title: Senior Credit Manager, AVP

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

UNION BANK, N.A.

 

 

 

 

 

 

 

By:

/s/ Cary Moore

 

Name: Cary Moore

 

Title: Senior Vice President

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

RAYMOND JAMES BANK, FSB

 

 

 

 

 

 

 

By:

/s/ Alexander L. Rody

 

Name: Alexander L. Rody

 

Title: Senior Vice President

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

Bank of the West

 

 

 

 

 

 

 

By:

/s/ David Alterman

 

Name: David Alterman

 

Title: Vice President

 

CREDIT AGREEMENT — SIGNATURE PAGE

 



 

 

SIEMENS FINANCIAL SERVICES, INC.

 

 

 

 

 

 

 

By:

/s/ Douglas Maher

 

Name: Douglas Maher

 

Title: Managing Director

 

 

 

 

 

 

 

By:

/s/ April Greaves-Bryan

 

Name: April Greaves-Bryan

 

Title: Loan Servicing Manager

 

CREDIT AGREEMENT — SIGNATURE PAGE

 


 

SCHEDULE 1

Commitments

 

Lender 

 

Multicurrency
Revolving
Commitment

 

Dollar
Revolving
Commitment

 

Total Revolving
Commitment

 

Tranche A
Term Loan
Commitment

 

Tranche B
Term Loan
Commitment

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank of America, N.A.

 

$

8,157,349.90

 

$

3,985,507.25

 

$

12,142,857.15

 

$

37,085,343.23

 

$

350,000,000.00

 

Barclays Bank PLC

 

$

6,476,190.47

 

$

17,809,523.83

 

$

24,285,714.30

 

$

36,085,343.21

 

 

JPMorgan Chase Bank, N.A.

 

$

3,238,095.24

 

$

8,904,761.90

 

$

12,142,857.14

 

$

19,486,085.34

 

 

Morgan Stanley Bank, N.A.

 

$

6,476,190.48

 

$

17,809,523.81

 

$

24,285,714.29

 

$

19,486,085.34

 

 

Royal Bank of Canada

 

$

3,130,434.78

 

$

8,608,695.65

 

$

11,739,130.43

 

$

23,260,869.57

 

 

Sumitomo Mitsui Banking Corporation

 

$

3,130,434.78

 

$

8,608,695.65

 

$

11,739,130.43

 

$

23,260,869.57

 

 

Key Bank, N.A.

 

$

3,130,434.78

 

$

8,608,695.65

 

$

11,739,130.43

 

$

23,260,869.57

 

 

Union Bank, N.A

 

$

3,130,434.78

 

$

8,608,695.65

 

$

11,739,130.43

 

$

23,260,869.57

 

 

CIT Group Inc.

 

 

$

8,385,093.17

 

$

8,385,093.17

 

$

16,614,906.83

 

 

Raymond James Bank

 

 

$

6,708,074.53

 

$

6,708,074.53

 

$

13,291,925.47

 

 

Bank of the West

 

$

1,788,819.88

 

$

4,919,254.65

 

$

6,708,074.53

 

$

13,291,925.47

 

 

East West Bank

 

 

$

3,354,037.27

 

$

3,354,037.27

 

$

6,645,962.73

 

 

Siemens Financial Services

 

$

894,409.94

 

$

2,459,627.33

 

$

3,354,037.27

 

$

6,645,962.73

 

 

Citizens Bank & Trust Company

 

$

447,204.97

 

$

1,229,813.66

 

$

1,677,018.63

 

$

3,322,981.37

 

 

 


 

SCHEDULE 1.1A

EXCLUDED SUBSIDIARIES

 

None.

 



 

SCHEDULE 4.4

CONSENTS, AUTHORIZATIONS, FILINGS AND NOTICES

 

None.

 



 

SCHEDULE 4.8A

EXCEPTED PROPERTY

 

Property

 

Entity

 

Location

 

Description

Warehouse space provided by Triumph Group (formerly Vought Aircraft Industries)

 

Wesco Aircraft Hardware Corp.

 

1431 Vultee Blvd., Bldg 39, Nashville, Tennessee

 

Facilities are provided by the customer pursuant to the agreement between the parties.

Warehouse space provided by The Boeing Company

 

Wesco Aircraft Hardware Corp.

 

Boeing Buildings # 88-19 & 88-20, 3455 Airframe Drive, North Charleston, South Carolina

 

Facilities are provided by the customer pursuant to the agreement between the parties.

Warehouse space provided by Korean Airlines

 

Wesco Aircraft Hardware Corp.

 

103, Daejo 2-Dong, Gangseo-Gu, Busan, South Korea

 

Facilities are provided by the customer pursuant to the agreement between the parties.

Office & warehouse space provided by Yail Noa Ltd.

 

Wesco Aircraft Israel Ltd.

 

15 Hasat St., Holon, Israel

 

Facilities are provided by the customer pursuant to the agreement between the parties.

Warehouse space provided by GKN Aerospace

 

Wesco Aircraft Europe Ltd

 

Golfcourse Lane, Filton, England

 

Facilities are provided by the customer pursuant to the agreement between the parties.

Warehouse space provided by BAE Systems

 

Wesco Aircraft Europe Ltd

 

King Fahad Airbase, Ta”If, Saudi Arabia

 

Facilities are provided by the customer pursuant to the agreement between the parties.

Warehouse space provided by Alenia Aeronautica

 

Wesco Aircraft Europe Ltd

 

Hangar 1, Strada Provinciale, Grottaglie, Italy

 

Facilities are provided by the customer pursuant to the agreement between the parties.

Warehouse space provided by AgustaWestland

 

Wesco Aircraft Europe Ltd

 

Via Triestina 214, Tessera, Italy

 

Facilities are provided by the customer pursuant to the agreement between the parties.

Office and warehouse space provided by Xian Aircraft International

 

Wesco Aircraft China

 

1.Xi’An Address: No.101 Park Road, Yanliang District, Xi’An, China (PRC)

 

Facilities are provided by the customer pursuant to the agreement between the parties.

 



 

SCHEDULE 4.8B

OWNED REAL PROPERTY

 

Owned Real Property:

 

None.

 

Leased Real Property:

 

Property

 

Lessor

 

Lessee

 

Location

 

Expiration
Date

Office space

 

Citadel I Limited Partnership

 

Wesco Aircraft Hardware Corp.

 

5850 T.G. Lee Boulevard, Suite 450 & 480, Orlando, Florida

 

4/30/15

Office and warehouse space

 

Presson P.V. Seven L.L.C.

 

Wesco Aircraft Hardware Corp.

 

1817 S. Horne, Suite 13-14, Mesa, Arizona

 

5/31/13

Office space

 

220 Glen Cove Avenue Holding Corp.

 

Wesco Aircraft Hardware Corp.

 

220 B. Glen Cove Avenue, Glen Cove, New York

 

9/30/13

Office, warehouse space and light manufacturing

 

WATX Properties, LLC

 

Wesco Aircraft Hardware Corp.

 

6701 Will Rogers Blvd. Fort Worth, Texas

 

6/30/19

Office and warehouse space

 

Tom & Lee Steuby

 

Wesco Aircraft Hardware Corp.

 

1446 Ashby Road, St. Louis, Missouri

 

11/30/13

Office and warehouse space

 

Avenue Scott, LLC

 

Wesco Aircraft Hardware Corp.

 

27727 Avenue Scott, Valencia, California

 

9/30/19

Office and warehouse space

 

Pensionfund Realty Limited

 

Wesco Aircraft Hardware Corp.

 

400-450 Matheson Blvd. East Unit 57/58, Mississauga, Ontario, Canada

 

4/30/11

Office and warehouse space

 

Truskey Real Estate Partnership, L.P.

 

Wesco Aircraft Hardware Corp.

 

640 Snyder Ave, Unit A, Bolmar Industrial Center, Westchester, Pennsylvania

 

03/31/12

Office and warehouse space

 

Prologis — North Carolina Limited Partnership

 

Wesco Aircraft Hardware Corp.

 

1810 South Lynhurst Dr. Suite C, Indianapolis, Indiana

 

Month-to-Month

Office and warehouse space and light manufacturing

 

Snyder Family Living Trust

 

Wesco Aircraft Europe Limited

 

Unit 1, Park Mill Way, Clayton West, Huddersfield, UK

 

12/31/20

Office and warehouse space and light manufacturing

 

FormForce Ltd.

 

Wesco Aircraft Europe Limited

 

Units B1 & B2, Park Mill Way, Clayton West, UK

 

2/22/15

Office and warehouse space

 

WAFR, LLC

 

S.A.S. Wesco Aircraft France

 

23 Avenue Georges Brassens, 31700 Blagnac, Haute Garonne, France

 

12/31/20

Office space

 

ACC, Airport City Center GmbH

 

Wesco Aircraft Germany GmbH

 

Otto-Lilienthal Strasse 22, Bremen, Germany

 

7/31/15

Office space

 

Fountain Valley Unified School District

 

Airtechnics, Inc.(1)

 

10055 Slater Avenue, Fountain Valley, California

 

06/01/14

Office and warehouse space

 

Mann Properties, L.L.C.

 

Airtechnics, Inc. (2)

 

3851 North Webb Rd, Wichita, KS

 

4/30/18

 


(1)  Airtechnics, Inc. has been merged with and into Wesco Aircraft Hardware Corp. as of June 1, 2009.

(2)  Airtechnics, Inc. has been merged with and into Wesco Aircraft Hardware Corp. as of June 1, 2009.

 



 

Property

 

Lessor

 

Lessee

 

Location

 

Expiration
Date

Office space

 

CAF VETS, LLC

 

Wesco Aircraft Hardware Corp.

 

4250 Veterans Highway, Suite 150 East, Holbrook, NY

 

11/30/12

Office and warehouse space

 

Virgie C. Simmons Family, LLC

 

Wesco Aircraft Hardware Corp.

 

4750-C Goer Drive, North Charleston, SC

 

12/31/11

Office and warehouse space

 

SREIT (2000 — 32 nd  Avenue) Ltd.

 

Wesco Aircraft Hardware Corp.

 

2000, 32 nd  Avenue, Lachine, Quebec

 

4/30/15

Office and warehouse space

 

Harsh Investment Realty

 

Wesco Aircraft Hardware Corp.

 

3320 West Valley Hwy #D102, Auburn, Washington

 

11/30/11

Office

 

Immobiliare Pemm SAS — Venezia

 

Wesco Aircraft Italy Srl

 

Via Porta Est 17, Marcon, Italy

 

4/13/13

Office

 

Hongkong Manchang Co.,Ltd

 

Wesco Aircraft Shanghai (Trading) Co. Ltd.

 

27E, Cross Region Plaza, No.899 Lingling Road, Shanghai, China (PRC)

 

8/27/15

Office and warehouse space

 

Yail Noa Ltd

 

Wesco Aircraft Israel Ltd

 

15 Hasat St., Holon, Israel

 

4/6/12

 


 

SCHEDULE 4.14

SUBSIDIARIES

 

Entity

 

Jurisdiction of
Incorporation

 

Equity

 

Owner(s)

 

Restricted
/Unrestricted
Subsidiary

Wesco Aircraft Hardware Corp.

 

California

 

100% of the common stock

 

Wesco Holdings, Inc.

 

Restricted

Flintbrook Limited

 

England and Wales

 

100% of the ordinary shares

 

Wesco Holdings, Inc.

 

Restricted

Wesco Aircraft France SAS

 

France

 

100% of the ordinary shares

 

Wesco Holdings, Inc.

 

Restricted

Wesco Aircraft Germany GmbH

 

Germany

 

100% of the ordinary shares

 

Wesco Holdings, Inc.

 

Restricted

Wesco Aircraft Italy Srl

 

Italy

 

100% of the ordinary shares

 

Wesco Holdings, Inc.

 

Restricted

Wesco Aircraft Israel Ltd.

 

Israel

 

100% of the ordinary shares

 

Wesco Holdings, Inc.

 

Restricted

Wesco LLC 1

 

Delaware

 

100% of the membership interest

 

Wesco Aircraft Hardware Corp.

 

Restricted

Wesco LLC 2

 

Delaware

 

100% of the membership interest

 

Wesco Aircraft Hardware Corp.

 

Restricted

Wesco 1 LLP

 

England and Wales

 

99% of the partnership interest

 

1% of the partnership interest

 

Wesco Aircraft Hardware Corp.

 

Wesco LLC 1

 

Restricted

Wesco 2 LLP

 

England and Wales

 

99% of the partnership interest

 

1% of the partnership interest

 

Wesco 1 LLP

 

 

Wesco LLC 2

 

Restricted

Rising Bay Limited

 

Hong Kong

 

100% of the ordinary shares

 

Wesco Aircraft Hardware Corp.

 

Restricted

Wesco Aircraft Trading (Shanghai) Co., Ltd.

 

China

 

100% of the ordinary shares

 

Rising Bay Limited

 

Restricted

Wesco Aircraft Hardware India Private Limited

 

India

 

99% of the ordinary shares

 

1% of the ordinary shares

 

Wesco Aircraft Europe, Ltd

 

Wesco Aircraft Hardware Corp.

 

Restricted

Wesco Aircraft Europe, Ltd

 

England and Wales

 

100% of the ordinary shares

 

Flintbrook Limited

 

Restricted

Wesco Logistics Limited

 

England and Wales

 

100% of the ordinary shares

 

Wesco Aircraft Europe, Ltd

 

Restricted

 



 

SCHEDULE 4.17

UCC FILING JURISDICTIONS

 

Entity

 

UCC Filing Jurisdiction

Wesco Holdings, Inc.

 

Delaware

Wesco Aircraft Hardware Corp.

 

California

 



 

SCHEDULE 7.2(d)

EXISTING INDEBTEDNESS

 

1.                Overdraft facility of Wesco Aircraft Europe Limited with Lloyds Bank plc with a termination date of September 30, 2011, with gross borrowings not exceeding £15,000,000 and net borrowings not exceeding £7,000,000.

 

2.                The Wesco Foreign Affiliates hire purchase contracts, leases or loans for company vehicles and equipment with an aggregate principal amount outstanding at September 30, 2010 of $429,164, comprised of the following:  Wesco Europe: $265,916 (£165,866 GBP); Wesco France: $71,028 (€50,382 EUR); Wesco Germany $56,531 (€40,099 EUR) and Wesco Italia $35,688 (€25,314 EUR).

 



 

SCHEDULE 7.3(f)

EXISTING LIENS

 

1.                Liens in existence as related to agreements listed on Schedule 7.2(D).

 

2.   UCC-1 Financing Statements:

 

Debtor

 

Secured Party

 

File Number

 

Filing Date

 

Jurisdiction

 

Collateral

Wesco Aircraft Hardware Corp.

27727 Avenue Scott,
Valencia, CA 91355

 

IBM Credit LLC

1 North Castle Drive,
Armonk, NY 10504

 

Original

07-7097176054

 

Original

1/2/07

 

California SOS

 

Equipment lease.

Wesco Aircraft Hardware Corp.

27727 Avenue Scott,
Valencia, CA 91355

 

IBM Credit LLC

1 North Castle Drive,
Armonk, NY 10504

 

Original

07-7127783315

 

Original

9/4/07

 

California SOS

 

Equipment lease.

Wesco Aircraft Hardware Corp.

27727 Avenue Scott,
Valencia, CA 91355

 

Citibank, N.A.

388 Greenwich Street,
NY, NY 10013

 

Original

0417760196

 

Original

6/21/04

 

Continuation

3/13/09

 

 

California SOS

 

Accounts receivable from United Technologies Corp. purchased by Citibank, N.A. per the terms of the Supplier Agreement between Wesco Aircraft Hardware Corp. and Citibank, N.A.

Wesco Aircraft Hardware Corp.

27727 Avenue Scott,
Valencia, CA 91355

 

IBM Credit LLC

1 North Castle Drive,
Armonk, NY 10504

 

Original

07-7135698602

 

Original

11/6/07

 

California SOS

 

Equipment lease.

Wesco Aircraft Hardware Corp.

27727 Avenue Scott,
Valencia, CA 91355

 

IBM Credit LLC

1 North Castle Drive,
Armonk, NY 10504

 

Original

08-7180772181

 

Original

12/8/08

 

California SOS

 

Equipment lease.

Wesco Aircraft Hardware Corp.

27727 Avenue Scott,
Valencia, CA 91355

 

IBM Credit LLC

1 North Castle Drive,
Armonk, NY 10504

 

Original

08-7182344401

 

Original

12/22/08

 

California SOS

 

Equipment lease.

Wesco Aircraft Hardware Corp.

27727 Avenue Scott,
Valencia, CA 91355

 

IBM Credit LLC

1 North Castle Drive,
Armonk, NY 10504

 

Original

09-7206823188

 

Original

8/27/09

 

California SOS

 

Equipment lease.

 



 

Debtor

 

Secured Party

 

File Number

 

Filing Date

 

Jurisdiction

 

Collateral

Wesco Aircraft Hardware Corp.

27727 Avenue Scott,
Valencia, CA 91355

 

IBM Credit LLC

1 North Castle Drive,
Armonk, NY 10504

 

Original

09-7207202716

 

Original

9/1/09

 

California SOS

 

Equipment lease.

Wesco Aircraft Hardware Corp.

27727 Avenue Scott,
Valencia, CA 91355

 

IBM Credit LLC

1 North Castle Drive,
Armonk, NY 10504

 

Original

09-7215326419

 

Original

11/25/09

 

California SOS

 

Equipment lease.

Wesco Aircraft Hardware Corp.

27727 Avenue Scott,
Valencia, CA 91355

 

IBM Credit LLC

1 North Castle Drive,
Armonk, NY 10504

 

Original

10-7220505163

 

Original

1/21/10

 

California SOS

 

Equipment lease.

Wesco Aircraft Hardware Corp.

27727 Avenue Scott,
Valencia, CA 91355

 

IBM Credit LLC

1 North Castle Drive,
Armonk, NY 10504

 

Original

10-7233501456

 

Original

6/1/10

 

California SOS

 

Equipment lease.

Wesco Aircraft Hardware Corp.

27727 Avenue Scott,
Valencia, CA 91355

 

IBM Credit LLC

1 North Castle Drive,
Armonk, NY 10504

 

Original

10-7252449266

 

Original

11/23/10

 

California SOS

 

Equipment lease.

Wesco Aircraft Hardware Corp.

27727 Avenue Scott,
Valencia, CA 91355

 

IBM Credit LLC

1 North Castle Drive,
Armonk, NY 10504

 

Original

11-7259254399

 

Original

1/31/11

 

California SOS

 

Equipment lease.

 



 

SCHEDULE 7.8

EXISTING INVESTMENTS

 

1.                Wesco Aircraft Hardware Corp. owns 143,000 preferred, non-voting shares of Dawefield Ltd.  Wesco Aircraft Hardware Corp. has no obligations with respect to these shares.

 

2.                Investments set forth on Schedule 4.14.

 



 

SCHEDULE 7.13

RESTRICTIONS ON RESTRICTED SUBSIDIARIES

 

1.                Agreements listed on Schedule 7.2(d).

 


 

EXHIBIT A

 

FORM OF GUARANTEE AND COLLATERAL AGREEMENT

 

[Separately Attached]

 



 

EXHIBIT B

 

FORM OF COMPLIANCE CERTIFICATE

 

This Compliance Certificate is delivered to you pursuant to Section 6.2 of the Credit Agreement, dated as of April 7, 2011 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Wesco Holdings, Inc. (“ Holdings ”), Wesco Aircraft Hardware Corp., as the Borrower, the several banks and other financial institutions or entities from time to time parties to the Credit Agreement as lenders, Bank of America, N.A., as Syndication Agent, Barclays Bank PLC, as Administrative Agent (in such capacity, the “ Administrative Agent ”), Collateral Agent and Documentation Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“ MLPFS ”), Key Bank, N.A. and Barclays Capital (“ Barclays Capital ”), the investment banking division of Barclays Bank PLC, as Joint Lead Arrangers, and MLFPS, Barclays Capital, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc., Sumitomo Mitsui Banking Corporation and Royal Bank of Canada, as Joint Bookrunners.  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

1.                                        At the end of the accounting period, for the accounting period ended                   , covered by the financial statements attached hereto as Attachment 1 , Holdings has no knowledge of any Default or Event of Default[, except as set forth below].

 

2.                                        Attached hereto as Attachment 2 are information and calculations showing compliance with the covenants set forth in Section 7.1 of the Credit Agreement.

 

[3.                                    Include description of any new Subsidiary, any change in jurisdiction of organization of any Loan Party and a listing of any material United States Intellectual Property filings by any Loan Party, to the extent not previously disclosed to the Administrative Agent.]

 



 

IN WITNESS WHEREOF, Holdings has caused this Certificate to be executed as of this            day of         , 201 .

 

 

 

 

[                    ]

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 



 

Attachment 1

to Compliance Certificate

 

[Financial Statements]

 



 

Attachment 2

to Compliance Certificate

 

The information described herein is as of             , 201 , and pertains to the period from                   , 201  to                      , 201 .

 

[Covenant Calculations]

 



 

EXHIBIT C

 

FORM OF CLOSING CERTIFICATE

 

Pursuant to section 5.1(e) of the Credit Agreement, dated as of April 7, 2011 (the “ Credit Agreement ”; unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement), among Wesco Holdings, Inc. (“ Holdings ”), Wesco Aircraft Hardware Corp., as the Borrower, the several banks and other financial institutions or entities from time to time parties to the Credit Agreement as lenders, Bank of America, N.A., as Syndication Agent, Barclays Bank PLC, as Administrative Agent, Collateral Agent and Documentation Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“ MLPFS ”), Key Bank, N.A. and Barclays Capital (“ Barclays Capital ”), the investment banking division of Barclays Bank PLC, as Joint Lead Arrangers, and MLFPS, Barclays Capital, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc., Sumitomo Mitsui Banking Corporation and Royal Bank of Canada, as Joint Bookrunners, the undersigned [Insert name of officer], [Insert title of officer] of                            (the “ Company ”), hereby certifies on behalf of the Company as follows:

 

1.                                        The Representations of the Company set forth in each of the Loan Documents to which it is a party or that are contained in any certificate furnished by or on behalf of the Company pursuant to any of the Loan Documents to which it is a party are true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof, except to the extent such representations and warranties relate to an earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date.

 

2.                                                                          is the duly elected and qualified Corporate Secretary of the Company, and the signature set forth for such officer below is such officer’s true and genuine signature.

 

3.                                        No Default or Event of Default has occurred and is continuing as of the date hereof or after giving effect to the Loans and other extensions of credit to be made on the date hereof.

 

The undersigned Corporate Secretary of the Company hereby certifies as follows:

 

1.                                        Attached hereto as Annex 1 is a true and complete copy of a Certificate of Good Standing or the equivalent from the Company’s jurisdiction of organization dated as of a recent date prior to the date hereof.

 

2.                                        Attached hereto as Annex 2 is a true and complete copy of resolutions/unanimous written consent duly adopted by the Board of Directors of the Company on                        , 2011, such resolutions have not in any way been amended, modified, revoked or rescinded, have been in full force and effect since their adoption to and including the date hereof and are now in full force and effect and are the only corporate proceedings of the Company now in force relating to or affecting the matters referred to therein.

 

3.                                        Attached hereto as Annex 3 is a true and correct copy of the Bylaws/Memorandum of Association of the Company as in effect on the date hereof.

 



 

4.                                        Attached hereto as Annex 4 is a true and complete certified copy of the Articles of Incorporation/Association of the Company, along with any amendments, restatements, or modifications thereto (collectively, the “ Charter Documents ”), and, except as attached as Annex 4 hereto, such Charter Documents have not been amended, repealed, modified or restated.

 

5.                                        The persons listed on Schedule I hereto are now duly elected and qualified officers of the Company holding the offices indicated next to their respective names on Schedule I hereto, and the signatures appearing opposite their respective names on Schedule I hereto are the true and genuine signatures of such officers, and each of such officers is duly authorized to execute and deliver on behalf of the Company each of the Loan Documents to which it is a party and any certificate or other document to be delivered by the Company pursuant to the Loan Documents to which it is a party.

 

6.                                        Latham & Watkins LLP may rely on this certificate in rendering its opinion.

 

IN WITNESS WHEREOF, the undersigned have hereunto set their names as of the date set forth below.

 

 

 

 

 

 

 

 

 

 

Name:

 

 

Name:

 

Title:

 

 

Title:

 

 

 

 

 

 

 

Date:

April 7, 2011

 

 

 



 

Schedule I

to Closing Certificate

 

NAME

 

OFFICE

 

SIGNATURE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Annex 1

to Closing Certificate

 

[Certificate of Good Standing]

 



 

Annex 2

to Closing Certificate

 

[Board Resolutions/Unanimous Written Consent]

 



 

Annex 3

to Closing Certificate

 

[Bylaws/Memorandum of Association]

 



 

Annex 4

to Closing Certificate

 

[Charter Documents]

 



 

EXHIBIT D

 

FORM OF
ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (the “ Assignment and Assumption ”) is dated as of the Effective Date set forth below and is entered into by and between [ Insert name of Assignor ] (the “ Assignor ”) and [ Insert name of Assignee ] (the “ Assignee ”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “ Credit Agreement ”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent (as identified below) as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any letters of credit, guarantees, and swingline loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “ Assigned Interest ”).  Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

 

1.

 

Assignor:

 

 

 

 

 

 

 

 

2.

 

Assignee:

 

 

 

 

 

 

 

[and is an Affiliate/Approved Fund of [ identify Lender ](1)]

 

 

 

 

 

3.

 

Borrower:

 

Wesco Aircraft Hardware Corp.

 

 

 

 

 

4.

 

Administrative Agent:

 

Barclays Bank PLC, as the administrative agent under the Credit Agreement (in such capacity, the “ Administrative Agent ”)

 

 

 

 

 

5.

 

Credit Agreement:

 

Credit Agreement dated as of April 7, 2011 among Wesco Holdings, Inc., Wesco Aircraft Hardware Corp., as the Borrower, the several banks and other financial institutions or entities from time to time parties to the Credit Agreement as lenders, Bank of America, N.A., as Syndication Agent, the Administrative Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“ MLPFS ”), Key Bank, N.A. and Barclays Capital (“ Barclays Capital ”), the investment banking division of Barclays Bank

 


(1) Select as applicable.

 



 

 

 

 

 

PLC, as Joint Lead Arrangers, and MLFPS, Barclays Capital, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc., Sumitomo Mitsui Banking Corporation and Royal Bank of Canada, as Joint Bookrunners

 

 

 

 

 

6.

 

Assigned Interest:

 

 

 

 

 

 

 

 

Facility Assigned(2)

 

Aggregate Amount of
Commitment/Loans for
all Lenders

 

Amount of
Commitment/Loans
Assigned

 

Percentage Assigned of
Commitment/Loans(3)

 

 

 

$

 

 

$

 

 

 

%

 

 

$

 

 

$

 

 

 

%

 

 

$

 

 

$

 

 

 

%

 

Effective Date:                                  , 20     [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

 

 

ASSIGNOR

 

 

 

 

 

[NAME OF ASSIGNOR]

 

 

 

 

 

 

 

 

By

 

 

 

Title:

 

 

 

 

 

 

 

 

ASSIGNEE

 

 

 

 

 

 

[NAME OF ASSIGNEE]

 

 

 

 

 

 

 

 

 

 

By

 

 

 

Title:

 


(2) Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g. “Tranche A Term Loan,” “Tranche B Term Loan” and “Revolving Commitment”)

 

(3) Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

 

2



 

[Consented to and](4) Accepted:

 

 

 

 

 

BARCLAYS BANK PLC,

 

 

  as Administrative Agent

 

 

 

 

 

 

 

 

By

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

[Consented to:

 

 

 

 

 

 

WESCO AIRCRAFT HARDWARE CORP.

 

 

 

 

 

 

 

 

 

 

By

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

[                    ],

 

 

  as Issuing Lender

 

 

 

 

 

 

 

 

 

 

By

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

BARCLAYS BANK PLC,

 

 

  as Swingline Lender

 

 

 

 

 

 

 

 

 

 

By

 

 

 

Title:](5)

 

 

 


(4) To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

 

(5) To be added only if the consent of the Borrower, the Issuing Lender or the Swingline Lender, as applicable, is required by the terms of the Credit Agreement and, in the case of the Borrower, has not been deemed to have been given.

 

3



 

ANNEX 1

 

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

 

1.  Representations and Warranties .

 

1.1   Assignor .  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is not a “Defaulting Lender”, as such term is defined in the Credit Agreement; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of Holdings or any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by Holdings or any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

 

1.2.  Assignee .  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 6.1 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) if it is a Non-US Lender, attached to this Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations that by the terms of the Loan Documents are required to be performed by it as a Lender.

 

2.  Payments .  From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts that have accrued to but excluding the Effective Date and to the Assignee for amounts that have accrued from and after the Effective Date.

 

3.  General Provisions .  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and

 



 

Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

 


 

Exhibit 1

to Assignment and Assumption

 

AFFILIATE LENDER ASSIGNMENT AND ASSUMPTION

 

This Lender Affiliate Assignment and Assumption (this “ Assignment and Assumption ”) is dated as of the Effective Date set forth below and is entered into by and between [ Insert name of Assignor ] (the “ Assignor ”) and [ Insert name of Assignee ] (the “ Assignee ”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “ Credit Agreement ”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent (as identified below) as contemplated below (i) all of the Assignor’s rights and obligations as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any letters of credit, guarantees, and swingline loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the “ Assigned Interest ”).  Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

 

1.

 

Assignor:

 

 

 

 

 

 

 

 

2.

 

Assignee:

 

 

 

 

 

 

 

[and is a Non-Debt Fund Affiliate]

 

 

 

 

 

3.

 

Borrower:

 

Wesco Aircraft Hardware Corp.

 

 

 

 

 

4.

 

Administrative Agent:

 

BARCLAYS BANK PLC, as the administrative agent under the Credit Agreement (in such capacity, the “ Administrative Agent ”)

 

 

 

 

 

5.

 

Credit Agreement:

 

Credit Agreement dated as of April 7, 2011 among Wesco Holdings, Inc., Wesco Aircraft Hardware Corp., as the Borrower, the several banks and other financial institutions or entities from time to time parties to the Credit Agreement as lenders, Bank of America, N.A., as Syndication Agent, the Administrative Agent, Merrill Lynch, Pierce Fenner & Smith Incorporated (“ MLPFS ”), Key Bank, N.A. and Barclays Capital (“ Barclays Capital ”), the investment banking division of Barclays Bank PLC, as Joint Lead Arrangers, and MLFPS, Barclays Capital, J.P.

 



 

 

 

 

 

Morgan Securities LLC, Morgan Stanley Senior Funding, Inc., Sumitomo Mitsui Banking Corporation and Royal Bank of Canada, as Joint Bookrunners.

 

 

 

 

 

6.

 

Assigned Interest:

 

 

 

Facility Assigned

 

Aggregate
Amount of
Commitment/Loans
for all Lenders*

 

Amount of
Commitment/Loans
Assigned*

 

Percentage
Assigned of
Commitment/Loans

 

 

 

$

 

 

$

 

 

 

%

 

 

$

 

 

$

 

 

 

%

 

 

$

 

 

$

 

 

 

%

 

7.

 

Trade Date:

 

 

 

 

 

 

 

8.

 

Effective Date:

 

                                 , 20     [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

 

 

 

 

 

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

 

 

ASSIGNOR

 

 

[NAME OF ASSIGNOR]

 

 

 

 

 

 

 

 

By:

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

ASSIGNEE

 

 

[NAME OF ASSIGNEE]

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Title:

 



 

Consented to and Accepted:

 

 

 

 

 

BARCLAYS BANK PLC, as

 

 

  Administrative Agent

 

 

 

 

 

 

 

 

By:

 

 

 

 

Title:

 

 

 



 

ANNEX 1 TO AFFILIATE LENDER ASSIGNMENT AND ASSUMPTION

 

STANDARD TERMS AND CONDITIONS FOR

AFFILIATE LENDER ASSIGNMENT AND ASSUMPTION

 

1.                                        Representations and Warranties.

 

1.1.                               Assignor.  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby, and (iv) it is not a “Defaulting Lender”, as such term is defined in the Credit Agreement; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of Holdings, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by Holdings, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

 

1.2.                               Assignee.  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it is an Other Affiliate, (iii) this Assignment and Assumption is being made pursuant to an open market purchase, (iv) no Default has occurred or is continuing or would result from the consummation of the transactions contemplated by this Assignment and Assumption, (v) after giving effect to this Assignment and Assumption, the aggregate principal amount of all Term Loans held by all Other Affiliates (other than Debt Fund Affiliates) constitutes no more than 20% of the aggregate principal amount of all Loans then outstanding, (vi) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (vii) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 6.1 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, (viii) if it is a Non-US Lender, attached to this Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee, and (ix) it is not a “Defaulting Lender”, as such term is defined in the Credit Agreement; (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender; (c) hereby affirms the No Undisclosed Information Representation and (d) shall at all times be subject to the voting restrictions set forth in Section 10.1 of the Credit Agreement.  For the avoidance of doubt, Lenders shall not be permitted to assign Revolving Commitments or Revolving Loans to any Affiliate Lender.  The Assignee further acknowledges and agrees that it shall not have any right to (i) attend (including by telephone) any meeting or discussions (or portion thereof) among the Administrative Agent or any Lender to which representatives of the Borrower are not then present or (ii) receive any information or material prepared by the Administrative Agent or any Lender or any communication by or

 



 

among Administrative Agent and one or more Lenders, except to the extent such information or materials have been made available to the Borrower or its representatives.

 

2.                                        Payments.  From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignee whether such amounts have accrued prior to or on or after the Effective Date.  The Assignor and the Assignee shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves.

 

3.                                        General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

 



 

EXHIBIT F

 

FORM OF EXEMPTION CERTIFICATE

 

Reference is made to the Credit Agreement, dated as of April 7, 2011 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Wesco Holdings, Inc. (“ Holdings ”), Wesco Aircraft Hardware Corp., as the Borrower, the several banks and other financial institutions or entities from time to time parties to the Credit Agreement as lenders, Bank of America, N.A., as Syndication Agent, Barclays Bank PLC, as Administrative Agent (in such capacity, the “ Administrative Agent ”), Collateral Agent and Documentation Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“ MLPFS ”), Key Bank, N.A. and Barclays Capital (“ Barclays Capital ”), the investment banking division of Barclays Bank PLC, as Joint Lead Arrangers, and MLFPS, Barclays Capital, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc., Sumitomo Mitsui Banking Corporation and Royal Bank of Canada, as Joint Bookrunners.  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

                                                 (the “ Non-US Lender ”) is providing this certificate pursuant to Section 2.20(d) of the Credit Agreement.  The Non-US Lender hereby represents and warrants that:

 

1.                                        The Non-US Lender is the sole record and beneficial owner of the Loans or the obligations evidenced by Note(s) in respect of which it is providing this certificate.

 

2.                                        The Non-US Lender is not a “bank” for purposes of Section 881(c)(3)(A) of the Code.  In this regard, the Non-US Lender further represents and warrants that:

 

(a)                                   the Non-US Lender is not subject to regulatory or other legal requirements as a bank in any jurisdiction; and

 

(b)                                  the Non-US Lender has not been treated as a bank for purposes of any tax, securities law or other filing or submission made to any Governmental Authority, any application made to a rating agency or qualification for any exemption from tax, securities law or other legal requirements;

 

3.                                        The Non-US Lender is not a 10-percent shareholder of the Borrower within the meaning of Section 881(c)(3)(B) of the Code; and

 

4.                                        The Non-US Lender is not a controlled foreign corporation receiving interest from a related person within the meaning of Section 881(c)(3)(C) of the Code.

 



 

IN WITNESS WHEREOF, the undersigned has duly executed this certificate.

 

 

 

[NAME OF NON-US LENDER]

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

Date:

 

 

 

 



 

EXHIBIT G

 

FORM OF SOLVENCY CERTIFICATE

 

Pursuant to Section 5.1(c) of the Credit Agreement, dated as of April 7, 2011 (the “ Credit Agreement ”; unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement), among Wesco Holdings, Inc. (“ Holdings ”), Wesco Aircraft Hardware Corp., as the Borrower, the several banks and other financial institutions or entities from time to time parties to the Credit Agreement as lenders, Bank of America, N.A., as Syndication Agent, Barclays Bank PLC, as Administrative Agent, Collateral Agent and Documentation Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“ MLPFS ”), Key Bank, N.A. and Barclays Capital (“ Barclays Capital ”), the investment banking division of Barclays Bank PLC, as Joint Lead Arrangers, and MLFPS, Barclays Capital, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc., Sumitomo Mitsui Banking Corporation and Royal Bank of Canada, as Joint Bookrunners, the undersigned hereby certifies that he is the duly elected and acting Chief Financial Officer of Holdings and that as such he is authorized to execute and deliver this Solvency Certificate on behalf of Holdings.

 

Holdings further certifies that Holdings and its Restricted Subsidiaries, on a consolidated basis, are Solvent after giving effect to the initial extensions of credit to be made on the Closing Date.

 

[signature page follows]

 



 

IN WITNESS WHEREOF ,  the undersigned has caused this Solvency Certificate to be executed as of this [    ] day of April, 2011.

 

 

 

WESCO HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

Chief Financial Officer

 


 

EXHIBIT H

 

FORM OF JOINDER AGREEMENT

 

JOINDER AGREEMENT, dated as of [                        , 201    ] (the “ Joinder Agreement ” or this “ Agreement ”), by and among [NEW LENDERS] (each, a “ New Lender ” and, collectively, the “ New Lenders ”), WESCO AIRCRAFT HARDWARE CORP., a California corporation (the “ Borrower ”), and BARCLAYS BANK PLC, as administrative agent (in such capacity, the “ Administrative Agent ”).

 

RECITALS:

 

WHEREAS , reference is hereby made to the Credit Agreement, dated as of April 7, 2011 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Wesco Holdings, Inc. (“ Holdings ”), Wesco Aircraft  Hardware Corp., as the Borrower, the several banks and other financial institutions or entities from time to time parties to the Credit Agreement as lenders, Bank of America, N.A., as Syndication Agent, the Administrative Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“ MLPFS ”), Key Bank, N.A. and Barclays Capital (“ Barclays Capital ”), the investment banking division of Barclays Bank PLC, as Joint Lead Arrangers, and MLFPS, Barclays Capital, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc., Sumitomo Mitsui Banking Corporation and Royal Bank of Canada, as Joint Bookrunners (capitalized terms used but not defined herein having the meaning provided in the Credit Agreement); and

 

WHEREAS , subject to the terms and conditions of the Credit Agreement, the Borrower may establish New Term Loan Commitments or increase Dollar Revolving Commitments by, among other things, entering into one or more Joinder Agreements with New Lenders;

 

NOW, THEREFORE , in consideration of the premises and agreements, provisions and covenants herein contained, the parties hereto agree as follows:

 

I.                                          Each New Lender party hereto hereby agrees to commit to provide its New Term Loan Commitment or Dollar Revolving Commitments, as set forth on Schedule A annexed hereto, on the terms and subject to the conditions set forth below:

 

II.                                      Each New Lender (i) confirms that it has received a copy of the Credit Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (ii) agrees that it will, independently and without reliance upon the Administrative Agent, any other New Lender or any other Lender or Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes the Administrative Agent and/or the Collateral Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as are delegated to the Administrative Agent and the Collateral Agent, respectively, by the terms thereof, together with such powers as are reasonably incidental thereto; and (iv) agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a New Lender.

 

III.                                  Each New Lender hereby agrees to make its respective Commitment on the following terms and conditions:

 



 

1.                                        Applicable Margin . The Applicable Margin for each New Term Loan shall mean, as of any date of determination, a percentage per annum as set forth below:

 

[INSERT PRICING]

 

2.                                        Principal Payments .  The Borrower shall make principal payments on the New Term Loan in installments on the dates and in the amounts set forth below:

 

(A)
Payment
Date

 

(B)
Scheduled
Repayment of New Term
Loans

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

3.                                        Voluntary and Mandatory Prepayments .  Scheduled installments of principal of the New Term Loans set forth above shall be reduced in connection with any optional [or mandatory] prepayments of the New Term Loans in accordance with Section[s] 2.11 [and 2.12] of the Credit Agreement respectively.

 

4.                                    Proposed Borrowing .  This Agreement represents the Borrower’s request to borrow New Term Loans or increase Dollar Revolving Commitments from the New Lenders as follows (the “ Proposed Borrowing ”):

 

SECTION 1. Business Day of Proposed Borrowing:                            ,               

 

SECTION 2. Amount of Proposed Borrowing:  $                           

 

SECTION 3. Interest rate option:

a.                ABR Loan(s)

 



 

b.          Eurocurrency Loan(s) with an initial Interest Period of        months

 

5.                                        [ New Lenders .  Each New Lender acknowledges and agrees that upon its execution of this Agreement and the making of New Term Loans or Dollar Revolving Loans, such New Lender shall become a “Lender” under, and for all purposes of, the Credit Agreement and the other Loan Documents, and shall be subject to and bound by the terms thereof, and shall perform all the obligations of and shall have all rights of a Lender thereunder.](1)

 

6.                                        Credit Agreement Governs .  Except as set forth in this Agreement, the New Term Loans and/or the Dollar Revolving Loans, as applicable, shall otherwise be subject to the provisions of the Credit Agreement and the other Loan Documents.

 

7.                                        Holdings’ Certifications .  By its execution of this Agreement, the undersigned officer, to the best of his or her knowledge, and Holdings hereby certify that:

 

i.                                           The representations and warranties in or pursuant to the Loan Documents are true and correct in all material respects on and as of the date hereof to the same extent as though made on and as of the date hereof, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material respects on and as of such earlier date;

 

ii.                                        No Default or Event of Default has occurred and is continuing as of the date hereof after giving effect to the proposed Borrowing contemplated hereby; and

 

8.                                        Notice .  For purposes of the Credit Agreement, the initial notice address of each New Lender shall be as set forth below its signature below.

 

9.                                        Non-US Lenders .  For each New Lender that is a Non-US Lender, delivered herewith to the Administrative Agent are such forms, certificates or other evidence with respect to United States federal income tax withholding matters as such New Lender may be required to deliver to Administrative Agent pursuant to subsection 2.20(d) of the Credit Agreement.

 

10.                                  Recordation of the New Loans .  Upon execution and delivery hereof, the Administrative Agent will record the New Loans made by each New Lender in the Register.

 

11.                                  Amendment, Modification and Waiver .  This Agreement may not be amended, modified or waived except as provided by Section 10.1 of the Credit Agreement.

 

12.                                  Entire Agreement .  This Agreement, the Credit Agreement and the other Loan Documents constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and verbal, among the parties or any of them with respect to the subject matter hereof.

 

13.                                GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL

 


(1)  Insert bracketed language if the lending institution is not already a Lender.

 



 

BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

14.                                  Severability .  Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as would be enforceable.

 

15.                                  Counterparts .  This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

 

[signature pages follow]

 



 

IN WITNESS WHEREOF , each of the undersigned has caused its duly authorized officer to execute and deliver this Joinder Agreement as of [                              ,           ].

 

 

[NAME OF NEW LENDER]

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

Notice Address:

 

 

 

Attention:

 

 

 

Telephone:

 

 

 

Facsimile:

 

 

 

 

 

 

 

 

 

WESCO HOLDINGS, INC.

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

WESCO AIRCRAFT HARDWARE CORP.

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 



 

Consented to by:

 

BARCLAYS BANK PLC, as
Administrative Agent

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 



 

SCHEDULE A
TO JOINDER AGREEMENT

 

Name of New Lender

 

Type of Commitment

 

Amount

 

[                 ]

 

[New Term Loan] [Dollar Revolving] Commitment

 

$

 

 

 



 

EXHIBIT I

 

FORM OF LENDER ADDENDUM

 

Reference is made to the Credit Agreement dated as of April 7, 2011 (as amended, amended and restated, extended, supplemented, or otherwise modified or replaced from time to time, the “ Credit Agreement ”) among Wesco Holdings, Inc., a Delaware corporation (“ Holdings ”), Wesco Aircraft Hardware Corp., a California corporation (the “ Borrower ”), the lenders party thereto from time to time, Bank of America, N.A., as Syndication Agent, Barclays Bank PLC, as Administrative Agent (in such capacity, the “ Administrative Agent ”), Collateral Agent  and Documentation Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“ MLPFS ”), Key Bank, N.A. and Barclays Capital (“ Barclays Capital ”), the investment banking division of Barclays Bank PLC, as Joint Lead Arrangers, and MLFPS, Barclays Capital, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc., Sumitomo Mitsui Banking Corporation and Royal Bank of Canada, as Joint Bookrunners. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

Upon execution and delivery of this Lender Addendum by the parties hereto as provided in Section 10.20 of the Credit Agreement, the undersigned hereby becomes a Lender under the Credit Agreement having the Commitments set forth beneath its signature hereto, effective as of the Closing Date.

 

THIS LENDER ADDENDUM SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

This Lender Addendum may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page hereof by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

 



 

IN WITNESS WHEREOF, the parties hereto have caused this Lender Addendum to be duly executed and delivered by their proper and duly authorized officers as of this      day of April, 2011.

 

 

[INSERT LENDER NAME]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[Revolving] [Tranche A] [Tranche B] Commitment:  $                        

 


 

EXHIBIT J

 

AUCTION PROCEDURES

 

This outline of auction procedures (the “ Auction Procedures ”)  is intended to summarize certain basic terms of the modified Dutch auction procedures pursuant to and in accordance with the terms and conditions of Section 10.6(g) of the Credit Agreement, of which this Exhibit J  is a part.  It is not intended to be a definitive statement of all of the terms and conditions of a modified Dutch auction, the definitive terms and conditions for which shall be set forth in the applicable Auction Procedures set for each Auction (the “ Offer Documents ”).  None of the Administrative Agent, the Auction Manager and any other Agent, or any of their respective affiliates, makes any recommendation pursuant to the Offer Documents as to whether or not any Term Lender of any Class should sell its Term Loans of any Class to Holdings or any of its Subsidiaries pursuant to the Offer Documents, nor shall the decision by the Administrative Agent, the Auction Manager or any other Agent (or any of their affiliates) in its capacity as a Term Lender be deemed to constitute such a recommendation.  Each Term Lender should make its own decision on whether to sell any of its Term Loans and, if it decides to do so, the principal amount of and price to be sought for such Term Loans.  In addition, each Term Lender should consult its own attorney, business advisor or tax advisor as to legal, business, tax and related matters concerning this Auction  and the Offer Documents.  Capitalized terms not otherwise defined in this Exhibit have the meanings assigned to them in the Credit Agreement.

 

Summary.   Holdings or any of its Subsidiaries may conduct one or more modified Dutch auctions in order to purchase all or any portion of the Term Loans of any Class (each, an “ Auction ”) pursuant to the procedures described herein.

 

Notice Procedures.   In connection with each Auction, Holdings or the applicable Subsidiary will provide notification to the Auction Manager (for distribution to the Term Lenders of the applicable Class) of the Term Loans that will be the subject of the Auction (an “ Auction Notice ”).  Each Auction Notice shall contain (i) the maximum principal amount of Term Loans of the applicable Class Holdings or the applicable Subsidiary is willing to purchase in the Auction (the “ Auction Amount ”), which shall be no less than $20,000,000 or an integral multiple of $1,000,000 in excess of thereof; (ii) the range of discounts to par (the “ Discount Range ”), expressed as a range of prices per $1,000 (in increments of $5), at which Holdings or the applicable Subsidiary would be willing to purchase Term Loans in the Auction; and (iii) the date on which the Auction will conclude, on which date Return Bids (as defined below) will be due by 1:00 p.m. New York time, as such date and time may be extended (such time, the “ Expiration Time ”) for a period not exceeding three Business Days upon notice by Holdings or the applicable Subsidiary to the Auction Manager received not less than 24 hours before the original Expiration Time.  An Auction shall be regarded as a “Failed Auction” in the event that either (x) Holdings or the applicable Subsidiary withdraws such Auction in accordance with the terms hereof or (y) the Expiration Time occurs with no Qualifying Bids (as defined below) having been received.  In the event of a Failed Auction, Holdings or the applicable Subsidiary shall not be permitted to deliver a new Auction Notice prior to the date occurring [five (5)] Business Days after such withdrawal or Expiration Time, as the case may be.

 

Reply Procedures.   In connection with any Auction, each Term Lender holding Term Loans of the applicable Class wishing to participate in such Auction shall, prior to the Expiration Time, provide the Auction Manager with a notice of participation (the “ Return Bid ”, in the form included in the Offer Document), which shall specify (i) a discount to par expressed as a price per $1,000 (in increments of $5) of Term Loans (the “ Reply Price ”) within the Discount Range and (ii) the principal amount of Term Loans of such Class, in an amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof, that such Term Lender is willing to offer for sale at its Reply Price (the “ Reply Amount ”);

 



 

provided , that such Term Lender may submit a Reply Amount that is less than the minimum amount and/or incremental amount requirements described above only if the Reply Amount comprises the entire amount of Term Loans of the applicable Class held by such Term Lender.  Each Term Lender of the applicable Class may only submit one Return Bid per Auction.  In addition to the Return Bid, the participating Term Lender must execute and deliver, to be held by the Auction Manager, an Affiliate Assignment Agreement.  Neither Holdings nor any of its Subsidiary will purchase any Term Loans at a price that is outside of the applicable Discount Range, nor will any Return Bids (including any component bids specified therein) submitted at a price that is outside such applicable Discount Range be considered in any calculation of the Applicable Threshold Price (as defined below).

 

Acceptance Procedures.   Based on Reply Prices and Reply Amounts received by the Auction Manager, the Auction Manager, in consultation with Holdings or the applicable Subsidiary, will calculate the lowest purchase price (the “ Applicable Threshold Price” ) for the Auction within the Discount Range for the Auction that will allow Holdings or the applicable Subsidiary to complete the Auction by purchasing the full Auction Amount (or such lesser amount of Term Loans of the applicable Class for which Holdings or the applicable Subsidiary has received Qualifying Bids (as defined below)).  Holdings or the applicable Subsidiary shall purchase Term Loans of the applicable Class from each Term Lender whose Return Bid is within the Discount Range and contains a Reply Price that is equal to or less than the Applicable Threshold Price (each, a “ Qualifying Bid ”). All Term Loans of the applicable Class included in Qualifying Bids received at a Reply Price lower than the Applicable Threshold Price will be purchased at the applicable Reply Price and shall not be subject to proration.

 

Proration Procedures.   All Term Loans offered in Return Bids constituting Qualifying Bids at the Applicable Threshold Price will be purchased at the Applicable Threshold Price; provided that if the aggregate principal amount of all Term Loans for which Qualifying Bids have been submitted in any given Auction at the Applicable Threshold Price would exceed the remaining portion of the Auction Amount (after deducting all Term Loans to be purchased below the Applicable Threshold Price), Holdings or the applicable Subsidiary shall purchase the Term Loans for which the Qualifying Bids submitted were at the Applicable Threshold Price ratably based on such Term Lenders’ Tranche A Term Percentages, Tranche B Term Percentages or New Tranche Term Percentages, as the case may and in an aggregate amount equal to the amount necessary to complete the purchase of the Auction Amount.

 

Notification Procedures.   The Auction Manager will calculate the Applicable Threshold Price and post the Applicable Threshold Price and proration factor onto an internet site (including an IntraLinks, SyndTrak or other electronic workspace) in accordance with the Auction Manager’s standard dissemination practices by 4:00 p.m. New York time on the same Business Day as the date the Return Bids were due.  The Auction Manager will insert the principal amount of Term Loans of the applicable Class to be assigned and the applicable settlement date into each applicable Affiliate Assignment Agreement received in connection with a Qualifying Bid.  Upon request of the submitting Term Lender, the Auction Manager will promptly return any Affiliate Assignment Agreement received in connection with a Return Bid that is not a Qualifying Bid.

 

Additional Procedures.   Once initiated by an Auction Notice, Holdings or the applicable Subsidiary may withdraw an Auction only in the event that, as of such time, no Qualifying Bid has been received by the Auction Manager.  Furthermore, in connection with any Auction, upon submission by a Term Lender of a Return Bid, such Term Lender will not have any withdrawal rights. Any Return Bid delivered to the Auction Manager may not be modified, revoked, terminated or cancelled by a Term Lender.  However, an Auction may become void if the conditions to the purchase of Term Loans by Holdings or the applicable Subsidiary required by the terms and conditions of Section 10.6(g)(iii) of the Credit Agreement are not met.  The purchase price in respect of each Auction shall be paid by Holdings or the applicable Subsidiary directly to the respective assigning Term Lender on a settlement date as determined by the Auction Manager in consultation with Holdings or the applicable Subsidiary (which shall be no later than ten (10) Business Days or such longer period as may be agreed after the date Return

 



 

Bids are due).  Holdings or the applicable Subsidiary shall execute each applicable Affiliate Assignment Agreement received in connection with a Qualifying Bid.

 

All questions as to the form of documents and validity and eligibility of Term Loans that are the subject of an Auction will be determined by the Auction Manager, in consultation with Holdings or the applicable Subsidiary, which determination will be final and binding.  The Auction Manager’s interpretation of the terms and conditions of the Offer Document, in consultation with Holdings or the applicable Subsidiary, will be final and binding.

 

None of the Administrative Agent, the Auction Manager, any other Agent or any of their respective affiliates assumes any responsibility for the accuracy or completeness of the information concerning Holdings or any of its Subsidiaries, each other Loan Party, or any of their affiliates (whether contained in the Offer Documents or otherwise) or for any failure to disclose events that may have occurred and may affect the significance or accuracy of such information.

 

This Exhibit J shall not require Holdings or any of its Subsidiaries to initiate any Auction.

 



 

EXHIBIT K-1

 

NOTICE OF TERM LOAN BORROWING

 

April [    ], 2011

 

Barclays Bank PLC,

as Administrative Agent for the

Term Lenders party to the Credit Agreement

referred to below

 

Attention:

 

Ladies and Gentlemen:

 

The undersigned refers to the Credit Agreement dated as of April 7, 2011 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Wesco Holdings, Inc., Wesco Aircraft  Hardware Corp., as the Borrower, the several banks and other financial institutions or entities from time to time parties to the Credit Agreement as lenders, Bank of America, N.A., as Syndication Agent, Barclays Bank PLC, as Administrative Agent, Collateral Agent and Documentation Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“ MLPFS ”), Key Bank, N.A. and Barclays Capital (“ Barclays Capital ”), the investment banking division of Barclays Bank PLC, as Joint Lead Arrangers, and MLFPS, Barclays Capital, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc., Sumitomo Mitsui Banking Corporation and Royal Bank of Canada, as Joint Bookrunners.  Terms defined in the Credit Agreement are used herein as defined therein.

 

The undersigned hereby requests a Term Loan borrowing under the Credit Agreement (the “ Proposed Borrowing ”), as follows:

 

(1)                                   The Business Day of the Proposed Borrowing is April [    ], 2011.

 

(2)                                   The Proposed Borrowing is to be comprised of [ABR Loans][Eurocurrency Loans, having an Interest Period of [    ] months duration].

 

(3)                                   The aggregate amount of the Proposed Borrowing is [$               of Tranche A Term Loans and $           of Tranche B Term Loans] [$                    ].

 

(4)                                   The account of the undersigned to which the proceeds of the Proposed Borrowing are to be made available is as follows:

 

Bank Name:

Bank Address:

ABA Number:

Account Number:

Attention:

Reference:

 



 

The undersigned hereby represents and warrants that, as of the date of this Notice of Borrowing and the date of the Proposed Borrowing, (i) each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects, in each case except to the extent that such representations and warranties relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date and (ii) at the time of and immediately after giving effect to such Proposed Borrowing no Default or Event of Default shall have occurred and be continuing.

 

 

 

Very truly yours,

 

 

 

WESCO AIRCRAFT HARDWARE CORP.

 

 

 

 

 

By:

 

 

  Name:

 

 

  Title:

 

 



 

EXHIBIT K-2

 

NOTICE OF REVOLVING BORROWING

 

[                ], 201[   ]

 

Barclays Bank PLC,

as Administrative Agent for the

Revolving Lenders party to the Credit Agreement

referred to below

 

Attention:

 

Ladies and Gentlemen:

 

The undersigned refers to the Credit Agreement dated as of April 7, 2011 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Wesco Holdings, Inc., Wesco Aircraft  Hardware Corp., as the Borrower, the several banks and other financial institutions or entities from time to time parties to the Credit Agreement as lenders, Bank of America, N.A., as Syndication Agent, Barclays Bank PLC, as Administrative Agent, Collateral Agent and Documentation Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“ MLPFS ”), Key Bank, N.A. and Barclays Capital (“ Barclays Capital ”), the investment banking division of Barclays Bank PLC, as Joint Lead Arrangers, and MLFPS, Barclays Capital, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc., Sumitomo Mitsui Banking Corporation and Royal Bank of Canada, as Joint Bookrunners.  Terms defined in the Credit Agreement are used herein as defined therein.

 

The undersigned hereby requests a Borrowing under the Credit Agreement (the “ Proposed Borrowing ”), as follows:

 

(1)                                   The Business Day of the Proposed Borrowing is                            , 201  .

 

(2)                                   The Currency of the Proposed Borrowing is                       .

 

(3)                                   The Proposed Borrowing is to be comprised of [ABR Loans] [Eurocurrency Loans with an Interest Period of [              ] months’ duration].

 

(4)                                   The aggregate amount of the Proposed Borrowing is [U.S. $                     of Dollar Revolving Loans] [and] [U.S. $                     of Multicurrency Revolving Loans].

 

(5)                                   The account of the undersigned to which the proceeds of the Proposed Borrowing are to be made available is as follows:

 

Bank Name:

Bank Address:

ABA Number:

Account Number:

Attention:

Reference:

 

The undersigned hereby represents and warrants that, as of the date of this Notice of Borrowing and the date of the Proposed Borrowing (i) each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects, in each case except to the extent that such representations and warranties relate to an earlier date, in which

 



 

case such representations and warranties shall be true and correct in all material respects as of such earlier date; and (ii) at the time of and immediately after giving effect to such Proposed Borrowing, no Default or Event of Default has occurred and is continuing.

 

 

 

Very truly yours,

 

 

 

WESCO AIRCRAFT HARDWARE CORP.

 

 

 

 

 

By:

 

 

  Name:

 

 

  Title:

 

 


 

EXHIBIT L

 

FORM OF PREPAYMENT OPTION NOTICE

 

[Tranche B Term Lender] [New Term Lender] party to the Credit Agreement

Referred to below

 

Attention of

Telecopy No.

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement dated as of April 7, 2011 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Wesco Holdings, Inc., Wesco Aircraft  Hardware Corp. (the “ Borrower ”), the several banks and other financial institutions or entities from time to time parties to the Credit Agreement as lenders, Bank of America, N.A., as Syndication Agent, Barclays Bank PLC, as Administrative Agent (in such capacity, the “ Administrative Agent ”), Collateral Agent and Documentation Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“ MLPFS ”), Key Bank, N.A. and Barclays Capital (“ Barclays Capital ”), the investment banking division of Barclays Bank PLC, as Joint Lead Arrangers, and MLFPS, Barclays Capital, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc., Sumitomo Mitsui Banking Corporation and Royal Bank of Canada, as Joint Bookrunners.  Terms defined in the Credit Agreement are used herein as defined therein.

 

The Administrative Agent hereby gives notice of an offer of prepayment made by the Borrower pursuant to Section 2.12(f) of the Credit Agreement in the Prepayment Amount for the [Tranche B Term Loans] [New Term Loans].  Amounts applied to prepay the [Tranche B Term Loans] [name of Tranche of New Term Loans] shall be applied pro rata to the [Tranche B Term Loans] [name of Tranche of New Term Loans] held by you.  The portion of the Prepayment Amount to be allocated to the [Tranche B Term Loans] [name of Tranche of New Term Loans] held by you and the date on which such prepayment will be made to you (should you elect to receive such prepayment) are set forth below:

 

(A)                               Total Prepayment Amount for the [Tranche B Term Loans]

[New Term Loans]:

 

(B)                                 Portion of Prepayment Amount for the

[Tranche B Term Loans] [New Term Loans]

to be received by you:

 

(C)                                 Prepayment Date (10 Business Days after the
date of this Prepayment Option Notice)
(the “ Mandatory Prepayment Date ”):

 

IF YOU DO NOT WISH TO RECEIVE ALL OF THE  PREPAYMENT AMOUNT FOR THE [TRANCHE B TERM LOANS] [NAME OF TRANCHE OF NEW TERM LOANS] TO BE ALLOCATED TO YOU ON THE MANDATORY PREPAYMENT DATE, please sign this notice in the space provided below and indicate the percentage of the Prepayment Amount for the [Tranche B Term Loans] [New Term Loans] otherwise payable that you do not wish to receive.  Please return this notice as so completed via telecopy to the attention of the Administrative Agent at [                        ] no later than 5:00pm, New York City time , one Business Day after receipt of this notice, at Telecopy No. [                      ].

 



 

IF YOU DO NOT RETURN THIS NOTICE YOU WILL RECEIVE 100% OF THE PREPAYMENT AMOUNT FOR THE [TRANCHE B TERM LOANS] [NAME OF TRANCHE OF NEW TERM LOANS] ALLOCATED TO YOU ON THE MANDATORY PREPAYMENT DATE.

 

[signature page follows]

 



 

 

BARCLAYS BANK PLC,

 

as Administrative Agent and as Collateral

 

Agent

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

NAME OF [TRANCHE B TERM LENDER] [NEW TERM LENDER]:

 

 

 

 

By:

 

 

Name:

Title:

 

 

 

Percentage of Prepayment Amount

 

Declined:       %

 

 



 

EXHIBIT M

 

NOTICE OF CONTINUATION/CONVERSION

 

[                ], 201    

 

Barclays Bank PLC,

as Administrative Agent for the

Lenders party to the Credit Agreement

referred to below

 

Attention:               

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement dated as of April 7, 2011 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Wesco Holdings, Inc., Wesco Aircraft  Hardware Corp. (the “ Borrower ”), the several banks and other financial institutions or entities from time to time parties to the Credit Agreement as lenders, Bank of America, N.A., as Syndication Agent, Barclays Bank PLC, as Administrative Agent, Collateral Agent and Documentation Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“ MLPFS ”), Key Bank, N.A. and Barclays Capital (“ Barclays Capital ”), the investment banking division of Barclays Bank PLC, as Joint Lead Arrangers, and MLFPS, Barclays Capital, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc., Sumitomo Mitsui Banking Corporation and Royal Bank of Canada, as Joint Bookrunners.  Terms defined in the Credit Agreement are used herein as defined therein.

 

Pursuant to Section 2.13 of the Credit Agreement, the Borrower hereby requests the continuation or conversion of Loans under the Credit Agreement as follows:

 

1.  Tranche A Term Loans:

 

$ [      ,      ,      ]

 

Eurocurrency Loans to be continued with Interest Period of [        ] month(s)

 

 

 

$ [      ,      ,      ]

 

ABR Loans to be converted to Eurocurrency Loans with Interest Period of [        ] month(s)

 

 

 

$ [      ,      ,      ]

 

Eurocurrency Loans to be converted to ABR Loans

 

2.  Tranche B Term Loans:

 

$ [      ,      ,      ]

 

Eurocurrency Loans to be continued with Interest Period of [        ] month(s)

 

 

 

$ [      ,      ,      ]

 

ABR Loans to be converted to Eurocurrency Loans with Interest Period of          month(s)

 

 

 

$ [      ,      ,      ]

 

Eurocurrency Loans to be converted to ABR Loans

 

3. Dollar Revolving Loans:

 

$ [      ,      ,      ]

 

Eurocurrency Loans to be continued with Interest Period of [        ] month(s)

 

 

 

$ [      ,      ,      ]

 

ABR Loans to be converted to Eurocurrency Loans with Interest Period of          month(s)

 



 

$ [      ,      ,      ]

 

Eurocurrency Loans to be converted to ABR Loans

 

The Borrower hereby certifies that as of the date hereof, no event has occurred and is continuing or would result from the consummation of the conversion and/or continuation contemplated hereby that would constitute an Event of Default or a Default.

 

 

Very truly yours,

 

 

 

WESCO AIRCRAFT HARDWARE INC.

 

 

 

 

 

By:

 

 

Name:

 

Title:

 




Exhibit 10.14

 

AMENDED AND RESTATED MANAGEMENT AGREEMENT

 

Amended and Restated Management Agreement (this “ Agreement ”), dated as of [              ], 2011, by and between Wesco Aircraft Holdings, Inc., a Delaware corporation (the “ Company ”), and Carlyle Investment Management L.L.C., a Delaware limited liability company (“ Carlyle ”).

 

RECITALS:

 

WHEREAS, TC Group, L.L.C., a Delaware limited liability company (“ TC Group ”), previously provided advisory and consulting services to the Company pursuant to that certain Management Agreement, dated as of September 29, 2006, by and between the Company and TC Group (the “ Original Agreement ”);

 

WHEREAS, the Company, TC Group and Carlyle desire to amend and restate the Original Agreement in its entirety on the terms and subject to the conditions contained herein, with Carlyle replacing TC Group as a party to this Agreement;

 

WHEREAS, Carlyle, by and through its officers, employees, agents, representatives and affiliates, has expertise in the areas of corporate management, business strategy, investment, acquisitions and other matters relating to the business of the Company and its subsidiaries; and

 

WHEREAS, the Company desires to avail itself of the expertise of Carlyle in the aforesaid areas, in which it acknowledges the expertise of Carlyle.

 

AGREEMENT:

 

NOW, THEREFORE, in consideration of the foregoing recitals and the covenants and conditions herein set forth, the parties hereto agree as follows:

 

Section 1.               Appointment .

 

The Company hereby appoints Carlyle to render the advisory and consulting services described in Section 2 hereof for the term of this Agreement.

 

Section 2.               Services .

 

(a)           During the term of this Agreement, Carlyle shall render to the Company and its subsidiaries, by and through such of Carlyle’s officers, employees, agents, representatives and affiliates as Carlyle, in its sole discretion, shall designate, in cooperation with the Company’s executive officers, from time to time, advisory, consulting and other services (the “ Oversight Services ”) in relation to the operations of the Company and its subsidiaries, strategic planning, marketing and financial oversight and including, without limitation, advisory and consulting services in relation to the selection, retention and supervision of independent auditors, the selection, retention and supervision of outside legal counsel, the selection, retention and supervision of investment bankers or other financial advisors or consultants and the structuring

 

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and implementation of equity participation plans, employee benefit plans and other incentive arrangements for certain key executives of the Company and its subsidiaries.

 

(b)           It is acknowledged and agreed that, from time to time, Carlyle may be requested to perform services in addition to the Oversight Services, for which Carlyle shall be entitled to additional compensation.

 

(c)           Notwithstanding anything set forth herein, it is expressly agreed that the Oversight Services shall not include investment banking services or other financial advisory services.

 

Section 3.               Fees .

 

In consideration of the performance of the Oversight Services contemplated by Section 2(b) hereof, the Company agrees to pay to Carlyle an aggregate per annum fee not to exceed $1,000,000 (the “ Annual Fee ”).  The Annual Fee shall initially be fixed at $1,000,000, subject to adjustment in the future by the Company’s Board of Directors from time to time, subject to the cap set forth in the foregoing sentence.

 

Section 4.               Out-of-Pocket Expenses .

 

In addition to the compensation payable to Carlyle pursuant to Section 3 hereof, the Company shall, at the direction of Carlyle, pay directly, or reimburse Carlyle for, its reasonable Out-of-Pocket Expenses.  For the purposes of this Agreement, the term “ Out-of-Pocket Expenses ” shall mean the amounts actually paid by Carlyle in cash in connection with its performance of the Services, including, without limitation, reasonable (i) fees and disbursements (including underwriting fees) of any independent auditors, outside legal counsel, consultants, investment bankers, financial advisors and other independent professionals and organizations, (ii) costs of any outside services or independent contractors such as financial printers, couriers, business publications or similar services and (iii) transportation, per diem, telephone calls, word processing expenses or any similar expense.  All reimbursements for Out-of-Pocket Expenses shall be made promptly upon or as soon as practicable after presentation by Carlyle to the Company of the statement in connection therewith.

 

Section 5.               Indemnification .

 

The Company will indemnify and hold harmless Carlyle and its officers, employees, agents, representatives, members and affiliates (each being an “ Indemnified Party ”) from and against any and all losses, costs, expenses, claims, damages and liabilities (the “ Liabilities ”) to which such Indemnified Party may become subject under any applicable law, or any claim made by any third party, or otherwise, to the extent they relate to or arise out of the performance of the Services contemplated by this Agreement or the engagement of Carlyle pursuant to, and the performance by Carlyle of the Services contemplated by, this Agreement.  The Company will reimburse any Indemnified Party for all reasonable costs and expenses (including reasonable attorneys’ fees and expenses) as they are incurred in connection with the investigation of, preparation for or defense of any pending or threatened claim for which the Indemnified Party would be entitled to indemnification under the terms of the previous sentence, or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party

 

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hereto, provided that, subject to the following sentence, the Company shall be entitled to assume its defense thereof at its own expense, with counsel satisfactory to such Indemnified Party in its reasonable judgment.  Any Indemnified Party may, at its own expense, retain separate counsel to participate in such defense, and in any action, claim or proceeding in which the Company, on the one hand, and an Indemnified Party, on the other hand, is, or is reasonably likely to become, a party, such Indemnified Party shall have the right to employ separate counsel at the Company’s expense and to control its own defense of such action, claim or proceeding if, in the reasonable opinion of counsel to such Indemnified Party, a conflict or potential conflict exists between the Company, on the one hand, and such Indemnified Party, on the other hand, that would make such separate representation advisable.  The Company agrees that it will not, without the prior written consent of the applicable Indemnified Party, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated hereby (if any Indemnified Party is a party thereto or has been actually threatened to be made a party thereto) unless such settlement, compromise or consent includes an unconditional release of the applicable Indemnified Party and each other Indemnified Party from all liability arising or that may arise out of such claim, action or proceeding.  Provided that the Company is not in breach of its indemnification obligations hereunder, no Indemnified Party shall settle or compromise any claim subject to indemnification hereunder without the consent of the Company.  The Company will not be liable under the foregoing indemnification provision (i) to the extent that any loss, claim, damage, liability, cost or expense is determined by a court, in a final judgment from which no further appeal may be taken, to have resulted solely from the gross negligence or willful misconduct of Carlyle or (ii) for any Liabilities incurred by a party to any agreement between or among any equity holders of the Company (including the Stock Purchase and Exchange Agreement and Agreement and Plan of Merger dated as of July 23, 2006, the Wesco Holdings, Inc. Stockholders Agreement dated as of September 29, 2006, or the Escrow Agreement dated as of September 29, 2006, as each may be amended from time to time) to the extent such Liabilities result from claims, actions or proceedings that relate to or arise under any such agreement.  If an Indemnified Party is reimbursed hereunder for any expenses, such reimbursement of expenses shall be refunded to the extent it is finally judicially determined that the Liabilities in question resulted solely from the gross negligence or willful misconduct of Carlyle.

 

Section 6.               Termination .

 

This Agreement shall become effective on the date hereof and shall continue in effect until the date as of which Carlyle or one or more of its affiliates no longer collectively control, in the aggregate, at least 15% of the equity interests of the Company, or such earlier date as the Company and Carlyle may mutually agree.  The provisions of Sections 5, 7 and 8 and otherwise as the context so requires shall survive the termination of this Agreement.

 

Section 7.               Other Activitie s .

 

Nothing herein shall in any way preclude Carlyle or its officers, employees, agents, representatives, members or affiliates from engaging in any business activities or from performing services for its or their own account or for the account of others, including for the Company that may be in competition with the businesses conducted by the Company.

 

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Section 8.               General .

 

(a)           No amendment or waiver of any provision of this Agreement, or consent to any departure by either party from any such provision, shall be effective unless the same shall be in writing and signed by the parties to this Agreement, and, in any case, such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

(b)           This Agreement and the rights of the parties hereunder may not be assigned without the prior written consent of the parties hereto; provided, however, that Carlyle may assign or transfer its duties or interests hereunder to a Carlyle affiliate at the sole discretion of Carlyle.

 

(c)           Any and all notices hereunder shall, in the absence of receipted hand delivery, be deemed duly given when mailed, if the same shall be sent by registered or certified mail, return receipt requested, and the mailing date shall be deemed the date from which all time periods pertaining to a date of notice shall run.  Notices shall be addressed to the parties at the following addresses:

 

If to Carlyle:

Carlyle Investment Management L.L.C.

 

1001 Pennsylvania Ave., NW

 

Suite 220 South

 

Washington DC, 20004-2505

 

Attention: Adam J. Palmer

 

Facsimile: (202) 347-9250

 

 

If to the Company:

Wesco Aircraft Hardware Corp.

 

27727 Avenue Scott

 

Valencia, CA 91355

 

Attention: Randy Snyder

 

(d)           This Agreement shall constitute the entire agreement between the parties with respect to the subject matter hereof, and shall supersede all previous oral and written (and all contemporaneous oral) negotiations, commitments, agreements and understandings relating hereto.

 

(e)           This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware (without giving effect to the choice of law principles therein).  Each of the parties hereto (i) consents to submit itself to the personal jurisdiction of the Court of Chancery or other courts of the State of Delaware in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from such court, (iii) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the Court of Chancery or other courts of the State of Delaware and (iv) to the fullest extent permitted by Law, consents to service being made through the notice procedures set forth in Section 8(c).  Each party hereto hereby agrees that, to the fullest extent permitted by Law, service of any process, summons,

 

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notice or document by U.S. registered mail to the respective addresses set forth in Section 8(c) shall be effective service of process for any suit or proceeding in connection with this Agreement or the transactions contemplated hereby.

 

(f)            This Agreement may be executed in two or more counterparts, and by different parties on separate counterparts.  Each set of counterparts showing execution by all parties shall be deemed an original, and shall constitute one and the same instrument.

 

(g)           The waiver by any party of any breach of this Agreement shall not operate as or be construed to be a waiver by such party of any subsequent breach.

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers or agents as set forth below.

 

 

 

CARLYLE INVESTMENT MANAGEMENT L.L.C.

 

 

 

 

 

 

 

By:

 

 

Name:  Adam J. Palmer

 

Title:  Managing Director

 

 

 

 

 

 

WESCO AIRCRAFT HOLDINGS, INC.

 

 

 

 

 

 

By:

 

 

 

Name: Gregory A. Hann

 

 

Title:  Authorized Signatory

 

 

Seen and agreed to by:

 

 

 

TC GROUP, L.L.C.

 

 

 

By: TCG Holdings, L.L.C., its Managing Member

 

 

 

 

 

By:

 

 

 

Name:  Peter J. Clare

 

Title:  Managing Director

 

 


 



Exhibit 10.20

 

WESCO AIRCRAFT HOLDINGS, INC.
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT

 

This Amended and Restated Stockholders Agreement (“ Agreement ”) is entered into as of [                    ], 2011 by and among Wesco Aircraft Holdings, Inc. (formerly known as Wesco Holdings, Inc.), a Delaware corporation (the “ Company ”), Falcon Aerospace Holdings, LLC, a Delaware limited liability company (“ Falcon ”), the trusts listed as Snyder Trusts on the signature pages hereof (the “ Snyder Trusts ”), and each other person listed as a Stockholder on the signature pages hereof or who from time to time may execute and deliver a counterpart signature page and become a party hereto.

 

RECITALS

 

WHEREAS, the Company entered into a Stockholders Agreement, dated September 29, 2006, with certain of its stockholders as of that date (the “ Original Agreement ”);

 

WHEREAS, the Company is proposing to consummate an initial public offering of its capital stock (the “ Initial Public Offering ”);

 

WHEREAS, in accordance with Section 11(j) of the Original Agreement, the Company, Falcon and the Snyder Trusts desire to amend and restate the Original Agreement in its entirety as provided herein; and

 

WHEREAS, the Company and the Stockholders desire to enter into this Agreement to provide for certain matters with respect to the ownership and transfer of the Common Stock now held of record or beneficially by, or hereafter acquired by, the Stockholders.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements set forth herein and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties hereto, intending to be legally bound, hereby agree as follows:

 

SECTION 1.          DEFINITIONS:

 

(a)            As used in this Agreement, the following terms have the following meanings set forth below.

 

Adverse Disclosure ” shall mean public disclosure of material non-public information which, in the Board of Directors’ good faith judgment, after consultation with independent outside counsel to the Company, (i) would be required to be made in any Registration Statement filed with the Commission by the Company so that such Registration Statement would not be materially misleading; (ii) would not be required to be made at such time but for the filing of such Registration Statement; and (iii) the Company has a bona fide business purpose for not disclosing publicly.

 



 

Affiliate ” means, when used with respect to a specified Person, another Person that, either directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Person specified.

 

Board of Directors ” means the board of directors of the Company.

 

Business Day ” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in New York, New York.

 

Carlyle Majority ” means Carlyle Stockholders who, in the aggregate, hold more than 51% of the Common Stock held by all Carlyle Stockholders.

 

Carlyle Management Agreement ” means that certain Management Agreement, dated as of September 29, 2006, by and between the Company and TC Group, L.L.C., as amended, restated or otherwise modified from time to time.

 

Carlyle Stockholders ” means (i) Falcon and (ii) any Affiliate of Carlyle Partners IV, L.P. or CP IV Coinvestment, L.P. which is issued Common Stock or becomes the beneficial owner of any Common Stock or is Transferred any Common Stock by any other Person.

 

Certificate of Incorporation ” means the Company’s Amended and Restated Certificate of Incorporation, including all amendments thereto, as filed with the Secretary of State of the State of Delaware as of the date hereof.

 

Common Stock ” means the common stock, par value $0.001 per share, of the Company, together with each class of security into which such common stock may be converted or for which such common stock may be exercised or exchanged.

 

Common Stock Equivalents ” means securities or rights that are convertible into or exercisable or exchangeable for (a) shares of Common Stock or (b) any other securities or rights that are convertible into or exercisable or exchangeable for, shares of Common Stock.

 

Company Sale ” means any transaction or series of transactions as a result of which one or more Affiliated Persons or a “group” of Persons (within the meaning of Section 13(d) under the Securities Exchange Act of 1934, as amended) (other than, in each case, the Stockholders and their Affiliates) acquires (i) equity securities of the Company possessing the voting power sufficient to elect a majority of the members of the Board of Directors of the Company or its successor(s) (whether such transaction is effected by merger, consolidation, recapitalization, sale or transfer of the Company’s equity or otherwise, but excluding any Exempt Transfers) or (ii) all or substantially all of the assets of the Company and its subsidiaries.

 

Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

Exempt Transfer ” means:

 

(i)             a Transfer of Common Stock by Randy Snyder, Susan Snyder, their lineal descendants, or trusts solely for the benefit of any of the foregoing to any foundation established by such Persons that qualifies as a charitable organization under Internal Revenue Code Sections 170(c), 2055(a) and 2522(a), provided that such foundation is controlled by Randy Snyder if he

 

2



 

is alive, or Susan Snyder if Randy Snyder is not alive, or Susan Snyder’s designee or legal successor if she is not alive, and the parties who control such foundation sign this Agreement on behalf of the foundation and further agree for the term of this Agreement not to Transfer any shares of Common Stock to any Person other than a return of such Common Stock to such transferor Wesco Stockholder or pursuant to Sections 4 , 5 or 7 ;

 

(ii)            a Transfer of Common Stock from a Wesco Stockholder which is a trust to the grantor or settlor of such trust or to a beneficiary of such trust provided that the transferee in any such Transfer is Randy Snyder, Susan Snyder, their lineal descendants, spouses of their lineal descendants or trusts solely for the benefit of the foregoing (collectively, the “ Snyder Family ”);

 

(iii)           a Transfer of Common Stock between or among Wesco Stockholders that are members of the Snyder Family or from a Wesco Stockholder that is a member of the Snyder Family to a trust for the sole benefit of members of the Snyder Family;

 

(iv)           a Transfer of Common Stock by any Wesco Stockholder by gift to, or for the benefit of, members of such Wesco Stockholder’s Immediate Family or one or more trusts established for the sole benefit of the transferring Wesco Stockholder or members of such Wesco Stockholder’s Immediate Family, provided that the transferring Wesco Stockholder at all times and through all subsequent Transfers (other than pursuant to Sections 4 , 5 or 7 ) retains the sole and exclusive right to vote and dispose of any Common Stock transferred to such person or trust;

 

(v)            a Transfer of Common Stock by any deceased Wesco Stockholder by will or intestate succession to such Wesco Stockholder’s heirs, executors, administrators, testamentary trustees, legatees or beneficiaries;

 

(vi)           a Transfer of Common Stock by a Wesco Stockholder to his or her spouse pursuant to a judgment or settlement related to such Wesco Stockholder’s divorce;

 

(vii)          at any time after a Qualified Public Offering, a Transfer of Common Stock by a Stockholder to the public pursuant to an effective registration statement under the Securities Act or pursuant to Rule 144 promulgated thereunder; or

 

(viii)         a Transfer to the Company with respect to which all obligations herein (including those with respect to the Tag-Along Right) have been observed and performed.

 

Notwithstanding the foregoing, (x) no Transfer shall be permitted pursuant to clauses (ii) , (iv) , (v)  and (vi)  to any of (i) the Seller Entities, (ii) the Snyder Family or (iii) any other Person who, by giving effect to such Transfer, would cause Wesco U.S. as “new target” within the meaning of Section 197(f)(9) of the Code to be related to Wesco U.S. as “old target” within the meaning of Section 197(f)(9) of the Code, without first obtaining the prior written consent of the Carlyle Majority, which may be withheld in its sole discretion if the Carlyle Majority are advised by their counsel that giving effect to the proposed Transfer, when considered together with the pre-existing stock ownership, would either cause or may create any risk that the anti-churning rules of Section 197(f)(9) of the Internal Revenue Code would apply to disallow or reduce any depreciation or amortization benefits otherwise available to Holdco, the Surviving Entity or any

 

3



 

of the Wesco Entities or any successor entities thereto, and (y) in no event shall any Transfer of Common Stock be effective (and any such attempted Transfer shall be null and void ab initio and of no further force or effect without any action of any party) if it has the effect of causing the anti-churning rules of Section 197(f)(9) of the Internal Revenue Code to disallow or reduce any depreciation or amortization benefits otherwise available to Holdco, the Surviving Entity or any of the Wesco Entities or any successor entities thereto.  Terms used in this paragraph but not defined in this Agreement shall have the meanings set forth in that certain Stock Purchase and Exchange Agreement and Agreement and Plan of Merger, dated July 23, 2006, by and among the Company, Wesco Aircraft Hardware Corp., Falcon and the other parties set forth on the signature pages thereof.

 

Governmental Authority ” means any United States, foreign, supra-national, federal, state, provincial, local or self-regulatory governmental, regulatory or administrative authority, agency, division, body, organization or commission or any judicial or arbitral body.

 

Immediate Family ” means, with respect to any natural person, (a) the spouse of such natural person and (b) such natural person’s, and his or her spouse’s, respective grandparents, parents, siblings, children or descendants, whether by blood, marriage or adoption.

 

Independent Director ” shall mean an individual that is independent within the meaning of “independent director” under the Exchange Act and the New York Stock Exchange rules or the rules of such other national securities exchange on which the Common Stock is then listed for trading.

 

IPO Date ” means the date on which the Company consummates a Qualified Public Offering.

 

Necessary Action ” shall mean, with respect to a specified result, all actions (to the extent such actions are permitted by law and, in the case of any action by the Company that requires a vote or other action on the part of the Board of Directors, to the extent such action is consistent with the fiduciary duties that the Directors may have in such capacity) necessary to cause such result, including (i) voting or providing a written consent or proxy with respect to the shares of Common Stock, (ii) causing the adoption of stockholders’ resolutions and amendments to the organizational documents of the Company, (iii) executing agreements and instruments, and (iv) making, or causing to be made, with governmental, administrative or regulatory authorities, all filings, registrations or similar actions that are required to achieve such result.

 

Parties ” means the Stockholders and the Company.

 

Permitted Transferee ” means any Person to which any Stockholder Transfers his, her or its Common Stock pursuant to an Exempt Transfer, other than a Transfer described in clause (vii ) of the definition thereof.

 

Person ” means any natural person, corporation, limited partnership, general partnership, limited liability company, joint stock company, joint venture, association, company, trust or other organization, or any Governmental Authority.

 

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Qualified Public Offering ” means an underwritten public offering of Common Stock by the Company pursuant to an effective registration statement filed by the Company with the Commission (other than on Forms S-4 or S-8 or successors to such forms) under the Securities Act, pursuant to which the aggregate offering price of the Common Stock sold in such offering is equal to or greater than $50 million.

 

Registrable Common Stock ” means the Common Stock, other than shares of Common Stock (a) sold by a Stockholder in a transaction that does not constitute an Exempt Transfer and in which the Stockholder’s rights under this Agreement are not assigned, (b) sold pursuant to an effective registration statement under the Securities Act, (c) sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof (including transactions under Rule 144, or a successor thereto, promulgated under the Securities Act) so that all transfer restrictions and restrictive legends with respect thereto, if any, are removed upon the consummation of such sale, or (d) that can be sold by the Stockholder in question within ninety (90) days in the manner described in clause (c)  above.

 

Securities Act ” means the Securities Act of 1933, as amended.

 

Shelf Registration Statement ” shall mean a Registration Statement of the Company filed with the Commission on either (i) Form S-3 (or any successor form or other appropriate form under the Securities Act) or (ii) if the Company is not permitted to file a Registration Statement on Form S-3, an evergreen Registration Statement on Form S-1 (or any successor form or other appropriate form under the Securities Act), in each case for an offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act (or any similar rule that may be adopted by the Commission) covering the shares of Registrable Common Stock, as applicable.

 

Stockholders ” means the Carlyle Stockholders and the Wesco Stockholders, collectively.

 

Third Party Purchaser ” means any Person other than a Stockholder or their Permitted Transferees who purchases or intends to purchase Common Stock from any Stockholder or their Permitted Transferees.

 

Transfer ” means sell, transfer, convey, assign, pledge, hypothecate or otherwise dispose of or encumber.

 

Vested Options ” means any options to acquire Common Stock now or hereafter issued by the Company pursuant to one or more equity or stock option plans adopted by the Board of Directors that are, at the time in question, exercisable in accordance with their terms (including any options which become exercisable as a result of or upon the consummation of any transaction giving rise to any relevant right hereunder).

 

Wesco Majority ” means Wesco Stockholders who, in the aggregate, hold more than 51% of the Common Stock held by all Wesco Stockholders.

 

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Wesco Stockholders ” means (i) Randy Snyder, Susan Snyder and trusts or foundations holding shares of Common Stock that are established by Randy Snyder or Susan Snyder or for the benefit of the Snyder Family, and in each case that are a party hereto, (ii) the other Stockholders from time to time designated as “Wesco Stockholders” on the signature pages hereto and (iii) any Permitted Transferee of the Persons listed in clause (i)  or (ii) .

 

(b)            The following terms have the meanings defined for such terms in the Sections set forth below:

 

Term

 

Section

Agreement

 

Preamble

Automatic Shelf Registration Statement

 

7(e)

Bring-Along Notice

 

4(b)

Bring-Along Right

 

4(a)

Carlyle Stockholder

 

Preamble

Commission

 

7(e)

Company

 

Preamble

Demand Registration

 

7(a)

Demand Suspension

 

7(a)

Demanding Stockholder

 

7(a)

Falcon

 

Preamble

FINRA

 

7(c)

Initial Public Offering

 

Recitals

Original Agreement

 

Recitals

Other Registering Holders

 

7(b)

Prospectus

 

7(e)

purchaser representative

 

6(a)

Registering Stockholder

 

7(b)

Registration Statement

 

7(e)

Sale Notice

 

5(b)

Snyder Trusts

 

Preamble

Stockholder

 

Preamble

Tag-Along Notice

 

5(c)

Tag-Along Right

 

5(a)

Tag-Along Stockholders

 

5(a)

Third Party Terms

 

4(b)

WKSI

 

7(e)

 

(c)            Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement; (iv) the term “Section” refers to the specified Section of this Agreement; (v) the word “including” shall mean “including, without limitation”, and (vi) the word “or” shall be disjunctive but not exclusive.

 

(d)            References to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto.

 

6



 

(e)            References to statutes shall include all regulations promulgated thereunder and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation.

 

(f)             The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against either Party.

 

SECTION 2.          BOARD OF DIRECTORS

 

(a)            Nomination .  The Board of Directors shall consist of eight (8) Directors; provided that, within one (1) year of the effective date of the registration statement relating to the Initial Public Offering, the Board of Directors shall be expanded to add an additional Independent Director and the Company and the Stockholders shall take all Necessary Actions to increase the size of the Board of Directors to add such Independent Director.  The Company will not decrease or otherwise increase the number of Directors without the consent of the Carlyle Stockholders constituting a Carlyle Majority (so long as the Carlyle Stockholders hold in the aggregate five percent (5%) or more of the then-outstanding shares of Common Stock) and the Wesco Stockholders constituting a Wesco Majority (so long as the Wesco Stockholders hold in the aggregate five percent (5%) or more of the then-outstanding shares of Common Stock).  The Company and the Stockholders shall take all Necessary Actions to cause the Board of Directors to consist of members designated as follows:

 

(i)             six (6) nominees designated by the Carlyle Stockholders constituting a Carlyle Majority (the “ Carlyle Directors ”); provided that (A) the number of Carlyle Directors to be designated by Carlyle shall be reduced to four (4) Directors at such time as the Carlyle Stockholders in the aggregate hold less than forty percent (40%) of the then-outstanding shares of Common Stock, (B) the number of Carlyle Directors to be designated by Carlyle shall be reduced to three (3) Directors at such time as the Carlyle Stockholders in the aggregate hold less than twenty five percent (25%) of the then-outstanding shares of Common Stock, (C) the number of Carlyle Directors to be designated by Carlyle shall be reduced to two (2) Directors at such time as the Carlyle Stockholders in the aggregate hold less than fifteen percent (15%) of the then-outstanding shares of Common Stock, (D) the number of Carlyle Directors to be designated by Carlyle shall be reduced to one (1) Director at such time as the Carlyle Stockholders in the aggregate hold less than ten percent (10%) of the then-outstanding shares of Common Stock and (E) the Carlyle Stockholders shall have no right to designate any members of the Board of Directors pursuant to this Section 2(a)(i)  at such time as the Carlyle Stockholders in the aggregate hold less than five percent (5%) of the then-outstanding shares of Common Stock;

 

(ii)            one (1) nominee designated by the Wesco Stockholders constituting a Wesco Majority; provided that the Wesco Stockholders shall have no right to designate any members of the Board of Directors pursuant to this Section 2(a)(ii)  at such time as the Wesco Stockholders in the aggregate hold less than five percent (5%) of the then-outstanding shares of Common Stock; and provided further , that, so long as Randy Snyder is employed by or engaged as a consultant by the Company or any of its subsidiaries, such nominee shall be Randy Snyder, and at such time as Randy Snyder is no longer employed or engaged by the

 

7



 

Company or any of its subsidiaries, such nominee must be deemed in the reasonable judgment of the Board of Directors to be qualified to serve on the board of a public company; and

 

(iii)           each additional nominee designated by the Board of Directors or a committee designated by the Board of Directors.

 

The Company shall cause the individuals designated in accordance with Section 2(a)  to be nominated for election to the Board of Directors, shall solicit proxies in favor thereof, and at each meeting of the stockholders of the Company at which directors of the Company are to be elected, shall recommend that the stockholders of the Company elect to the Board of Directors each such individual nominated for election at such meeting.

 

(b)        Voting Agreement .  At each election of Directors held after the date hereof (or each written consent in lieu thereof), each Stockholder agrees to vote all shares of Common Stock entitled to vote in the election of directors owned or held of record by such Stockholder, and to take any other Necessary Actions, to elect (or to execute such written consent consenting to the election of) the nominees designated pursuant to subsection (a)  above.  The voting agreements contained herein are coupled with an interest and may not be revoked or amended except as set forth in this Agreement.

 

(c)        Removal .  If Stockholders representing a Carlyle Majority or a Wesco Majority, as the case may be, provide written notice to each other Stockholder entitled to vote in the election of Directors indicating that such Stockholders desire to remove a Director previously designated by a Carlyle Majority or Wesco Majority, as the case may be, then such Director shall be removed, and each Stockholder hereby agrees to vote all shares of Common Stock owned or held of record by such Stockholder to effect such removal.  Notwithstanding the foregoing, no Director designated by a Carlyle Majority or a Wesco Majority shall be removed, with or without cause, without the prior written consent of a Carlyle Majority or a Wesco Majority, respectively.

 

(d)        Vacancies .  If a vacancy is created on the Board of Directors at any time by the death, disability, retirement, resignation or removal (with or without cause) of a Director nominated pursuant to Sections 2(a)(i)  or 2(a)(ii) , the Carlyle Majority or the Wesco Majority, as the case may be, who previously designated such Director shall be entitled to designate a replacement Director to fill such vacancy (subject to any consent rights set forth in subsection (a)(iii)  above), and each Stockholder then entitled to vote in the election of Directors hereby agrees to vote all voting shares of Common Stock owned or held of record by it for the individual designated to fill such vacancy by the Carlyle Majority or Wesco Majority, as the case may be; provided , that such designee may not previously have been a Director who was removed for cause.

 

SECTION 3.          PROHIBITIONS ON TRANSFERS

 

Except as approved by the Carlyle Majority and the Wesco Majority, no Wesco Stockholder shall Transfer or enter into any binding commitment to Transfer any shares of Common Stock except (i) in compliance with the terms of Sections 4 , 5 or 7 hereof or (ii) pursuant to an Exempt Transfer.  It shall be a condition to any Transfer pursuant to the preceding clause (ii)

 

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that (a) the Permitted Transferee (and any trustee(s) of any trust that is a Permitted Transferee) shall agree to become a party to this Agreement as a “Stockholder” for all purposes hereof and shall complete, execute and deliver to the Company a signature page in the form attached as Exhibit A hereto acknowledging that such Permitted Transferee agrees to be bound by the terms hereof (except in the case of a Transfer of Common Stock pursuant to a transaction set forth in clause (v)  or (vii)  of the definition of Exempt Transfer) and (b) such Transfer is either exempt from the registration requirements of the Securities Act and the applicable securities laws of any state or that such registration requirements have been complied with.  Any attempted Transfer of any Common Stock not in accordance with the provisions of this Section 3 shall be null and void and neither the Company nor any transfer agent of such Common Stock shall give any effect to such attempted Transfer in violation hereof.

 

SECTION 4.          BRING-ALONG RIGHTS

 

(a)            In connection with any proposed Company Sale, the Carlyle Stockholders shall have the right (a Bring-Along Right ”), but not the obligation, to cause all, but not less than all, Wesco Stockholders to tender for purchase to the Third Party Purchaser in such Company Sale, a number of shares of Common Stock (including Common Stock issuable upon exercise of Vested Options) equaling the amount derived by multiplying (i) the total number of shares of Common Stock proposed to be purchased by the Third Party Purchaser by (ii) a fraction, the numerator of which is the total number of shares of Common Stock held by such Wesco Stockholder (which shall, for the purpose of this Section 4(a) , be deemed to include all Common Stock issuable upon exercise of all Vested Options held by such Wesco Stockholder and any restricted shares of Common Stock held by such Wesco Stockholder) and the denominator of which is the total number of then outstanding shares of Common Stock (which shall, for the purpose of this Section 4(a) , be deemed to include all Common Stock issuable upon exercise of all Vested Options then outstanding and all restricted shares of Common Stock then outstanding).

 

(b)            Any Carlyle Stockholder that elects to exercise its Bring-Along Right shall so notify each of the Wesco Stockholders pursuant to a written notice (each, a “ Bring-Along Notice ”) delivered to the Wesco Stockholders at least twenty (20) Business Days prior to the date on which the Carlyle Stockholder expects the proposed Company Sale that triggered such Bring-Along Right to be consummated.  Each Bring-Along Notice shall set forth: (i) the name of the Third Party Purchaser and the amount of Common Stock proposed to be purchased by such Third Party Purchaser, (ii) the proposed amount and form of consideration and the terms and conditions of payment offered by the Third Party Purchaser and a summary of any other material terms pertaining to the Transfer (“ Third Party Terms ”), together with a copy of any written documents constituting the offer or proposal of the Third Party Purchaser and (iii) the number of shares of Common Stock and/or Vested Options that such Wesco Stockholder is required to sell pursuant to the Bring-Along Right; provided however , that the aggregate consideration payable for Vested Options sold to a Third Party Purchaser pursuant to the Bring-Along Right shall be (i) the aggregate consideration payable with respect to the Common Stock issuable upon exercise of such Vested Options, minus (ii) the aggregate exercise price payable upon the exercise of such Vested Options.  The terms and conditions applicable to such purchase and sale of any shares of Common Stock and Vested Options purchased from any Wesco Stockholder pursuant to this Section 4 shall otherwise be the same

 

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as the terms and conditions applicable to such Carlyle Stockholders, including the timing of purchase, sale and payment.

 

(c)            Upon the receipt of a Bring-Along Notice, each Stockholder shall be obligated to sell the number of shares of Common Stock and Vested Options required to be sold by such Stockholder as set forth in the Bring-Along Notice on the Third Party Terms, on the terms and subject to the conditions generally applicable to all Stockholders selling to the Third Party Purchaser in connection with such transaction(s) and subject to the consummation of such transaction(s) in accordance with their terms.

 

(d)            At the closing of the Transfer to any Third Party Purchaser pursuant to this Section 4 , the Third Party Purchaser shall remit to each Stockholder the consideration for the Common Stock and Vested Options to be sold by such Stockholder (less any portion of the consideration to be escrowed or otherwise held back in accordance with the Third Party Terms; provided , however , that such escrow or hold back is pro rata among all Stockholders and other parties selling securities in such transaction), against delivery by such Stockholder of the certificates (if any) representing such Common Stock, duly endorsed for Transfer or with duly executed stock powers or similar instruments, and such other instruments of Transfer or acknowledgments of cancellation of any Vested Options to be sold by such Stockholder, in each case, as may be reasonably requested by the Third Party Purchaser and the Company, and the compliance by such Stockholder with any other conditions to closing generally applicable to all Stockholders selling Common Stock in such transaction; provided , no such condition shall require such Stockholder to undertake or agree to bear joint and several liability with any other party thereto or to bear more than such Stockholder’s proportionate share of any indemnification obligations.

 

SECTION 5.          TAG-ALONG RIGHTS

 

(a)            In the event that a Carlyle Stockholder proposes to Transfer all or any portion of the Common Stock then held by such Carlyle Stockholder to a Third Party Purchaser, other than pursuant to an Exempt Transfer, each of the Snyder Trusts and their respective Permitted Transferees (collectively, the “ Tag-Along Stockholders ”) shall have the right (the “ Tag-Along Right ”) to sell in their discretion up to the same percentage of such Tag-Along Stockholder’s Common Stock as all Carlyle Stockholders are proposing to sell in such a transaction by requesting that such Third Party Purchaser purchase from such Tag-Along Stockholder up to the number of shares of Common Stock equal to the number derived by multiplying (i) the total number of shares of Common Stock that the proposed Third Party Purchaser(s) have agreed or committed to purchase by (ii) a fraction, the numerator of which is the total number of shares of Common Stock owned by such Tag-Along Stockholder (other than shares issuable upon the exercise of Vested Options of such Tag-Along Stockholder, but including unvested restricted shares of Common Stock held by such Stockholder if the proposed Transfer would constitute a Company Sale and including any shares to be issued upon any exercise of Vested Options conditioned upon the consummation of the Transfer), and the denominator of which is the total number of shares of Common Stock then outstanding (other than shares issuable upon the exercise of then-outstanding Vested Options, but including unvested restricted shares of Common Stock then outstanding if the proposed Transfer would constitute a Company Sale and including any shares issuable upon the exercise of Vested Options conditioned upon the

 

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consummation of such Transfer).  Any shares of Common Stock purchased from Tag-Along Stockholders pursuant to this Section 5(a) shall be purchased upon the same terms and conditions (including timing of purchase and payment) as such proposed Transfer by such Carlyle Stockholder.

 

(b)            If any Carlyle Stockholder proposes to make a Transfer triggering the Tag-Along Right, such Carlyle Stockholder shall send a written notice (each, a “ Sale Notice ”) to all of the Snyder Trusts and their respective Permitted Transferees at least twenty (20) Business Days prior to the date on which such Carlyle Stockholder expects to consummate such Transfer.  Each Sale Notice shall set forth the Third Party Terms applicable to the proposed Transfer, the maximum number of shares of Common Stock the Wesco Stockholder to whom the Sale Notice is delivered is entitled to sell pursuant to the Tag-Along Right and the anticipated closing date of the Transfer, and shall be accompanied by a copy of any written documents reflecting the terms and conditions agreed to by the Carlyle Stockholder and the Third Party Purchaser.

 

(c)            Each Tag-Along Stockholder that desires to exercise the Tag-Along Right shall deliver a written notice (each, a “ Tag-Along Notice ”) to that effect to the Carlyle Stockholder proposing to sell Common Stock within ten (10) Business Days following receipt of the Sale Notice from such Carlyle Stockholder.  The Tag-Along Notice shall state the number of shares of Common Stock (not to exceed the amount determined in accordance with Section 5(a) ) that such Tag-Along Stockholder proposes to include in such Transfer to the Third Party Purchaser, and shall constitute the Tag-Along Stockholder’s binding agreement to sell its shares on the terms and subject to the conditions as are specified in or accompany the Sale Notice.  If the Third Party Purchaser does not purchase the specified number of shares of Common Stock from the Tag-Along Stockholders on the same terms and conditions as specified in the Sale Notice and at the same time as the Third Party Purchaser purchases Common Stock from such Carlyle Stockholder, then such Carlyle Stockholder shall not be entitled to sell any shares of Common Stock to the proposed Third Party Purchaser in the proposed Transfer unless such Carlyle Stockholder or its designee substantially concurrently purchases from each such Tag-Along Stockholder the number of shares of Common Stock of such Tag-along Stockholder as is specified in the Tag-Along Notice, on the Third Party Terms.

 

(d)            At the closing of the Transfer to any Third Party Purchaser pursuant to this Section 5 , the Third Party Purchaser shall remit to each Tag-Along Stockholder the consideration for the Common Stock of such Tag-Along Stockholder sold pursuant hereto (less any such consideration to be escrowed or otherwise held back in accordance with the Third Party Terms; provided , however , that such escrow or hold back is pro rata among all sellers of Common Stock participating in such transaction), against delivery by such Tag-Along Stockholder of certificates (if any) representing such Common Stock, duly endorsed for Transfer or with duly executed stock powers or similar instruments, or such other instrument of Transfer of such Common Stock as may be reasonably requested by the Third Party Purchaser and the Company, and the compliance by such Stockholder with any other conditions to closing generally applicable to all Stockholders selling Common Stock in such transaction; provided that no such condition shall require such Stockholder to undertake or agree to bear joint and several liability with any other party thereto or to bear more than such Stockholder’s proportionate share of any indemnification obligations.

 

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(e)            If any Transfer described in a Tag-Along Notice has not been consummated in accordance with the terms set forth in the Tag-Along Notice within one hundred and eighty (180) days after the expiration of the ten (10) Business Day election period specified in Section 5(c) , or if the terms of such proposed Transfer have been modified in any material respect from those set forth in the Tag-Along Notice, such Transfer may not be completed without first providing a new Tag-Along Notice to the Snyder Trusts and their respective Permitted Transferees and allowing another opportunity for such Stockholders to elect to exercise their Tag-Along Right set forth in this Section 5 .

 

SECTION 6.          COOPERATION

 

(a)            If the Company or any Carlyle Stockholder enters into any negotiation with respect to any transaction which could give rise to the issuance of Securities (as defined in the Securities Act) to a Stockholder for which Rule 506 (or any similar rule then in effect) promulgated under the Securities Act may be available, each such Stockholder shall, if requested by the Company, appoint for such Stockholder a “ purchaser representative ” (as such term is defined in Rule 501 of the Securities Act) reasonably acceptable to the Company to advise such Stockholder in connection with such transaction.  If such purchaser representative is designated by the Company, the Company shall pay the fees and expenses of such purchaser representative, but if any Stockholder appoints another purchaser representative, such Stockholder shall be responsible for the fees and expenses of the purchaser representative so appointed.

 

(b)            Subject to Section 7(d) , each of the Stockholders agrees that in any transaction in which such Stockholder sells some or all of the Common Stock and/or Vested Options held by such Stockholder (pursuant to this Agreement or otherwise, and whether structured as a sale of equity, merger, recapitalization, sale of assets or otherwise), such Stockholder shall bear his, her or its pro-rata portion of the costs of such transaction (based upon the percentage that the number of shares of Common Stock that are sold for such Stockholder in such transaction bears to the total number of shares of Common Stock that are sold in such transaction) to the extent such costs are incurred for the benefit of all holders of Common Stock and are not otherwise paid by the Company or the acquiring party.

 

(c)            If any action by the Wesco Stockholders is required in connection with any transaction giving rise to a Tag-Along Right or a Bring-Along Right, a Qualified Public Offering or any Company Sale, each Wesco Stockholder shall take such actions as may be reasonably requested by the Company or the Carlyle Stockholders in connection therewith, so long as the Company and the Carlyle Stockholders are then in compliance with the terms of this Agreement and the Carlyle Stockholders take the same or equivalent action as is being requested of the Wesco Stockholders.  Without limiting the generality of the foregoing, each Wesco Stockholder agrees that he, she or it (i) shall consent to and raise no objections against such transaction, (ii) shall execute any Common Stock purchase agreement, merger agreement or other agreement in reasonably customary form entered into with the Third Party Purchaser with respect to such transaction memorializing the definitive Third Party Terms of such transaction and any ancillary agreement with respect thereto, so long as such agreements do not place disproportionate costs, expenses, risks or potential liability on the Wesco Stockholders as compared to any other Stockholders, (iii) shall vote the Common Stock held by such Wesco

 

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Stockholder in favor of such transaction, (iv) shall use its reasonable best efforts to cause its Director nominee to vote in favor of such transaction (including without limitation by removal or replacement of any such Director) and (v) shall refrain from the exercise of dissenters’ appraisal rights with respect to such transaction.

 

SECTION 7.          REGISTRATION RIGHTS

 

(a)            Demand Registrations .

 

(i)             The Carlyle Stockholders shall have the right on any six (6) occasions, and the Snyder Trusts (and their Permitted Designees) shall have the right on any two (2) occasions, to make a written request to the Company for registration with the Commission, under and in accordance with the provisions of the Securities Act, of all or part of the Common Stock held of record and beneficially by such Stockholder (a “ Demand Registration ” and the Stockholder exercising such right, the “ Demanding Stockholder ”).  The Demanding Stockholder may request that the Company register such Common Stock on an appropriate form, including a Shelf Registration Statement and, if the Company is a WKSI, an automatic shelf registration statement.  Within thirty (30) days after receipt of a request for a Demand Registration, the Company shall file a registration statement relating to such Demand Registration (a “ Demand Registration Statement ”) and shall use its best efforts to cause such Demand Registration Statement to promptly (but in any event within 180 days of receipt of the written request for a Demand Registration) be declared effective under the Securities Act; provided that, to the extent the Company will be a WKSI at the time such Demand Registration Statement is filed with the Commission, the Company shall file such Demand Registration Statement within five (5) business days after receipt of a request for a Demand Registration.  The Company shall not be obligated to file a Demand Registration Statement under this Section 7(a) unless the aggregate purchase price of the securities to be included in the requested Demand Registration (determined by reference to the offering price on the cover of the registration statement proposed to be filed) is greater than $25,000,000.

 

(ii)            If any Demand Registration is an underwritten registration and the managing underwriter or underwriters determine that the aggregate amount of securities proposed to be sold in such Demand Registration exceeds the maximum amount of securities that may be sold without having a material adverse effect on the success of the offering, including without limitation the selling price and other terms of such offering, the Company will include in such registration, (i)  first , the number of securities requested by the Demanding Stockholder to be included in such Demand Registration that, in the opinion of such managing underwriter(s), can be sold and (ii)  second , only if all securities referred to in clause (i) have been included in such Demand Registration, any other securities eligible for inclusion in such Demand Registration.

 

(iii)           If the filing, initial effectiveness or continued use of a Demand Registration Statement at any time would require the Company to make an Adverse Disclosure, the Company may, upon giving prompt written notice of such action to the Demanding Stockholder(s), delay the filing or initial effectiveness of, or suspend use of, the Demand Registration Statement (a “ Demand Suspension ”); provided however , that the Company shall not be permitted to exercise a Demand Suspension (i) more than once during

 

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any twelve (12) month period or (ii) for a period exceeding thirty (30) days on any one occasion.  In the case of a Demand Suspension, the Stockholders agree to suspend use of the applicable Prospectus in connection with any sale or purchase, or offer to sell or purchase, Registrable Common Stock, upon receipt of the notice referred to above.  The Company shall immediately notify the Demanding Stockholder(s) upon the termination of any Demand Suspension, amend or supplement the Prospectus, if necessary, so it does not contain any untrue statement or omission and furnish to the Demanding Stockholder(s) such numbers of copies of the Prospectus as so amended or supplemented as the Demanding Stockholder(s) may request.  The Company agrees, if necessary, to supplement or make amendments to the Demand Registration Statement, if required by the registration form used by the Company for the Demand Registration or by the instructions applicable to such registration form or by the Securities Act or the rules or regulations promulgated thereunder or as may be requested by the Demanding Stockholder(s).

 

(b)            Piggyback Registrations .  If the Company at any time after the IPO Date proposes to register under the Securities Act any shares of Common Stock or any Common Stock Equivalents (other than in connection with a Demand Registration pursuant to Section 7(a) ), whether or not for sale for its own account, on a form and in a manner which would permit registration of the Common Stock held by a Stockholder for sale to the public under the Securities Act, the Company shall give written notice of the proposed registration to each Stockholder not later than thirty (30) days prior to the filing thereof.  Each Stockholder shall have the right to request that all or any part of his or its Registrable Common Stock be included in such registration.  Each Stockholder can make such a request by giving written notice to the Company within ten (10) Business Days (or, if the Company is a WKSI at such time, five (5) Business Days) after the giving of such notice by the Company (any Stockholder giving the Company a notice requesting that the Registrable Common Stock owned by it be included in such proposed registration being hereinafter referred to in this Section 7 as a “ Registering Stockholder ”); provided however , that if the registration is an underwritten registration and the managing underwriters of such offering determine that the aggregate amount of securities of the Company which the Company, all Registering Stockholders and all other stockholders of the Company entitled to register securities on a pari passu basis with the Registering Stockholders in connection with such offering (“ Other Registering Holders ”) propose to include in such registration statement exceeds the maximum amount of securities that may be sold without having a material adverse effect on the success of the offering, including without limitation the selling price and other terms of such offering, the Company will include in such registration, (i)  first , the securities which the Company proposes to sell, (ii)  second , the Common Stock of any holders with registration rights that are senior to the rights of the Registering Stockholders hereunder and (iii)  third , the Registrable Common Stock of such Registering Stockholders and the Registrable Common Stock to be sold for the account of Other Registering Holders pro rata among all such Registering Stockholders and any such Other Registering Holders, taken together, on the basis of the relative percentage of Registrable Common Stock owned by all Registering Stockholders and such Other Registering Holders who have requested that securities owned by them be so included (it being further agreed and understood, however, that such underwriters shall have the right to eliminate entirely the participation of the Registering Stockholders in such registration if such underwriters eliminate entirely the participation in such registration of all such Other Registering Holders).

 

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Registrable Common Stock proposed to be registered and sold pursuant to an underwritten offering for the account of any Registering Stockholder shall be sold to the prospective underwriters selected or approved by the Company and on the terms and subject to the conditions of one or more underwriting agreements negotiated between the Company and the prospective underwriters.  The Company may withdraw any registration statement at any time before it becomes effective, or postpone or terminate the offering of securities, without obligation or liability to any Registering Stockholder.

 

(c)            Holdback Agreements .  Notwithstanding any other provision of this Section 7 , each Stockholder agrees that he, she or it will not (and it shall be a condition to the rights of each Stockholder under this Section 7 that such Stockholder does not) offer for public sale any Common Stock during a period not to exceed sixty (60) days prior to and one-hundred and eighty (180) days (but subject to extension as may be required to comply with Rule 2711 of the Financial Industry Regulatory Authority (“ FINRA ”)) after the effective date of any registration statement filed by the Company in connection with an underwritten public offering (except as part of such underwritten registration or as otherwise permitted by such underwriters), but only if so required by the underwriters in an underwritten offering and if each Carlyle Stockholder participating in the offering also agrees to and does comply with such requirement.

 

(d)            Expenses .  Except as otherwise required by state securities or blue sky laws or the rules and regulations promulgated thereunder, all expenses, disbursements and fees incurred by the Company and the Stockholders in connection with any registration under this Section 7 shall be borne by the Company (including the fees and expenses of one legal firm to represent the Stockholders participating in any such registration), except that the following expenses shall be borne by the Stockholder incurring the same:  (i) the costs and expenses of counsel to such Stockholder to the extent such Stockholder retains its own independent counsel; (ii) discounts, commissions, fees or similar compensation owing to underwriters, selling brokers, dealer managers or other reasonable compensation paid to other industry professionals, to the extent relating to the distribution or sale of such Stockholder’s securities; (iii) transfer taxes with respect to the securities sold by such Stockholder; and (iv) other expenses incurred by such Stockholder and incidental to the sale and delivery of the securities to be sold by such Stockholder.

 

(e)            Registration Procedures .  In connection with any registration of Registrable Common Stock under the Securities Act pursuant to this Agreement, the Company will consult with each Registering Stockholder whose Common Stock is to be included in any such registration concerning the form of underwriting agreement (and shall provide to such Registering Stockholder the form of underwriting agreement prior to the Company’s execution thereof) and shall provide to such Registering Stockholder and its representatives such other documents (including correspondence with the Securities and Exchange Commission (the “ Commission ”) with respect to the registration statement and the related securities offering) as such Registering Stockholder shall reasonably request in connection with its participation in such registration.  The Company will furnish each Registering Stockholder whose Registrable Common Stock is registered thereunder and each underwriter, if any, with a copy of the registration statement and all amendments thereto and will supply each such Registering Stockholder and each underwriter, if any, with copies of any prospectus forming a part of such registration statement (including a preliminary prospectus and all amendments and

 

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supplements thereto, the “ Prospectus ”), in such quantities as may be reasonably requested for the purposes of the proposed sale or distribution covered by such registration.  The Company shall not, however, be required to maintain the registration statement effective or to supply copies of a prospectus for a period beyond (i) ninety (90) days after the effective date of such registration statement, in the case of a firm commitment, underwritten public offering or (ii) one hundred and eighty (180) days after the effective date of such registration statement, if the public offering is not firmly underwritten (or such lesser time as may be necessary for the selling stockholders to sell the registered shares under the effective registration statement) and, at the end of such period, the Company may deregister any securities covered by such registration statement and not then sold or distributed; provided , however , that such ninety (90) day and one hundred and eighty (180) day periods shall be tolled for any period during which the Registering Stockholders participating in the registration are unable to (or requested by the Company or the underwriter not to) sell their Registrable Common Stock due to some defect or omission in the registration statement or as a result of any stop order issued, or any action, investigation or proceeding undertaken by the Commission or any applicable Governmental Authority.  In the event that the Company prepares and files with the Commission a registration statement on any appropriate form under the Securities Act (a “ Registration Statement ”) providing for the sale of Registrable Common Stock held by any Registering Stockholder pursuant to its obligations under this Section 7 , the Company will:

 

(i)             upon filing a Registration Statement or any Prospectus related thereto, furnish to the Registering Stockholders whose Registrable Common Stock are covered by such Registration Statement and the underwriters, if any, copies of all such documents;

 

(ii)            prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period referenced in subparagraph (d)  above; cause the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement or supplement to such Prospectus;

 

(iii)           promptly notify the Registering Stockholders and the managing underwriters, if any, and (if requested by any such Person) confirm such advice in writing, (A) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (B) of any request by the Commission or any state securities commission for amendments or supplements to a Registration Statement or related Prospectus or for additional information, (C) of the issuance by the Commission or any state securities commission of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of any of the Registrable Common Stock for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, and (E) of the existence of any fact which results in a Registration Statement, a

 

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Prospectus or any document incorporated therein by reference containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein not misleading;

 

(iv)           use its reasonable best efforts to promptly obtain the withdrawal of any order suspending the effectiveness of a Registration Statement;

 

(v)            if requested by the managing underwriters or a Registering Stockholder, promptly incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriters or the Registering Stockholders holding a majority of the Registrable Common Stock being sold by Registering Stockholders agree should be included therein relating to the sale of such Registrable Common Stock, including without limitation information with respect to the amount of Registrable Common Stock being sold to such underwriters, the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten (or best efforts underwritten) offering of the Registrable Common Stock to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment;

 

(vi)           furnish to such Registering Stockholder and each managing underwriter at least one signed copy of the Registration Statement and any post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference);

 

(vii)          deliver to such Registering Stockholders and the underwriters, if any, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such persons or entities may reasonably request;

 

(viii)         prior to any public offering of Registrable Common Stock, register or qualify or cooperate with the Registering Stockholders, the underwriters, if any, and their respective counsel in connection with the registration or qualification of such Registrable Common Stock for offer and sale under the securities or blue sky laws of such jurisdictions within the United States as any Registering Stockholder or underwriter reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Common Stock covered by the applicable Registration Statement; provided however , that the Company will not be required to qualify generally to do business in any jurisdiction where it is not then so required to be qualified or to take any action which would subject it to general service of process or taxation in any such jurisdiction where it is not then so subject;

 

(ix)            cooperate with the Registering Stockholders and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Common Stock to be sold pursuant to such Registration Statement and not bearing any restrictive legends, and enable such Registrable Common Stock to be in such denominations and registered in such names as the managing

 

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underwriters may request at least two Business Days prior to any sale of Registrable Common Stock to the underwriters;

 

(x)             if any fact described in subparagraph (iii)(E)  above exists, promptly prepare and file with the Commission a supplement or post-effective amendment to the applicable Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Common Stock being sold thereunder, such Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading;

 

(xi)            cause all Registrable Common Stock covered by the Registration Statement to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed;

 

(xii)           provide a CUSIP number for all Registrable Common Stock included in such Registration Statement, not later than the effective date of the applicable Registration Statement;

 

(xiii)          enter into such agreements (including an underwriting agreement in form reasonably satisfactory to the Company) and take all such other reasonable actions in connection therewith in order to expedite or facilitate the disposition of such Registrable Common Stock;

 

(xiv)         make available for inspection by a representative of the Registering Stockholders whose Registrable Common Stock is being sold pursuant to such Registration Statement, any underwriter participating in any disposition pursuant to a Registration Statement, and any attorney or accountant retained by such Registering Stockholders or underwriter, all financial and other records and any pertinent corporate documents and properties of the Company reasonably requested by such representative, underwriter, attorney or accountant in connection with such Registration Statement; provided however , that any records, information or documents that are designated by the Company in writing as confidential shall be kept confidential by such persons or entities unless disclosure of such records, information or documents is required by court or administrative order; and

 

(xv)          otherwise use reasonable best efforts to comply with all applicable rules and regulations of the Commission and relevant state securities commissions, and make generally available to the Registering Stockholders earning statements satisfying the provisions of Section 11(a) of the Securities Act no later than forty-five (45) days after the end of any 12-month period (or ninety (90) days, if such period is a fiscal year) commencing at the end of any fiscal quarter in which Registrable Common Stock of such Registering Stockholder is sold to underwriters in an underwritten offering, or, if not sold to underwriters in such an offering, beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of a Registration Statement, which statements shall cover said 12-month period.

 

18



 

To the extent the Company is a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) (a “ WKSI ”) at the time any Demand Registration is submitted to the Company, and such Demand Registration requests that the Company file an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) (an “ Automatic Shelf Registration Statement ”) on Form S-3, the Company shall file an Automatic Shelf Registration Statement which covers those shares of Registrable Common Stock which are requested to be registered.  If the Company does not pay the filing fee covering the shares of Registrable Common Stock at the time the Automatic Shelf Registration Statement is filed, the Company agrees to pay such fee at such time or times as the shares of Registrable Common Stock are to be sold.  If the Automatic Shelf Registration Statement has been outstanding for at least three (3) years, at the end of the third year the Company shall refile a new Automatic Shelf Registration Statement covering the shares of Registrable Common Stock.  If at any time when the Company is required to re-evaluate its WKSI status the Company determines that it is not a WKSI, the Company shall use its reasonable best efforts to refile the Automatic Shelf Registration Statement on Form S-3 and, if such form is not available, Form S-1 and keep such registration statement effective during the period during which such registration statement is required to be kept effective.

 

(f)             Conditions to Stockholder Rights; Indemnification by Stockholder .  It shall be a condition of each Registering Stockholder’s rights hereunder to have Registrable Common Stock owned by it registered that:

 

(i)             such Registering Stockholder shall cooperate with the Company in all reasonable respects by supplying information and executing documents relating to such Registering Stockholder or the securities of the Company owned by such Registering Stockholder to the extent required to be included in any public filing required to be made with the Commission in connection with such registration;

 

(ii)            such Registering Stockholder shall enter into such undertakings and take such other action relating to the conduct of the proposed offering which the Company or the underwriters may reasonably request as being necessary to ensure compliance with federal and state securities laws and the rules or other requirements of FINRA or otherwise to effectuate the offering, provided that the Carlyle Stockholders do the same; and

 

(iii)           such Registering Stockholder shall execute and deliver an agreement to indemnify and hold harmless the Company and each underwriter (as defined in the Securities Act), and each person or entity, if any, who controls such underwriter within the meaning of the Securities Act, against such losses, claims, damages or liabilities (including reimbursement for legal and other expenses) to which such underwriter or controlling person or entity may become subject under the Securities Act or otherwise, in such manner as is customary for registrations of the type then proposed and, in any event, at least equivalent in scope to indemnities given by the Company in connection with such registration, but only with respect to information furnished in writing by such Registering Stockholder in its capacity as a Registering Stockholder specifically for use in the Registration Statement or Prospectus in connection with such registration and with respect to such Registering Stockholder’s failure to deliver Prospectuses as required

 

19



 

under the Securities Act; provided however , that in no event shall such obligation require any Registering Stockholder to agree to provide indemnification in excess of the net amount of proceeds from the sale of shares of Registrable Common Stock that are actually received by such Registering Stockholder.

 

(g)            Indemnification by Company .  In the event of any registration under the Securities Act of any Registrable Common Stock of Registering Stockholders pursuant to this Section 7 , the Company shall execute and deliver an agreement in customary scope and substance to indemnify and hold harmless each Registering Stockholder disposing of such Registrable Common Stock and any underwriter participating in such disposition against such losses, claims, damages or liabilities (including reimbursement for legal and other expenses) to which such Registering Stockholder and any such underwriter may become subject under the Securities Act or otherwise, in such manner as is customary in underwriting agreements for registrations of the type then proposed.

 

(h)            Rule 144 .  The Company covenants that it will timely file all periodic and current reports required to be filed by it under the Securities Act and the Exchange Act, and the rules and regulations adopted by the Commission thereunder, such that at all times while the Company is subject to such filing and reporting requirements, the requirement of Rule 144 that adequate information regarding the Company be publicly available through the making of such requisite filings shall at all time be satisfied.  Upon the request of any Registering Stockholder, the Company will deliver to such Registering Stockholder a written statement confirming that it has complied with such requirements and any such other statements and information as reasonably may be requested by the Stockholder in determining the availability of Rule 144 to such Stockholder.

 

(i)             Priority .  Without the prior written consent of a Carlyle Majority and a Wesco Majority, the Company shall not grant any Stockholder registration rights that are prior in right to the registration rights granted to the Stockholders hereunder.  Subject to the foregoing and notwithstanding any other provision of this Section 7 , the Company may, without the consent of the Parties, grant registration rights senior to the rights of the Parties pursuant to this Section 7 in connection with any bona fide investment or financing transaction negotiated at arm’s length by the Company.

 

SECTION 8.          MISCELLANEOUS

 

(a)            Legends .  All certificates representing shares of Common Stock issued to or acquired by any of the Stockholders prior to the execution of this Agreement bear the following legend:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF.”

 

20


 

“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN A STOCKHOLDERS AGREEMENT BETWEEN THE ISSUER AND THE INITIAL HOLDER HEREOF DATED AS OF SEPTEMBER 29, 2006. A COPY OF SUCH AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

 

Upon the execution of this Agreement, in addition to any other legend that the Company may deem advisable under the Securities Act and applicable state securities laws, all certificates, if any, representing shares of capital stock of the Company issued by the Company to any of the Stockholders shall bear the following legend, and the shares represented by such certificates shall be subject to the applicable provisions of this Agreement:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF.”

 

“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN AN AMENDED AND RESTATED STOCKHOLDERS AGREEMENT BETWEEN THE ISSUER AND THE INITIAL HOLDER HEREOF DATED AS OF [                    ], 2011. A COPY OF SUCH AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

 

(b)            Successors, Assigns and Transferees .  This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective legal representatives, heirs, legatees, successors, and permitted assigns (including, without limitation, successors to the Company, whether by merger or otherwise) and any other transferee of the Common Stock and shall also apply to any Common Stock acquired by the Stockholders after the date hereof.

 

(c)            Specific Performance .  Each Party, in addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, shall be entitled to specific performance of each other Party’s obligations under this Agreement. The Company, the Carlyle Stockholders and the Wesco Stockholders agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by any of them of the provisions of this Agreement and each hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

 

21



 

(d)            Governing Law .  This Agreement shall be governed by and construed in accordance with the internal laws, and not the law of conflicts, of the State of Delaware.

 

(e)            Interpretation .  The headings of the Sections contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not affect the meaning or interpretation of this Agreement.

 

(f)             Notices .  All notices and other communications provided for or permitted hereunder shall be in writing and shall be deemed to have been duly given and received when delivered by overnight courier or hand delivery, when sent by telecopy, or five days after mailing if sent by registered or certified mail (return receipt requested) postage prepaid, to the Parties at the following addresses (or at such other address for any Party as shall be specified by like notices, provided that notices of a change of address shall be effective only upon receipt thereof).

 

If to the Company, at:

 

Wesco Aicraft Holdings, Inc.
27727 Avenue Scott
Valencia, California 91355
Telecopier:  (661) 295-1340
Attention:  Randy Snyder

 

With a copy to Falcon, at the address given below.

 

If to Falcon, at:

 

Carlyle Partners IV, L.P.
c/o TC Group, L.L.C.

1001 Pennsylvania Avenue, NW

Suite 220 South

Washington, DC 20004-2505

Telecopier:  (202) 347-9250

Attention:  Adam J. Palmer


If to the Snyder Family, to:

 

Wesco Aircraft Holdings, Inc.
27727 Avenue Scott
Valencia, California 91355
Telecopier:  (661) 295-1340
Attention:  Randy Snyder

 

Or such other address for a trustee as may be specified on the signature page(s) hereto.

 

If to any other Stockholders, to the address set forth on the signature pages hereto.

 

22



 

(g)            Recapitalization, Exchange, Etc. Affecting the Company’s Equity Securities .  The provisions of this Agreement shall apply, to the full extent set forth herein, with respect to any and all Common Stock of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets, conversion to a corporation or otherwise) that may be issued in respect of, in exchange for, or in substitution of, the Common Stock and shall be appropriately adjusted for any dividends, splits, reverse splits, combinations, recapitalizations, and the like occurring after the date hereof.  This Agreement shall also apply to any Common Stock acquired by the Stockholders at any time hereafter, whether as a result of exercising Vested Options, the vesting of restricted stock or otherwise without any further action by such Stockholder.  Notwithstanding the foregoing, or any other provision contained herein, this Agreement will terminate upon consummation of a Company Sale.

 

(h)            Counterparts .  This Agreement may be executed by facsimile signature and in two or more counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to constitute one and the same agreement.

 

(i)             Severability .  In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal, or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby.

 

(j)             Amendment .  This Agreement may be amended and any provision hereof waived only by written document signed by each of the Parties; provided , however , that (i) a Wesco Majority may agree to amend this Agreement or grant a waiver of any term hereof on behalf of all Wesco Stockholders to the extent their rights and obligations are not disproportionately adversely affected relative to those of such Wesco Majority and (ii) a Carlyle Majority may agree to amend this Agreement or grant a waiver of any term hereof on behalf of all Carlyle Stockholders to the extent their rights and obligations are not disproportionately adversely affected relative to those of such Carlyle Majority.  Notwithstanding the foregoing, at any time hereafter, Permitted Transferees or other Persons acquiring shares of Common Stock in accordance with the terms hereof may be made parties hereto and treated as “Stockholders” for all purposes hereunder by executing a counterpart signature page in the form attached as Exhibit A hereto, which signature page shall be countersigned by the Company and shall be attached to this Agreement and become a part hereof without any further action of any other Party hereto.

 

(k)            Tax Withholding .  The Company shall be entitled to require payment in cash or deduction from other compensation payable to a Stockholder of any sums required by federal, state or local tax law to be withheld with respect to the issuance, vesting, exercise, repurchase or cancellation of any Common Stock or any option to purchase Common Stock.

 

(l)             Management Agreement .  The Stockholders acknowledge and agree that the Carlyle Management Agreement shall remain in effect until amended, restated or otherwise modified or terminated pursuant to its terms.

 

23



 

(m)           Effectiveness of Amendment and Restatement .  Upon effectiveness of the Registration Statement relating to the Initial Public Offering, the Original Agreement shall thereupon be deemed to be amended and restated as hereinabove set forth as fully and with the same effect as if the amendments and restatements made hereby were originally set forth in the Original Agreement, but such amendments and restatements shall not operate so as to render invalid or improper any action heretofore taken under the Original Agreement.

 

[ Signature pages follow ]

 

24



 

IN WITNESS WHEREOF, the Parties have executed this Amended and Restated Stockholders Agreement as of the date first above written.

 

 

 

 

WESCO AIRCRAFT HOLDINGS, INC.

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

Gregory Hann

 

 

Title:

Chief Financial Officer and Executive Vice President

 

 

 

 

 

 

 

 

STOCKHOLDERS:

 

 

 

 

 

FALCON AEROSPACE HOLDINGS, LLC.

 

 

 

 

 

 

 

 

 

 

 

By:

Peter J. Clare

 

 

Its:

President

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

LISA KABAKER HESS AND THE CAPITAL TRUST COMPANY OF DELAWARE AS TRUSTEES OF THE JUSTIN HENRY SNYDER EXEMPT TRUST U/T RANDY SNYDER 2005 GRANTOR TRUST DATED DECEMBER 31, 2005

 

 

 

 

 

 

 

 

 

 

 

Lisa Kabaker Hess, Trustee

 

 

 

 

 

 

 

 

CAPITAL TRUST COMPANY OF DELAWARE

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

Its:

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

LISA KABAKER HESS AND THE CAPITAL TRUST COMPANY OF DELAWARE AS TRUSTEES OF THE JUSTIN HENRY SNYDER EXEMPT TRUST U/T SUSAN SNYDER 2005 GRANTOR TRUST DATED DECEMBER 31, 2005

 

 

 

 

 

 

 

 

 

 

 

Lisa Kabaker Hess, Trustee

 

 

 

 

 

 

 

 

CAPITAL TRUST COMPANY OF DELAWARE

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

Its:

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

LISA KABAKER HESS AND THE CAPITAL TRUST COMPANY OF DELAWARE AS TRUSTEES OF THE JOSHUA JACK SNYDER EXEMPT TRUST U/T RANDY SNYDER 2005 GRANTOR TRUST DATED DECEMBER 31, 2005

 

 

 

 

 

 

 

 

 

 

 

Lisa Kabaker Hess, Trustee

 

 

 

 

 

 

 

 

CAPITAL TRUST COMPANY OF DELAWARE

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

Its:

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

LISA KABAKER HESS AND THE CAPITAL TRUST COMPANY OF DELAWARE AS TRUSTEES OF THE JOSHUA JACK SNYDER EXEMPT TRUST U/T SUSAN SNYDER 2005 GRANTOR TRUST DATED DECEMBER 31, 2005

 

 

 

 

 

 

 

 

 

 

 

Lisa Kabaker Hess, Trustee

 

 

 

 

 

 

 

 

CAPITAL TRUST COMPANY OF DELAWARE

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

Its:

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

LISA KABAKER HESS AND THE CAPITAL TRUST COMPANY OF DELAWARE AS TRUSTEES OF THE TODD IAN SNYDER EXEMPT TRUST U/T RANDY SNYDER 2005 GRANTOR TRUST DATED DECEMBER 31, 2005

 

 

 

 

 

 

 

 

 

 

 

Lisa Kabaker Hess, Trustee

 

 

 

 

 

 

 

 

CAPITAL TRUST COMPANY OF DELAWARE

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

Its:

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 


 

 

 

LISA KABAKER HESS AND THE CAPITAL TRUST COMPANY OF DELAWARE AS TRUSTEES OF THE TODD IAN SNYDER EXEMPT TRUST U/T SUSAN SNYDER 2005 GRANTOR TRUST DATED DECEMBER 31, 2005

 

 

 

 

 

 

 

 

 

 

 

Lisa Kabaker Hess, Trustee

 

 

 

 

 

 

 

 

CAPITAL TRUST COMPANY OF DELAWARE

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

Its:

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

Randy Snyder 2009 Extended Family Trust, dated March 9, 2009

 

 

 

 

 

 

 

 

 

 

 

Name:

U.S. Trust Company of Delaware

 

 

Title:

Trustee

 

 

 

 

 

 

By:

 

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

Susan Snyder 2009 Extended Family Trust, dated March 9, 2009

 

 

 

 

 

 

 

 

 

 

 

Name:

U.S. Trust Company of Delaware

 

 

Title:

Trustee

 

 

 

 

 

 

By:

 

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

MICHAEL W. ALLEN

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

MICHAEL BATTENFIELD

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

MORRIS BENOUN

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

HAN SUN CHO

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

VICTORIA J. CONNER

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

GREGORY DIETZ

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

STEPHEN GOLD

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 


 

 

 

 

 

 

JAMES E. GRASON

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

SHERYL KNIGHTS

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

TOMMY LEE

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

ALEX MURRAY

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

JOHN F. SEGOVIA

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

CHAD WALLACE

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

BRUCE WEINSTEIN

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

DANA L. WILKIN

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

PAUL E. FULCHINO

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

KATHY DERASMO

 

 

 

 

 

 

 

 

 

 

 

FRANK DERASMO

 

[Signature Page to Amended & Restated Stockholders Agreement]

 


 

 

 

 

 

 

JOHN JUMPER

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

George and Lisa Hess Trust dated October 1, 2003

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

George Hess

 

 

Title:

Trustee

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

Lisa Hess

 

 

Title:

Trustee

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

Kuntz-Wright Family Revocable Trust

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

Mark J. Kuntz

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

Kimberly Lloyd Wright

 

 

Title:

 

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

ROBERT D. PAULSON

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

Weinstein Living Trust dated September 21, 2006

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

Hal R. Weinstein

 

 

Title:

Trustee

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

Cynthia Weinstein

 

 

Title:

Trustee

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

Wright Family Trust dated August 29, 2003

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

Trevor J. Wright

 

 

Title:

Trustee

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

Jean L. Wright

 

 

Title:

Trustee

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

DAVID L. SQUIER

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

JOHN CHALARIS

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

 

 

 

 

 

SHIRLEY WARNER

 

[Signature Page to Amended & Restated Stockholders Agreement]

 



 

EXHIBIT A

 

SIGNATURE PAGE
TO THE
STOCKHOLDERS AGREEMENT

 

By execution of this signature page,                                                                 hereby agrees to become a party to, be bound by the obligations of and receive the benefits of that certain Amended and Restated Stockholders Agreement dated as of [June] [  ], 2011 by and among Wesco Aircraft Holdings, Inc., a Delaware corporation, Falcon Aerospace Holdings, LLC, a Delaware limited liability company, and certain other parties named therein, as amended from time to time thereafter.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

Notice Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accepted:

 

 

 

 

 

 

 

WESCO AIRCRAFT HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

[Exhibit A to Amended & Restated Stockholders Agreement]

 




Exhibit 10.27

 

WESCO AIRCRAFT HOLDINGS, INC.

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (“ Agreement ”) is made as of                                 , 2011 by and between WESCO AIRCRAFT HOLDINGS, INC., a Delaware corporation (the “ Company ”), and                              (“ Indemnitee ”).

 

RECITALS

 

WHEREAS, highly competent persons have become more reluctant to serve publicly-held corporations as directors or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to, and activities on behalf of, the corporation and the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;

 

WHEREAS, the Board of Directors of the Company (the “ Board ”) has determined that, (i) in order to attract and retain qualified individuals, the Company shall use its best efforts to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities; (ii) although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions; (iii) at the same time, directors, officers and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself;

 

WHEREAS, the Bylaws of the Company require indemnification of the officers and directors of the Company, and, although Indemnitee may also be entitled to indemnification pursuant to applicable provisions of the General Corporation Law of the State of Delaware (“ DGCL ”), the Bylaws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification;

 

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

 

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

 



 

WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws of the Company and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; and

 

WHEREAS, Indemnitee does not regard the protection available under the Company’s Bylaws and insurance as adequate in the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve in such capacity and Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he be so indemnified;

 

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee, intending to be legally bound, do hereby covenant and agree as follows:

 

1.                                        Services to the Company.   Indemnitee will serve or continue to serve as an officer, director or key employee of the Company for so long as Indemnitee is duly elected or appointed or until Indemnitee tenders his resignation.

 

2.                                        Definitions.   As used in this Agreement:

 

(a)                                   Affiliate ” of any specified Person (as defined below) shall mean any other Person controlling, controlled by or under common control with such specified Person.

 

(b)                                  Agent ” means any person who is or was a director, officer, or employee of the Company or a Subsidiary (as defined below) of the Company or other person authorized by the Company to act for the Company or any Enterprise (as defined below) relating thereto, including any such person serving in such capacity as a director, officer, employee, trustee, general partner, managing member, fiduciary, agent or other official of another corporation, partnership, limited liability company, joint venture, trust or other enterprise at the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the Company.

 

(c)                                   Beneficial Owner ” and “ Beneficial Ownership ” have the meanings set forth in Rule 13d-3 promulgated under the Exchange Act (as defined below) as in effect on the date hereof.

 

(d)                                  Carlyle ” means TC Group, L.L.C. and any other investment fund or related management company or general partner that is an Affiliate of TC Group, L.L.C.; provided, however, that the definition of Carlyle shall not include the Company or any of its subsidiaries.

 

(e)                                   Change in Control ” means the earliest to occur after the date of this Agreement of any of the following events:

 

1.                                        Acquisition of Stock by Third Party .  Any Person (as defined below) other than Carlyle or the Snyder Stockholders, is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of

 

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the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors, unless (i) the change in the relative Beneficial Ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors, or (ii) such acquisition was approved in advance by the Continuing Directors (as defined below) and such acquisition would not constitute a Change in Control under part (3) of this definition;

 

2.                                        Change in Board of Directors .  Individuals who, as of the date hereof, constitute the Board, and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors on the date hereof or whose election for nomination for election was previously so approved (collectively, the “ Continuing Directors ”), cease for any reason to constitute at least a majority of the members of the Board;

 

3.                                        Corporate Transactions .  The effective date of a reorganization, merger or consolidation of the Company (a “ Business Combination ”), in each case, unless, following such Business Combination:  (i) all or substantially all of the individuals and entities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior to such Business Combination beneficially own, directly or indirectly, more than 51% of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more Subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors; (ii) no Person (excluding any corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of 15% or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of such corporation except to the extent that such ownership existed prior to the Business Combination; and (iii) at least a majority of the Board of the corporation resulting from such Business Combination were Continuing Directors at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination;

 

4.                                        Liquidation .  The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement or series of agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than factoring the Company’s current receivables or escrows due (or, if such approval is not required, the decision by the Board to proceed with such a liquidation, sale, or disposition in one transaction or a series of related transactions); or

 

5.                                        Other Events .  There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

 

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(f)                                     Corporate Status ” means the status of a Person (as defined below) who is or was an Agent of the Company or of any Enterprise (as defined below) which such Person is or was serving at the request of the Company.

 

(g)                                  Delaware Court ” shall mean the Court of Chancery of the State of Delaware.

 

(h)                                  Disinterested Director ” means a director of the Company who is not and was not a party to a Proceeding (as defined below) in respect of which indemnification is sought by Indemnitee.

 

(i)                                      Enterprise ” means any corporation, constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger to which the Company (or any of its wholly owned subsidiaries) is a party, Subsidiary (as defined below), limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as an Agent.

 

(j)                                      Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

(k)                                   Expenses ” means (i) attorneys’ fees and costs, retainers, court costs, transcript costs, fees of testifying and non-testifying experts and consultants, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses incurred in connection with (a) prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding (as defined below), (b) any appeal resulting from any Proceeding (as defined below), including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent; (c) preparing and forwarding statements to the Company to support advances of Expenses sought hereunder, (d) the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise, (e) any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement; provided, however, that Expenses excludes amounts paid in settlement by Indemnitee or the amount of judgments or Fines (as defined below) against Indemnitee.

 

(l)                                      Fines ” includes any excise tax assessed on Indemnitee with respect to any employee benefit plan; references to “serving at the request of the Company” shall include, but not be limited to, any service as an Agent of the Company which imposes duties on, or involves services by, such Agent with respect to an employee benefit plan, its participants or beneficiaries, including as a deemed fiduciary thereto; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

 

(m)                                Independent Counsel ” means a law firm or a member of a law firm that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of

 

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other indemnitees under similar indemnification agreements); or (ii) any other party to a Proceeding (as defined below) giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any Person (as defined below) who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

 

(n)                                  Person ” has the meaning set forth in Sections 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided , however , that “Person” shall exclude:  (i) the Company; (ii) any Subsidiaries (as defined below) of the Company; (iii) any employee benefit plan or employment plan of the Company or of a Subsidiary (as defined below) of the Company or of any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company; and (iv) any trustee or other fiduciary holding securities under an employee benefit plan or employment plan of the Company or of a Subsidiary (as defined below) of the Company or of a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

(o)                                  Potential Change in Control ” means the occurrence of any of the following events: (i) the Company enters into any written or oral agreement, undertaking or arrangement, the consummation of which would result in the occurrence of a Change in Control; (ii) any Person or the Company publicly announces an intention to take or consider taking actions which if consummated would constitute a Change in Control; (iii) any Person who becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 5% or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors increases his Beneficial Ownership of such securities by 5% or more over the percentage so owned by such Person on the date hereof; or (iv) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

 

(p)                                  Proceeding ” shall be broadly construed and shall include, without limitation, any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism (including, but without limitation, voluntary or court-ordered mediation), investigation (whether instituted by or on behalf of the Company or its Board or a governmental authority or other party), inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether formal or informal or brought in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or investigative nature, in which Indemnitee was, is or will be involved as a party or otherwise (including but without limitation as a witness) by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action (or failure to act) taken by him or of any action (or failure to act) on his part while acting as an Agent of the Company, or by reason of the fact that he is or was serving at the request of the Company as an Agent of any Enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement.  For purposes of determining whether Expenses were incurred in connection with a Proceeding as described in Section 2(k), the definition of

 

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Proceeding shall be met if Indemnitee in good faith believes that circumstances or events at will lead to a Proceeding as defined herein.

 

(q)                                  Snyder Stockholders ” means Randy Snyder, Susan Snyder and certain Affiliates of Randy Snyder and Susan Snyder; provided, however, that the definition of Snyder Stockholders shall not include the Company or any of its subsidiaries.

 

(r)                                     Subsidiary ,” with respect to any Person, means any corporation or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by that Person.

 

3.                                        Indemnification in Third-Party Proceedings.   The Company shall indemnify and hold harmless Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant (as a witness or otherwise) in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified against all Expenses, judgments, Fines, liabilities, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, Fines, liabilities, penalties and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any Enterprise, not opposed to, the best interests of the Company and, in criminal actions or Proceedings, in addition, had no reasonable cause to believe that his conduct was unlawful.

 

4.                                        Indemnification in Proceedings by or in the Right of the Company.   The Company shall indemnify and hold harmless Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant (as a witness or otherwise) in any Proceeding by or in the right of the Company or any Enterprise to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted, in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any Enterprise, not opposed to, the best interests of the Company. No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Company, unless and only to the extent that the court in which the action was brought, or, if no action was brought, any court of competent jurisdiction, determines upon application that, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such Expenses as the court deems proper.

 

5.                                        Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement (and in furtherance of, and not as a limitation to, the indemnification provided thereunder), to the extent that Indemnitee is a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify and hold harmless Indemnitee against all Expenses actually and reasonably incurred by him in connection

 

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therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify and hold harmless Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. If the Indemnitee is not wholly successful in such Proceeding, the Company also shall indemnify and hold harmless Indemnitee against all Expenses actually and reasonably incurred in connection with a claim, issue or matter related to any claim, issue or matter on which the Indemnitee was successful. For purposes of this Section 5 and without limitation, the termination of any Proceeding or claim, issue or matter in such Proceeding by settlement (with or without court approval), entry of a plea of nolo contendere (or its equivalent) or by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

6.                                        Indemnification for Expenses of a Witness or for the Production of Documents Pursuant to Subpoena or Other Legal Compulsion.   Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, (i) a witness in any Proceeding to which Indemnitee is not a party, or (ii) compelled to produce documents or other evidence pursuant to subpoena or other legal compulsion, the Company shall indemnify and hold harmless the Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

 

7.                                        Additional Indemnification.

 

(a)                                   Notwithstanding any limitation in Sections 3, 4 or 5 or in Section 145 of the DGCL or any other applicable statutory provision, the Company shall indemnify and hold harmless Indemnitee to the fullest extent permitted by applicable law if Indemnitee is made, or is threatened to be made, a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, Fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, Fines, penalties and amounts paid in settlement) actually and reasonably incurred by Indemnitee in connection with the Proceeding.  No indemnification shall be made under this Section 7(a) on account of Indemnitee’s conduct which, through a final judicial adjudication, has been determined to constitute either a breach of Indemnitee’s duty of loyalty to the Company or its investors or is an act or omission not in good faith or which involves intentional misconduct or a knowing violation of the law.

 

(b)                                  For purposes of this Agreement, including without limitation Section 7(a) hereof, “to the fullest extent permitted by applicable law” includes, without limitation: (i) to the fullest extent authorized or permitted by the provisions of the DGCL as are in effect as of the date hereof, or any other applicable statutory provision, that authorize or contemplate indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL or other applicable statutory provision; and (ii) to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL or other applicable statutory provision, adopted after the date of this Agreement that increase the extent to which the Company or any Enterprise may indemnify its Agents or other Persons holding similar fiduciary responsibilities.

 

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8.                                        Contribution in the Event of Joint Liability .

 

(a)                                   To the fullest extent permitted by applicable law, if the indemnification and hold harmless rights provided for in this Agreement are unavailable to Indemnitee in whole or in part for any reason whatsoever, the Company, in lieu of indemnifying and holding harmless Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for judgments, liabilities, Fines, penalties, amounts paid or to be paid in settlement and/or for Expenses, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against Indemnitee.

 

(b)                                  The Company shall not, without the prior written consent of Indemnitee, which consent shall not be unreasonably withheld, conditioned or delayed, enter into any settlement of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement: (i) provides for a full and final release of all claims asserted against Indemnitee; (ii) admits or implies no wrongdoing by or on behalf of Indemnitee; and (iii) potentially or actually imposes no cost, liability, exposure or burden on Indemnitee.

 

(c)                                   The Company hereby covenants and agrees to fully indemnify and hold harmless Indemnitee from any claims for contribution which may be brought by officers, directors or employees of the Company other than Indemnitee who may be jointly liable with Indemnitee.

 

9.                                        Exclusions.  Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnification in connection with any claim made against Indemnitee:

 

(a)                                   for which payment has actually been received by or on behalf of Indemnitee under any insurance policy or other indemnification provision other than as provided for pursuant to Section 17(g) herein;

 

(b)                                  for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act or similar provisions of state statutory law or common law; provided, however, that this Section 9(b) shall not negate Indemnitee’s right to the advancement of Expenses unless and to the extent that the Company reasonably determines that Indemnitee violated Section 16(b) of the Exchange Act or similar provisions of any federal, state or local laws and must disgorge profits in connection with such violation; provided further, however, that notwithstanding anything to the contrary stated or implied in this Section 9(b), indemnification pursuant to this Agreement relating to any Proceeding against Indemnitee for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Exchange Act or similar provisions of any federal, state or local laws shall not be prohibited if Indemnitee ultimately establishes in any a final, non-appealable judgment, by

 

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a court of competent jurisdiction, that no recovery of such profits from Indemnitee is permitted under Section 16(b) of the Exchange Act or similar provisions of any federal, state or local laws;

 

(c)                                   except as otherwise provided in Sections 14(e) and (f) hereof, prior to a Change in Control, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation; or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law; and/or

 

(d)                                  where the indemnification would be: (i) inconsistent with the law of the state of Delaware; (ii) inconsistent with a provision of the certificate of incorporation, a bylaw, a resolution of the board or of the shareholders, an agreement or other proper corporate action, in effect prior to and at the time of the accrual of the alleged cause of action asserted in the Proceeding in which the Expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or (iii) if there has been a settlement that is approved by a court of competent jurisdiction and provides that the indemnification would be inconsistent with any condition with respect to indemnification expressly imposed by such court in approving the settlement.

 

10.                                  Advances of Expenses; Defense of Claim.

 

(a)                                   In the event Indemnitee is entitled to indemnification and/or advancement of Expenses with respect to any Proceeding, Indemnitee may, at Indemnitee’s option, (i) retain counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld, conditioned or delayed) to represent Indemnitee with respect to such Proceeding, at the sole expense of the Company, or (ii) have the Company assume the defense of Indemnitee in such Proceeding, in which case the Company shall assume the defense of such Proceeding with counsel selected by the Company and approved by Indemnitee (which approval shall not be unreasonably withheld, conditioned or delayed) within ten (10) days of the Company’s receipt of written notice of Indemnitee’s election to cause the Company to do so.  If the Company is required to assume the defense of any such Proceeding, it shall engage legal counsel for such defense, and the Company shall be solely responsible for all fees and expenses of such legal counsel and otherwise of such defense.  Such legal counsel may represent both Indemnitee and the Company (and/or any other party or parties entitled to be indemnified by the Company with respect to such matter) unless, in the reasonable opinion of legal counsel to Indemnitee, there is an actual or potential conflict of interest between Indemnitee and the Company (or any other such party or parties) or there are legal defenses available to Indemnitee that are not available to the Company (or any such other party or parties).  Notwithstanding either party’s assumption of responsibility for defense of a Proceeding, each party shall have the right to engage separate counsel at its own expense.  The party having responsibility for defense of a Proceeding shall provide the other party and its counsel with all copies of pleadings and non-privileged or otherwise protected material correspondence relating to the Proceeding.  Indemnitee and the Company shall reasonably cooperate in the defense of any Proceeding with respect to which indemnification is sought hereunder, regardless of whether the Company or

 

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Indemnitee assumes the defense thereof.  Indemnitee may not settle or compromise any Proceeding without the prior written consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed.  The Company may not, without the prior written consent of Indemnitee, which consent shall not be unreasonably withheld, conditioned or delayed, effect any settlement (in whole or in part) of any action, claim or Proceeding against Indemnitee; provided, however, that the Company shall be required to obtain Indemnitee’s prior written approval, which may be granted or withheld in Indemnitee’s sole, reasonable discretion, before entering into any settlement that (i) does not grant Indemnitee a complete and unqualified release of liability, (ii) would potentially or actually impose any cost, liability, exposure, penalty, burden or limitation on Indemnitee, or (iii) would admit any liability or misconduct, or imply any wrongdoing, by or on behalf of Indemnitee.  Moreover, without Indemnitee’s prior written consent, the Company shall not enter into any settlement of any action, claim or Proceeding in which the Company is or could be jointly liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee; provided, however, that Indemnitee’s written consent shall not be required if the Company has determined that Indemnitee is not entitled to indemnification hereunder.  Notwithstanding the foregoing terms in this Section 10(a) or the terms of Section 8(b), the Company shall not, on its own behalf, settle any part of any action, claim or Proceeding to which Indemnitee is a party with respect to other parties (including the Company) without the written consent of Indemnitee if any portion of such settlement is to be funded from insurance proceeds pursuant to any insurance policy pursuant to which Indemnitee is an insured, additional insured, or otherwise an intended beneficiary with respect to Indemnitee’s status as an Agent; provided, however, that Indemnitee’s written consent shall not be required if the Company has determined that Indemnitee is not entitled to indemnification hereunder.

 

(b)                                  Notwithstanding any provision of this Agreement to the contrary, and to the fullest extent permitted by applicable law, within ten (10) days after the receipt by the Company of a written request for the advancement of Expenses by Indemnitee, the Company shall, in accordance with such request (but without duplication) (i) pay such Expenses on behalf of Indemnitee, (ii) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (iii) reimburse Indemnitee for such Expenses, whether such requests for advances are made prior to or after final disposition of any action, claim, Proceeding or other matter for which Indemnitee requests such advances unless, prior to the expiration of such ten-day period, the Company has delivered to Indemnitee a written determination that, in the reasonable and good faith opinion of the governing body of the Company, after consultation with outside legal counsel, such governing body has determined that there is no reasonable basis to believe that Indemnitee may be entitled to indemnification hereunder. Advances shall be unsecured and interest free. Advances shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Advances shall include any and all reasonable Expenses incurred pursuing a Proceeding to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. This Section 10(b) shall not apply to any claim made by Indemnitee for which indemnification is excluded pursuant to Section 9, except as expressly provided in Section 9.

 

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(c)                                   The Company will be entitled to participate in the Proceeding at its own expense.

 

(d)                                  The Company shall not seek, nor shall it agree to, consent to, support, or agree not to contest the entry of any “bar order” or other order, decree or stipulation, pursuant to 15 U.S.C. § 78u-4 (the Private Securities Litigation Reform Act), or any similar foreign, federal or state statute, regulation, rule or law, which would have the effect of prohibiting or limiting Indemnitee’s right to receive advancement of Expenses under this Agreement.

 

(e)                                   The right to advances under this Section 10 shall in all events continue until the final, non-appealable disposition of any action, claim, Proceeding or other matter for which Indemnitee is entitled to receive such advances hereunder.  The Company shall not initiate any proceeding seeking repayment of any advanced Expenses pursuant to the foregoing undertaking other than in a proceeding initiated in Delaware Court following a final, non-appealable judgment, by a court of competent jurisdiction, of the underlying and operative action, claim, Proceeding or other matter for which Indemnitee received such advanced Expenses.

 

(f)                                     Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement, which shall constitute an undertaking by Indemnitee to repay (without interest) the amounts advanced if and to the extent that it is ultimately determined by a court of competent jurisdiction in a final judgment, from which no appeals can be taken, that Indemnitee is not entitled to be indemnified by the Company, and no other form of undertaking shall be required from Indemnitee other than the execution of this Agreement.

 

11.                                  Procedure for Notification of Indemnified Matters and Application for Indemnification.

 

(a)                                   In the event Indemnitee believes that he or she is entitled to indemnification or advancement of Expenses hereunder, Indemnitee shall promptly deliver to the Company written notice of the action, claim, Proceeding or other matter with respect to which the Indemnitee believes he or she is or may be entitled to indemnification or advancement of Expenses hereunder. The failure of Indemnitee to so notify the Company shall not (i) prejudice the Indemnitee’s rights hereunder, or (ii) relieve the Company of any obligation which it may have to Indemnitee under this Agreement, or otherwise.

 

(b)                                  Indemnitee may deliver to the Company a written application to indemnify and hold harmless Indemnitee in accordance with this Agreement. Such application(s) may be delivered from time to time and at such time(s) as Indemnitee deems appropriate in his or her sole discretion. Following such a written application for indemnification by Indemnitee, the Indemnitee’s entitlement to indemnification shall be determined according to Section 12(a) of this Agreement.

 

12.                                  Procedure Upon Application for Indemnification.

 

(a)                                   A determination, if required by applicable law, with respect to Indemnitee’s entitlement to indemnification shall be made in the specific case by one of the

 

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following methods: (i) by the Board acting by a quorum consisting of directors who are not parties to such Proceeding upon a finding that Indemnitee has met the standard of conduct set forth in the Agreement and the DGCL; or (ii) if a quorum under subparagraph (a)(i) is not obtainable or, even if obtainable, a quorum of Disinterested Directors so directs: (a) by the Board upon the opinion in writing of Independent Counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in this Agreement and the DGCL has been met by Indemnitee, or (b) by the shareholders upon a finding that Indemnitee has met the applicable standard of conduct set forth in such sections.

 

(b)                                  The Company promptly will advise Indemnitee in writing with respect to any determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied. If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall reasonably cooperate with the Person, Persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such Person, Persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or Expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the Person, Persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

 

(c)                                   In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12(a) hereof, the Independent Counsel shall be selected as provided in this Section 12(c). The Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected and certifying that the Independent Counsel so selected meets the requirements of “Independent Counsel” as defined in Section 2 of this Agreement. If the Independent Counsel is selected by the Board, the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected and certifying that the Independent Counsel so selected meets the requirements of “Independent Counsel” as defined in Section 2 of this Agreement. In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been received, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided , however , that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the Person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court of competent jurisdiction has determined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 11(b) hereof, no Independent Counsel shall have been

 

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selected and not objected to, either the Company or Indemnitee may petition the Delaware Court for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a Person selected by the Delaware Court, and the Person with respect to whom all objections are so resolved or the Person so appointed shall act as Independent Counsel under Section 12(a) hereof.  Upon the due commencement of any judicial Proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

 

(d)                                  The Company agrees to pay the reasonable fees and Expenses of Independent Counsel and to fully indemnify and hold harmless such Independent Counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

13.                                  Presumptions and Effect of Certain Proceedings.

 

(a)                                   In making a determination with respect to entitlement to indemnification hereunder, the Person, Persons or entity making such determination (including, without limitation, any Independent Counsel) shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11(b) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any Person, Persons or entity of any determination contrary to that presumption.  Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

 

(b)                                  If the Person, Persons or entity empowered or selected under Section 12 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within thirty (30) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a final judicial determination that any or all such indemnification is expressly prohibited under applicable law; provided , however , that such 30-day period may be extended for a reasonable time, not to exceed an additional fifteen (15) days, if the Person, Persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto.

 

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(c)                                   The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement (with or without court approval), conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or any Enterprise or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

 

(d)                                  To the greatest extent permitted by law, settlement of any Proceeding without any finding of responsibility, wrongdoing or guilt on the part of the Indemnitee with respect to claims asserted in such Proceeding shall constitute a conclusive determination that Indemnitee is entitled to indemnification hereunder with respect to such Proceeding.

 

(e)                                   For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Company or any Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Company or any Enterprise in the course of their duties, or on the advice of legal counsel for the Company or any Enterprise or on information or records given or reports made to the Company or any Enterprise by an independent certified public accountant or by an appraiser or other expert selected by the Company or any Enterprise.  The provisions of this Section 13(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed or found to have met the applicable standard of conduct set forth in this Agreement.

 

(f)                                     The knowledge and/or actions, or failure to act, of any other Agent of the Company or any Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

 

14.                                  Remedies of Indemnitee.

 

(a)                                   In the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses, to the fullest extent permitted by applicable law, is not timely made pursuant to Section 10 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 12(a) of this Agreement within thirty (30) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5, 6, 7 or the last sentence of Section 12(b) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, (v) a contribution payment is not made in a timely manner pursuant to Section 8 of this Agreement, or (vi) payment of indemnification pursuant to Section 3 or 4 of this Agreement is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication by the Delaware Court to such indemnification, contribution or advancement of Expenses.  Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Except as set forth herein, the provisions of Delaware law

 

14



 

(without regard to its conflict of laws rules) shall apply to any such arbitration. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

 

(b)                                  In the event that a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial Proceeding or arbitration commenced pursuant to this Section 14 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial Proceeding or arbitration commenced pursuant to this Section 14, Indemnitee shall be presumed to be entitled to indemnification under this Agreement and the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be, and the Company may not refer to or introduce into evidence any determination pursuant to Section 12(a) of this Agreement adverse to Indemnitee for any purpose. If Indemnitee commences a judicial Proceeding or arbitration pursuant to this Section 14, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 10 until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).

 

(c)                                   If a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial Proceeding or arbitration commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification; or (ii) a prohibition of such indemnification under applicable law.

 

(d)                                  The Company shall be precluded from asserting in any judicial Proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.

 

(e)                                   The Company shall indemnify and hold harmless Indemnitee to the fullest extent permitted by applicable law against all Expenses and, if requested by Indemnitee, shall (within ten (10) days after the Company’s receipt of such written request) advance to Indemnitee, to the fullest extent permitted by applicable law, such Expenses which are incurred by Indemnitee in connection with any judicial Proceeding or arbitration brought by Indemnitee (i) to enforce his rights under, or to recover damages for breach of, this Agreement or any other indemnification, advancement or contribution agreement or provision of the Company’s Bylaws now or hereafter in effect; or (ii) for recovery or advances under any insurance policy maintained by any Person for the benefit of Indemnitee, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance, contribution or insurance recovery, as the case may be.

 

(f)                                     Interest shall be paid by the Company to Indemnitee at the legal rate under Delaware law for amounts which the Company indemnifies or is obliged to indemnify for the period commencing with the date on which Indemnitee requests indemnification, contribution,

 

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reimbursement or advancement of any Expenses and ending with the date on which such payment is made to Indemnitee by the Company.

 

15.                                  Establishment of Trust.   In the event of a Potential Change in Control, the Company shall, upon written request by Indemnitee, create a trust for the benefit of Indemnitee (the “ Trust ”) and from time to time upon written request of Indemnitee shall fund such Trust in an amount sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for, participating in or defending any Proceedings, and any and all judgments, Fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such judgments, Fines penalties and amounts paid in settlement) in connection with any and all Proceedings from time to time actually paid or claimed, reasonably anticipated or proposed to be paid.  The trustee of the Trust (the “ Trustee ”) shall be a bank or trust company or other individual or entity chosen by the Indemnitee and reasonably acceptable to the Company. Nothing in this Section 15 shall relieve the Company of any of its obligations under this Agreement. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding obligation shall be determined by mutual agreement of the Indemnitee and the Company or, if the Company and the Indemnitee are unable to reach such an agreement, by Independent Counsel selected in accordance with Section 12(c) of this Agreement. The terms of the Trust shall provide that, except upon the consent of both the Indemnitee and the Company, upon a Change in Control:  (a) the Trust shall not be revoked, or the principal thereof invaded, without the written consent of the Indemnitee; (b) the Trustee shall advance, to the fullest extent permitted by applicable law, within two (2) business days of a request by the Indemnitee and upon the execution and delivery to the Company of an undertaking providing that the Indemnitee undertakes to repay the advance to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company, any and all Expenses to the Indemnitee; (c) the Trust shall continue to be funded by the Company in accordance with the funding obligations set forth above; (d) the Trustee shall promptly pay to the Indemnitee all amounts for which the Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise; and (e) all unexpended funds in such Trust shall revert to the Company upon mutual agreement by the Indemnitee and the Company or, if the Indemnitee and the Company are unable to reach such an agreement, by Independent Counsel selected in accordance with Section 12(c) of this Agreement, that the Indemnitee has been fully indemnified under the terms of this Agreement.  The Trust shall be governed by Delaware law (without regard to its conflicts of laws rules) and the Trustee shall consent to the exclusive jurisdiction of the Delaware Court in accordance with Section 23 of this Agreement.

 

16.                                  Security.   Notwithstanding anything herein to the contrary, to the extent requested by the Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to the Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to the Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.

 

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17.                                  Non-Exclusivity; Priority of Payments; Survival of Rights; Insurance; Subrogation; Information Sharing.

 

(a)                                   The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Company’s Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in applicable law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Company’s Bylaws or this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

 

(b)                                  The DGCL and the Company’s Bylaws permit the Company to purchase and maintain insurance or furnish similar protection or make other arrangements including, but not limited to, providing a trust fund, letter of credit, or surety bond (“ Indemnification Arrangements ”) on behalf of Indemnitee against any liability asserted against him or incurred by or on behalf of him or in such capacity as Agent of the Company, or arising out of his status as such, whether or not the Company would have the power to indemnify him against such liability under the provisions of this Agreement or under the DGCL, as it may then be in effect.  The purchase, establishment, and maintenance of any such Indemnification Arrangement shall not in any way limit or affect the rights and obligations of the Company or of the Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and the Indemnitee shall not in any way limit or affect the rights and obligations of the Company or the other party or parties thereto under any such Indemnification Arrangement.

 

(c)                                   To the extent that the Company maintains any insurance policy providing liability insurance for any Agents of the Company or any Enterprise which Agent serves at the request of the Company (such policy being referred to for purposes of this Section 17(d) as the “ D&O Insurance ”), Indemnitee shall be covered by such D&O Insurance policy in accordance with its terms.   In the event (i) that the Company determines to reduce materially or not to renew its directors’ and officers’ liability insurance, the Company will purchase six (6) year tail coverage D&O Insurance, on terms and conditions substantially similar to the existing D&O Insurance and through the Company’s insurance broker (“ Comparable Coverage ”), for the benefit of the directors, officers, employees or other Agents of the Company or any other Enterprise who had served in such capacity prior to the reduction, termination or expiration of the coverage; or (ii) of a Change in Control, the Company will either (A) purchase six (6) year tail coverage D&O Insurance with Comparable Coverage for the benefit of the directors, officers, employees or other Agents of the Company or any other Enterprise who had served in such capacity prior to the closing of the transaction or the occurrence of the event constituting the Change in Control, and/or (B) as applicable, cause the acquiring entity or person to purchase

 

17



 

such coverage and require the acquiring entity or person to deliver proof of the purchase of such coverage, in form and substance satisfactory to the Company, at or prior to the closing of the transaction or the occurrence of the event constituting the Change in Control; provided, however, that this clause (ii) shall not apply if, in connection with the Change in Control, there is no material reduction or non-renewal of the existing D&O Insurance coverage for the benefit of the directors, officers, employees or other Agents of the Company or any other Enterprise who served in such capacity prior to the closing of the transaction or the occurrence of the event constituting the Change in Control for the six (6) year period following the date of such closing or event.  Notwithstanding the foregoing, if the annual premium for any year of such tail coverage or other continuing D&O Insurance coverage would exceed 200% of the annual premium the Company paid for D&O Insurance in its last full fiscal year prior to the reduction, termination or expiration of the D&O Insurance or such Change in Control event, the Company (or the acquiror or successor, as the case may be) will be deemed to have satisfied its obligations under this Section 17(d) by purchasing as much D&O Insurance for such year as can be obtained for a premium equal to 200% such annual premium the Company paid for D&O Insurance in its last full fiscal year.

 

(d)                                  If, at the time the Company receives notice from any source of a Proceeding as to which Indemnitee is a party or a participant (as a witness or otherwise) and the Company has applicable (or potentially applicable) liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.  Notwithstanding the foregoing, the Company shall not be required to pay any amount hereunder if and to the extent that Indemnitee has actually received payment of such amount under any insurance policy, but the Company shall not be excused from any obligation hereunder due to the availability of any such insurance coverage, subject to the Company’s right to seek reimbursement of any amounts paid by the Company pursuant to any applicable insurance policy.  Nothing in this Agreement is intended or shall be construed to limit or reduce the rights of the Company, Carlyle, Indemnitee or any other individuals or entities pursuant to any insurance policy, or to limit or reduce the obligations of any insurer pursuant to any insurance policy or otherwise.  The foregoing notwithstanding, to the extent a claim for which indemnification or advancement of Expenses is available hereunder is covered by any insurance policy, (i) the issuer of such policy shall not be entitled to seek recovery from the Company or Carlyle, by subrogation or otherwise, solely by virtue of this Agreement, and (ii) nothing in this Agreement shall limit the Company’s or Carlyle’s right to pursue any claim for recovery or reimbursement of amounts paid under this Agreement under any insurance policy.  Indemnitee shall engage in reasonable, good faith efforts to cause the Company’s insurance to apply on a primary basis with respect to any other insurance that may be applicable to matters indemnified hereunder, including without limitation insurance procured for the benefit of the Indemnitee by Carlyle.

 

(e)                                   In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including

 

18



 

execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

(f)                                     The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as an Agent of any Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such Enterprise. Notwithstanding any other provision of this Agreement to the contrary, (i) Indemnitee shall have no obligation to reduce, offset, allocate, pursue or apportion any indemnification, hold harmless, exoneration, advancement, contribution or insurance coverage among multiple parties possessing such duties to Indemnitee prior to the Company’s satisfaction and performance of all its obligations under this Agreement, and (ii) the Company shall perform fully its obligations under this Agreement without regard to whether Indemnitee holds, may pursue or has pursued any indemnification, advancement, hold harmless, exoneration, contribution or insurance coverage rights against any Person or entity other than the Company.

 

(g)                                  The Company and Indemnitee hereby agree that any obligations of Carlyle to provide indemnification and advancement of Expenses with respect to actions, claims, Proceedings or other matters indemnified hereunder, including any such obligations arising from the terms of this Agreement, shall be (i) secondary to any indemnification or advancement obligations owed by the Company or any Enterprise and/or their respective subsidiaries, and (ii) reduced by any amount that the Indemnitee collects from the Company or any Enterprise and/or their respective subsidiaries as indemnification or advancement of Expenses.  Indemnitee shall engage in reasonable, good faith efforts to obtain indemnification and advancement of Expenses from the Company (or, if applicable, a subsidiary of the Company or an Enterprise and/or such Enterprise’s subsidiaries) prior to seeking indemnification and/or advancement of Expenses from Carlyle pursuant to this Agreement or otherwise.  Moreover, the Company and Indemnitee hereby agree to waive any right of subrogation or contribution against Carlyle or Carlyle’s insurers with respect to any payment made pursuant to this Agreement, including, but without limitation, any subrogation or contribution rights that otherwise would arise in favor of (i) Indemnitee, (ii) the Company or any Enterprise and/or their respective subsidiaries, or (iii) any insurer providing coverage to Indemnitee, the Company, or any Enterprise, and/or their respective subsidiaries.

 

18.                                  Duration of Agreement; Claims against Indemnitee.   All agreements and obligations of the Company contained herein shall continue during the period Indemnitee serves as an Agent of the Company or of any Enterprise which Indemnitee serves at the request of the Company and shall continue thereafter so long as Indemnitee shall be subject to any possible Proceeding (including any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement) by reason of his Corporate Status, whether or not he is acting in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement.  In addition to, and without limiting, the foregoing: (i) the rights and obligations set forth in this Agreement shall not be terminated without the prior written consent of the parties hereto, nor shall any change in Indemnitee’s Corporate Status (including but without limitation any termination of Indemnitee’s status as an officer, director, employee or Agent of, or attorney for, Company) affect the Indemnitee’s rights

 

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hereunder with respect to indemnified matters arising pursuant to the terms hereof; (ii) no amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal; and (iii) this Agreement shall be effective as of the date set forth on the first page, and this Agreement shall apply to any indemnifiable actions, events or omissions occurring prior to such date if the Indemnitee was an Agent of the Company or of any Enterprise which Indemnitee served at the request of the Company at the time such actions, events or omissions occurred.

 

19.                                  Severability.   If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever:  (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by applicable law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

 

20.                                  Enforcement and Binding Effect.

 

(a)                                   The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director, officer or key employee of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director, officer or key employee of the Company.

 

(b)                                  Without limiting any of the rights of Indemnitee under the Bylaws of the Company as they may be amended from time to time, this Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

 

(c)                                   The indemnification and advancement of Expenses provided by or granted pursuant to this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be an Agent of the Company or of any Enterprise at the Company’s request, and shall inure to the benefit of Indemnitee and his or her spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

 

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(d)                                  The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

(e)                                   The Company and Indemnitee agree herein that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause Indemnitee irreparable harm. Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance Indemnitee shall not be precluded from seeking or obtaining any other relief to which he may be entitled. The Company and Indemnitee further agree that Indemnitee shall be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertaking in connection therewith. The Company acknowledges that in the absence of a waiver, a bond or undertaking may be required of Indemnitee by the court in which the action was brought, and the Company hereby waives any such requirement of such a bond or undertaking.

 

21.                                  Modification and Waiver.   No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.

 

22.                                  Notices.   All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (i) if delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third (3 rd ) business day after the date on which it is so mailed:

 

(a)           If to Indemnitee, at the address indicated on the signature page of this Agreement or such other address as Indemnitee shall provide in writing to the Company.

 

(b)                                  If to the Company, to:

 

Wesco Aircraft Holdings, Inc.
27727 Avenue Scott

Valencia, CA 91355
Attention:  General Counsel

 

or to any other address as may have been furnished to Indemnitee in writing by the Company.

 

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23.                                  Applicable Law and Consent to Jurisdiction .  This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (a) agree that any action or Proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court and not in any other state or federal court in the United States of America or any court in any other country; (b) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or Proceeding arising out of or in connection with this Agreement; (c) appoint irrevocably, to the extent such party is not a resident of the State of Delaware, CT Corporation as its agent in the State of Delaware as such party’s agent for acceptance of legal process in connection with any such action or Proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware; (d) waive any objection to the laying of venue of any such action or Proceeding in the Delaware Court; and (e) waive, and agree not to plead or to make, any claim that any such action or Proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum, or is subject (in whole or in part) to a jury trial.

 

24.                                  Identical Counterparts .  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed (and delivered by facsimile or other electronic transmission) by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

 

25.                                  Miscellaneous.   Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

*                                          *                                          *

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the date first above written.

 

WESCO AIRCRAFT HOLDINGS INC.

 

INDEMNITEE

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Name:

 

 

Title:

 

 

Address:

 

 

22


 



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Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We hereby consent to the use in this Registration Statement on Amendment No. 2 to Form S-1 of Wesco Aircraft Holdings, Inc. of our report dated December 22, 2010 relating to the financial statements of Wesco Aircraft Holdings, Inc. (formerly known as Wesco Holdings, Inc.), which appears in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP
Los Angeles, California
June 6, 2011




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